RSJ Financial Planning
RSJ Financial Planning
RSJ Financial Planning

Providing a Sustainable
Income Over the Long Term



Most clients require, from their investments, a level of income that is higher than the investments/pension fund can provide naturally from dividends, interest and rent (the underlying yield). So to achieve this high level of income, capital will have to be taken over time to supplement the income however, equities are volatile over periods of between 5 and 6 years.


Another factor is the effects of inflation as those retiring today can look forward to enjoying life for at least another 20 years but we cannot forecast the date of our death! So the investments have to last for longer. The current Retail Prices Index is 4.5% so £24,000 will in ten years time mean its "buying power" will cut to £15,000 - 37% cut.

So to have an income that is sustainable over a long period of time, a large proportion the investment portfolio will have to be invested in real asset (equities and commercial property) as, historically, they have, over 5 to 6 years, produced better returns than cash or fixed interest.

To achieve a real return the portfolio needs to grow at a greater rate than inflation.

So how is this managed in a risk environment?

RSJ Financial Planning's concept

To provide this need for long term sustainable income, our plan uses the two components independently that make up "total" return (i) income and (ii) capital.

There are two measures of risk with any investment portfolio:

The Level of Income needed - there is a risk in the first five to six years that equities could under-perform, so the recommended plan is structured so that the income required for the first five to six years will come from a combination of dividends from the equity funds, interest from the fixed interest element, rent from property and withdrawals from the deposit fund which, over that time scale, will be depleted. As can be seen in the plan, you should not have to sell any of the equity funds to top up the deposit element in the first six years. If the funds perform well in the short term, then the deposit fund can be topped up earlier.

Total Return - Another measurement of the risk inherent in the portfolio over the long term is the total return required to maintain the level of income. The higher this figure, the higher the risk in that the plan will not meet your expectations and needs.

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Contact us either by e-mail or phone 0151 703 1088