RSJ Financial Planning
RSJ Financial Planning
RSJ Financial Planning

Providing a Sustainable
Income Over the Long Term (Continued)

 

Stockmarket Timing

It is too easy to miss the Gains in the Equity Market - over period 1992 to 2007 (15 years) - the average Annualised Returns with the effect of missing the best days -

Country
Fully Invested
Best 10 days
missed
Best 20 days
missed
Best 30 days
missed
Best 40 days
missed
UK
10.9%
7.9%
5.6%
3.7%
2.0%
Germany
10.9%
6.1%
2.5%
-0.4%
-2.9%
Hong Kong
13.4%
6.8%
2.9%
-0.4%
-3.2%


Naturally if you were able to miss the worst days of the Stockmarket you would see higher returns than staying invested, but the days that market falls and again when they rise are notoriously difficult to predict.

Moral - so from this it is prudent to stay invested as no one can forecast when the market turns for the better.

Our Concept/Plan

To cater for the above volatility our plan is to have investments in differing "boxes!"
Equities for Income
- Capital will not be touched but will slowly grow
- Income is not dependent upon the capital value on a day to day basis and over time will increase at a better rate than inflation
Fixed Income
- Income is Fixed
- Income is at a higher yield than Equities
- Capital will over time be eroded
Commercial property
- Rental Income will increase in line with Inflation over time
- Capital value is again not dependent upon the capital value on a day to day basis and over the long term will increase in line with Inflation
Equities for Growth - Total Return
- In the short term can drop as was last seen from 2000 to 2003 by some 50%
- In the long term will increase at a rate better than Cash and Fixed Interest
Cash:
- Income from the various asset classes is paid into this "box".
- Income needed is paid out into the Clients account.
- level of cash should not "run out" for 5 to 6 years
- after which capital is fed in.
- if in the mean time there are some superior years of Equity Growth than profit can be taken at an earlier stage

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Contact us either by e-mail or phone 0151 703 1088
mail@rsjinvestments.co.uk