POWERED BY MOMENTUM MEDIA
Retirees beating inflation through equities
Investing in equities can help a retiree's potential for a higher sustainable withdrawal rate by gaining more flexibility in accounting for inflation, according to a report by Milliman Financial Risk Management.
The report found that since 1930 the growth rate of the S&P 500 dividend kept up with inflation, and outpaced it by more than one per cent per year.
"Over the course of 10 years the dividend has doubled to $41.31 [per share]. Based on the level of the S&P 500 in April 2005 (1157), $41.31 per share equates to a yield of 3.5 per cent," the report said.
"A level far superior to the two per cent yield on the 10-year Treasury bond in April 2015."
The report noted the reason for the ability to keep up and outpace inflation is because businesses are able to pass along price increases to consumers.
"History bears witness to the ability (and arguably tendency of stocks' earnings, dividends, and share prices to inflate with the economic price inflation," the report said.
"For this reason we believe investors should have a significant allocation to stocks, both when approaching and during retirement."
Recommended for you
APRA’s latest data has revealed that superannuation funds spent $1.3 billion on advice fees, with the vast majority sent to external financial advisers.
Cbus Super has unveiled Advice Essentials Plus, a new service offering affordable financial advice to both members and their partners.
The fund has launched a new tool to help deliver personalised financial education and digital personal advice to eligible members.
The QAR lead reviewer has told a Senate committee that the government’s demands of super funds conflict with their original purpose.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
Spire Oaktree Opportunities XI Second Close
61.07 3 y p.a(%)
2
Spire Oaktree Opportunities XI First Close USD
59.21 3 y p.a(%)
3
DomaCom Lot 21 Chellaston Road Munno Para West SA 5115 Australia
32.57 3 y p.a(%)
4
Fidante Credit Suisse Global Private Equity
32.09 3 y p.a(%)
5
DomaCom 4/27 Crombie Avenue Bundall QLD 4217 Australia
27.42 3 y p.a(%)
