Island Life Magazine Ltd December 2011/January 2012 | Page 34

PROPERTY
ADVERTISING
FEATURE

FINANCIAL
with Paul St. John Martin

Is your income suffering from
record-low interest rates?
It’s an obvious statement, but income
is important. The difficulty is that, in
an uncertain world, investment income
is hard to find right now.
Investors looking for income have
faced an increasing challenge ever
since the financial crisis broke in
2008. Prudence and vigilance became
the order of the day as financial
institutions across the globe took
extreme measures to protect themselves
from global meltdown.
Central Governments across the
world also reacted strongly, tightening
monetary policy and forcing interest
rates to record lows. Three years on
and interest rates in the UK remain
almost non-existent. The result is real
losses for savers in bank and building
society deposits which fail to match
inflation.
History shows that investing in
equities, or shares, has provided
investors with a better chance of
outpacing inflation over the long term
versus other asset classes, particularly
if the shares are able to increase the
dividend payments year after year.
With dividend payouts on the

turn, the outlook for equity income
funds could also be on the up.
Equity income funds have a strong
track record for delivering attractive,
sustainable income and steady returns
over the long term.
But it is worth remembering that
not all equity income funds are the
same. Some are better for income,
while others provide better prospects
for total return for investors through
the reinvestment of income.
Corporate bond funds, which are
by their nature income producers,
remain popular, particularly with
cautious investors. At St. James’s
Place Wealth Management we firmly
subscribe to the view that a diversified
fixed interest strategy with exposure
to investment grade, sub-investment
grade and senior secured debt will
ensure your portfolio is positioned to
benefit from growth across the credit
spectrum.
Commercial property felt the full
effects of the credit crunch and the fall
in property values left many investors
nursing significant losses. But again,
history suggests that commercial

property has a place in a portfolio for
income investors. Its long-term track
record is strong and, importantly,
it offers returns which are lowly
correlated to other asset classes.
Those investing for income need
to remember that no one asset class
is the panacea. With interest rates
likely to remain low for some time,
a well diversified, well-managed
portfolio which blends different
forms of investment remains the most
suitable strategy for investors taking
a longer-term view of their income
needs.
If you are dissatisfied with the returns
offered by your bank or building
society or want to know how we can
help, then contact Paul St John Martin
on 01983 559360 for a free overview
with no pressure to act upon any
advice given.
*Investors should however note that
investing in equities and corporate bonds
does not provide the security of capital
associated with a bank or building
society deposit account and the value of
capital, and income, can fall as well as
rise.

The Holistic Wealth Management Consultancy
Birchmore Lane, Blackwater, Newport PO30 3BP
TEL: [phone]
www.psjm.co.uk

Representing St. James's Place Wealth Management Group plc, which is authorised and regulated by the Financial Services Authority
34

www.visitislandlife.com