Welcome to August’s fixed income outlook. Here are some questions we’re answering this time around. First, where can you hit the “save progress” button in wealth creation? Second, is optimization even worth it? Lastly, how does the Budget affect fixed-income investments?
Save Your Progress: Capital Preservation
Imagine you’re playing a video game and you’re doing exceedingly well. You’re crossing level after level – tackling bigger challenges as you get ahead. Then you get to a difficult level and you’re afraid of losing a life. But, the bigger problem is you’d have to start from scratch and go through all those tricky parts again. This is where crossing checkpoints and saving your progress helps. Is it worth going through all those challenges again?
In wealth creation, just as with video games, you can save your progress. But investors are keen on marching into trickier levels without pausing. Would you like to know more about how you can save progress? We’ve got a webinar for you!
Is Optimisation Worth It?
Which investor doesn’t want the best outcome? The shortcut to the best outcomes is optimisation. Investors are notorious for optimising their predictions, tax efficiency, and returns. How far does this take them? Not far. Forecasts are often wrong and we know what happens when you build a castle on shaky foundations. After the Budget, the system encourages merit (not tax) based asset allocation decisions. Return optimisation creates more problems than it solves. It works only when things are going well.
Risk optimisation is a forgotten philosophy. Investors are not interested in optimising portfolio risk. What’s one hard truth investors will learn? It costs less to lose out on returns than to pay for the wrong risks.
Tax on Debt Instruments
Here’s a quick reckoner on how debt instruments are taxed going forward.
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