Question: As I am a soon-to-be retired SMSF owner, who’ll be living off interest on investments, could you please address this issue, particularly bank term deposit interest (approx. 2.69%)? And also maybe discuss income from shares especially in the light of the Telstra (TLS) dividend reduction and the threat to CBA dividends going forward and also the losses incurred recently in these two shares and how much they could potentially drop further (it’s all very well getting the dividends but we are now losing capital as well). What other avenues are open to retirees to prop up dwindling fixed incomes?
Answer (By Paul Rickard): Notwithstanding the cut to Telstra’s dividends, most companies reported higher dividends at their results in August. On an aggregate basis, the Australian share market is yielding a touch over 4.5%.
If you are looking for income outside the share market (excluding bank/term deposits), then consider:
- bank hybrid securities
- credit/mortgage funds
- corporate bonds
- unlisted property funds
Obviously, these investments are higher risk than bank term deposits. With the potential for higher return comes the prospect of higher risk.
Question: What is your opinion about La Trobe Financial please? I would like to invest $50,000 (1/3 of my super) as a means for receiving some guaranteed monthly income from their fund?
Answer (By Paul Rickard): La Trobe Financial is a respected provider that has been in business for many years. That said, mortgage funds are by definition higher risk – and hence, the higher return on offer. Would I consider investing with Latrobe? Yes. Would I consider investing 1/3 of my super with a single provider? No.
I would encourage you to thoroughly review the PDS before investing.
Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances.