- High- quality corporate bonds with fixed coupons;
- Shares of quality companies whose management is committed to delivering rising dividends to its owners;
- Property assets with long-term rental agreements and infrastructure assets with inflation–linked contractual cash flows.
Retirees concerned about the latest cut to the official cash rate need to clearly identify their investment goals to help clarify whether capital stability or income sustainability is of greater importance. In this article, we discuss how a well-managed portfolio of select corporate bonds, equities, property and infrastructure can deliver attractive and predictable income streams that that can be expected to rise over time. Sustainable income in a low- rate environment Cash investments such as term deposits have been regarded as a safe option for cautious investors due to the stability of their capital value and, at least historically, the delivery of an adequate level of income. However, official cash rates are now at historically low levels and the income from term deposits has fallen to levels marginally above the underlying rate of inflation. By contrast, a diversified portfolio of bonds, shares and real assets can be managed to meet the goal of a predictable and sustainable income stream that rises progressively over time. This stability of income can be achieved through the selection of investments with specific characteristics such as: