23rd July 2012

Are your sources of income still reliable?

Now is the time to go further for income

The world has changed and the ground has shifted from underneath our feet. Investors need to adapt to this new world as they face up to the challenges of growing their income and wealth in uncertain times: 

• Life expectancy has increased: Equity income funds typically invest in higher quality companies that can consistently pay and grow their dividends over time, giving investors access to a reliable and additional source of income.
• The erosive effects of inflation: With inflation a constant threat, investors need a way of maintaining their purchasing power. There’s a 90% correlation between dividend growth and inflation, meaning dividends are a real return, and should grow with inflation.
• The search for yield: High quality, dividend-paying stocks offer yields currently in excess of those delivered by traditional fixed income and cash deposits.
• Uncertain market outlook: Global GDP growth is expected to remain challenged. Dividend-paying companies have historically outperformed in low growth environments.

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