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Investment Strategies for Your Financial Future

Monday, June 08, 2020

With the advent of COVID lockdowns this year, the financial markets went into the usual gyrations it goes through during uncertain times. Certainly, the global pandemic has been an unknown entity where there is little historical reference point for market response and recovery. This naturally resulted in concerns for many investors regarding their retirement investments, their income and future security.

In the short term many retirees experienced a significant downward effect on the account balance of their superannuation, pensions and annuity portfolio values. Encouragingly, the markets have bounced back, yet there could well be further gyrations as the world emerges from restrictions and the markets gain a clearer view of the economic impact.

What is of ultimate importance during these times is having an intelligent investment strategy in place that provides you cash flow without dipping into your capital investments. This means riding out the crisis, maintaining your income, and leaving your investments in place to recover, all through the same period.

The Australian Government also offered investors the option to further reduce their income payments below their usual minimums if they needed to further reduce the impact on their investments. To assist retirees, the Government has reduced the minimum annual payment required by 50%, for account-based pensions and annuities, allocated pensions and annuities, and market-linked pensions and annuities in the 2019–20 and the 2020–21 financial years.This means that eligible retirees, with enough cash flow to ride out this period of market volatility, will not be forced to sell shares, property or other assets into a falling market simply to comply with the usual minimum drawdown amounts. By preserving more of their capital, they will have more money working for them to capture the market upswing when it occurs.  

The markets will recover in time. These kinds of declines were also seen at the time of the GFC - when the crisis is over and the world gets back to business, the markets respond in kind.

We recommend consulting your financial adviser to best navigate and maintain your assets during this next phase, and for positioning your investments for the future.
This document was prepared without taking into account any person’s particular objectives, financial situation or needs. It is not guaranteed as accurate or complete and should not be relied upon as such. Maher Digby Securities Pty Ltd does not accept any responsibility for the opinions, comments, forward looking statements, and analysis contained in this document, all of which are intended to be of a general nature. Investors should, before acting on this information, consider the appropriateness of this information having regard to their personal objectives, financial situation or needs. We recommend consulting a financial advisor