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Active Retirees : Active Retirees June-July 2012
42 | www.probussouthpacific.org finance A fter the volatility and plummeting investment returns of the global financial crisis, many retirees, looking for more certainty and stability, are turning to fixed income investments – term deposits, government bonds and corporate bonds – which guarantee payments on fixed dates and tend to be less volatile than equities. “Investors increasingly concerned about instability in equity markets and its effect on cash flow requirements are shifting to bonds,” says Andrew Gordon, director of fixed income broker FIIG Securities. Term deposits have been the most popular fixed income instrument in recent times, but their rates are now falling and, with yields on government bonds also anaemic, corporate bonds are becoming more attractive. Generally, investors enjoy higher yields, greater transparency, no fees and buying direct rather than through funds, allowing better cash flow management. “Direct bonds provide investors with the ability to lock in returns for years to come without ongoing fees,” Gordon explains. Get defensive Fixed income assets have long provided a strong defensive element Money money money Investing in fixed income assets such as corporate bonds can offer predictability for retirees, but all are not equal. Ben Power explains their returns and risks, and asks the experts just how much money a retiree can afford to invest. Thinkstock
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