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Setting Realistic Investment Expectations

At Swallow Financial Planning, we are very careful to explain at length what clients can and cannot expect from a long term investment portfolio. Indeed, we tend to reflect growth more in relation to inflation rates than fixed percentages.

A recent Schroder survey conducted in the Spring via an online questionnaire, which spanned 20,000 investors and advisers in 28 countries, produced a range of alarming expectations. However the most concerning result was that investors on average expected a return of 9.1% pa.

Despite 20 years of low inflation and even lower returns, many people are still stuck in the 1980s where double digit returns were the norm. Low world growth, inflation and interest rates mean correspondingly lower growth for investments in the longer term and that means high charges afect growth disproportionately. Those saving for later years therefore need to put aside significantly more than what was the case in the heady days of the 1970s and 80s.

We recently reviewed two with profits bonds from two different, excellent with profit life offices. Both were 15 years old and both had provided returns of around 3.5% pa net of charges. In the current market, that is a decent return from a low risk asset.

We have put a copy on our website simply click the following link to review the Schroder’s survey.

As ever, if you have any queries or wish us to take action on your behalf then do please get in touch.


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