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Boost your retirement investment income the low risk way

by , 06 May 2016

So, you think that during retirement you can rely on your investment income to keep you going. Well, what if you find yourself dipping into your actual investment capital to make ends meet?

The danger is, each time you take cash from your investments, there's less capital invested to generate income.

That's why today, I want to show you how an ultra-low risk investment to help you generate enough income to stop you having to draw down on your capital.


Beat inflation with this ultra-low risk retirement investment

 
The first thing you need to do is allocate around 35% of your portfolio to bonds. That’s because, the capital you invest in a bond is guaranteed.
 
Look at inflation linked retail bonds, especially when you rely on your investment income. The reason is because interest rates can’t keep up with inflation.
 
That’s why our first goal is to make sure you, at the very least, beat inflation. And this is what makes inflation linked retail bonds such an attractive option.
 
You see, when you invest in an inflation linked bond, the lump sum you’ve invested is adjusted to inflation every six months.
 
So for example, if you invest R100,000 in an inflation linked bond, and CPI (the inflation measure used for the bond) is at 6% per annum, your capital will be adjusted every six months. In this case, to R103,000.
 
(R100,000 x (1 + (6/12 x 6%)).
 
Now, you’ll also get paid about 2.25% interest on this bond every year. But it all depends on the type of bond you decide to take. This interest percentage stays constant no matter what.
 

To get the best income returns, you want to buy the 10 year inflation linked bond

 
The good news is you can buy these bonds online by going to www.rsaretailbonds.gov.za or you can even buy them at your local Pick n’ Pay!
 
This portion of your Retirement Survival Strategy is your safety net. It’s your guaranteed capital.
 
That’s why the next investment I’ve included in your Retirement Survival Strategy is perfect to boost your income…



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