Learn how to reinforce your income in uncertain times

Seven Principles of Investment - No.2: Fixed interest is better than variable


In a time of uncertainty, this much is clear. Fixed income beats variable income every time. Most of us are used to thinking about this choice through a mortgage on our property. Finance companies have long offered both fixed and variable options.

If you are seeking income to live on now or to build up your savings for the future, then knowing – in advance
– what you will receive and when you will receive it is crucial. It is also crucial to be confident that your income will continue and not suddenly be reduced because of rate changes.

Some investors have a portfolio of stocks and shares that they have centred around decent dividend yields.
In years past, this used to be an effective strategy. Not any more. With many companies losing sales and facing economic hardship, one of the first things to go is the payment of the dividend, either partly or completely.

Tesco has just been slated for paying a dividend. Why? Cash is king... the experts believe institutions are wiser to retain reserves at the moment. It’s a massive turnaround for commentators to react negatively to a company that pays its dividend. Normally they berate a company for reducing or cancelling a dividend payment!

If we take everything together, variable income is only worthwhile considering if at least one of these criteria is met:

  1. Bank base rate is likely to increase substantially - and soon.
  2. Variable-rate income now is so much higher than a fixed rate.
  3. Share prices are solid, profitability is growing and cashflow producing surpluses. Then dividend flows are more secure.

At this moment in time, none of these conditions are satisfied. Banks and building societies offer derisory rates which they can reduce at the drop of a hat. Variable rates are barely higher than fixed rates, and dividends are being chopped across the board.

At Avantis Wealth, we are massive believers in investors being assured of what they will receive in return for investment – fixed income with a fixed payment schedule, whether monthly, quarterly, six-monthly or annually.



Read about all 7 principles of investment by downloading our report. The report equips you with the knowledge of how to improve your chances of success and make the most of your investment portfolio.

More relevent Articles



Latest Insights

R Etirement 3c

How to build income and wealth for retirement 3c: Getting the best from different investment classes through day trading

In this part of the series we examine if day trading could work to help build a pensionable income

R Etirmeent 3d

How to build income and wealth for retirement 3d: Getting the best from different investment classes through unquoted bonds and loan notes

In this part of the series we examine if unquoted bonds and gilts could work to help build a pensionable income

Retirement 3e

How to build income and wealth for retirement 3e: Getting the best from different investment classes through savings and cash

In this part of the series we examine if savings and cash could work to help build a pensionable income

Current Investments

Register to Invest

All investments have all gone through a stringent 3-phase due-diligence process that is available for your evaluation and is available to qualified investors only
Qualified Investors Only

TALK TO OUR INVESTMENT TEAM

Investment decisions can be complicated. At Avantis, we are here to help you understand the investments that are presented to you. By understanding more about your investment goals, we can give access to opportunities that can achieve these goals.
+44 1273 447 299
invest@avantiswealth.com
8 The Drive, Hove, East Sussex, BN3 3JA
I consent to be contacted via telephone and/or email and i consent to my data being stored by avantis wealth to comply with european gdpr regulation.

Register for Investment Access

All the details and downloadable documents are available through the investment portal.
Register

Disclaimer

Your capital is at risk. The value of your investment may go up as well as down. Past performance does not indicate future performance. There is no right for compensation in respect of poor investment performance and your investment is not covered by the UK FSCS. Avantis Wealth Ltd is not licensed or regulated by the Financial Conduct Authority and does not provide financial advice. The content of any promotion has not been approved by an authorised person within the meaning of the Financial Services and Markets Act 2000. Reliance on this promotion for the purpose of engaging in any investment activity may expose the investor to a significant risk of losing all of the capital invested. [Article 48(4) Financial Services and Markets Act 2000 (Financial Promotion) Order 2005] Please note that as a responsible company we require the self-certification of either a High Net Worth Investor or Sophisticated Investor statement prior to issuing any detailed information by way of an Investment Memorandum. Investors are not charged any fees when placing an investment through Avantis Wealth Ltd.