051 | An introduction to income investing

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Tutor:

  • Dorian Hughes, Head of UK Regional Sales, BlackRock

Learning outcomes:

  1. Explain how income investing can work for investors at all stages of their lives
  2. Describe how an equity income strategy can support clients
  3. Understand how UK investors feel about their financial future using the insights from the BlackRock Investor Pulse survey
  4. Illustrate the risk/reward profiles of each key asset class in the current economic and market environment

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Asset Management
051 | An introduction to income investing Print Learning outcomes: 1. Explain how income investing can work for investors at all stages of their lives 2. Describe how an equity income strategy can support clients 3. Understand how UK investors feel about their financial future using the insights from the BlackRock Investor Pulse survey 4. Illustrate the risk/reward profiles of each key asset class in the current economic and market environment Tutor: Dorian Hughes, Head of UK Regional Sales, BlackRock The three investment stages of life DORIAN HUGHES: So income investing is definitely a strategy for all stages of life. When you think about life, you can break it down perhaps, the way we think about it, into three stages. The accumulation phase of your life, when you’re just building a portfolio, you’re building something for the future. The middle stage of your life, when maybe you’ve got further commitments, you want to perhaps pay down a mortgage or you want to make a big purchase, maybe a property or a second car or something like that, second home perhaps. And then finally the last stage of your life, when traditionally you’d buy an annuity, and of course the law’s changed and rules have changed with the Budget in 2014 enabling from next year people to actually do something different than buy an annuity, and that definitely plays into an income strategy in terms of your portfolio. So, if we go back and we look at the initial stages of building a portfolio of wealth, accumulating wealth, then income strategies are really really important - because the power of accumulation, massive, massively important. So if you think about investing and you think about dividends perhaps from equities on top of that, then you really get a nice multiplier in terms of your portfolio. I think most students or scholars of finance will understand the difference between just a capital-only return, which can sometimes look unimpressive and unexciting, and the compounding you get from adding dividends into your portfolio. So when you’re building a portfolio initially, you really want to think about ensuring you’ve got income investing in mind, because that builds you a nicely compounded portfolio - that’s the first stage of your life. Second stage, again, you might want to mix - this is what we find talking to clients - you might want to mix continuing to save and accumulate wealth with the necessary expenditure. School fees maybe, a second home as I mentioned, maybe a car or a big purchase, paying down your mortgage, what have you, and again that income stream can help you to actually fund some of those purchases depending on how big you make them. And then finally again, as I mentioned, the Budget changes is a good example of just where you need income in retirement, everybody knows that. We’re all living longer. We’ll come onto that as part of this video. We’re all living longer and we need income in retirement, and the income strategies that you put in place throughout your life really start to literally pay you the dividends you need as you start to wind into hopefully a long and happy retirement. Pension freedoms and demographics So one of the things I mentioned was the Budget, which is interesting isn’t it, because you’ve got investors who are previously tied into annuities. You’ve seen the advent and increasing use of things like third way, so called third way products within the life company space, which were effectively guaranteed products often that would provide you with an income. And now you’ve got much more choice. There’s been a lot in the press, comments from the Pensions Minister about maybe buying a Ferrari, that’s all a bit flippant, but the reality is you have more choice in your pension going forwards from 2015, and actually most people would recognise that rather than spending all of their nest egg on a single purchase, they need to annuitise themselves. Either buy an annuity, which we still think will be in the marketplace, pick a product that’s going to give you income, or indeed build your own portfolio with the help of an adviser, often the best way to do it, that actually throws off the income that you need in retirement. So you now have this choice. Quite exciting, hopefully people will be responsible about the way that they deal with that choice, and build themselves a portfolio and actually gain the income that they need in retirement. Different things for different individuals, but definitely something that will see a shift in terms of continuation focus on income portfolios. So we all know people are living longer in the UK. So the average age in terms of mortality when you retire at 65 is about 84/85 years of age. So you’ve got a long and hopefully happy and healthy retirement to look forward to, and that does change the way in which you think about income. Again, an annuity was very much about buying something that wound down over time, but you had income for life. Now you’ve got a portfolio where you probably want to continue to enjoy the income, you definitely need that in your retirement because your earnings cease of course when you retire, no doubt about that. But you also want to maintain a nest egg, probably to pass on to relatives, friends and family when you pass away. And to do that again you’ve got to be thinking about different ways of investing, definitely with an income in mind, but maintaining the capital. Increasingly important I think in investors’ perception in terms of what they want to do with their money. The age old question, so what do I do with my money? So the answer isn’t just as simple as but definitely includes putting money aside in perhaps a slightly lower risk portfolio that has a nice yield, and traditionally high yielding stocks in the UK equity market, that’s just one source of income but that’s somewhere we can explore later, high yielding stocks typically have lower risk, they tend to be bigger companies, so they perform slightly differently in terms of the overall market. They tend to underperform at a huge bull market, but outperform a bear market. So you end up with some consistency in terms of your capital relative to the overall market, and the nice yield as well, and that has two benefits. Again, the ability for you to leave money to those that you want to when you pass away, your friends and your family, perhaps a charity, and for you to enjoy and necessarily so the benefits of an income as you continue to live out the rest of your life. Changing income needs in retirement So when you look at retirement itself, we have this image of people just perhaps holidaying and spending their money wisely or unwisely on whatever they need to. But the reality is you obviously have the basics you need to spend money on, so your living expenses. Typically what people do is initially they have perhaps a holiday or two or perhaps regular holidays, and ultimately they then settle into a happy and relatively stable retirement you might call it. And then as they start to get older, maybe they become slightly less fit, maybe they have some health concerns and they need that money to actually perhaps spend on healthcare or whatever to make themselves as comfortable as they possibly can. Maybe even some sheltered accommodation or nursing home or whatever as you get really old, and that’s important to keep that income steady and maybe even save some of that income because you potentially will need it as you get increasing old and perhaps need greater attention spent on your medical needs. So we did a survey, a global survey actually, 17,600 investors globally, 2,000 people in the UK, and we asked them a myriad of questions about how they felt about the current market situation in terms of investing, their financial future, where they’re saving, what they’re doing about that, and there were some alarming, perhaps not surprising results coming out from that survey. Investor confidence and attitudes to cash So we focused on the UK, 2,000 investors within the UK, and we asked them how they felt about the future, and only 48% of those we interviewed said they were positive about their financial future; 47% slightly less said they were negative and the kind of rump it’s just a rounding error. And those who felt positive, actually by far the largest contingent of those are those who are affluent already, so those who have £150,000 worth of annual income, or £100,000 worth of investable assets; 75% of those felt quite confident about the future. So there’s a lot of work to do as an industry in terms of the overall financial services industry to make people feel a little bit more comfortable about their future. Get them investing again, because one of the things that they continue to do, and we’ll come on to some of those statistics in a minute, is to hold a lot of cash. And in this market environment, in any market environment, if you have a longer life expectancy, which we all do, cash is definitely not your friend. And to underpin that, to underline that, when we asked people if they’re comfortable investing, 63% of those surveys said they’re not investing at all, and 57% of those are not happy to invest in the stock market. And before we get into the cash argument specifically, we asked them about their preference for investing, 63% of those people surveyed aren’t investing at all, and 57% of those surveyed are not prepared to take any risk whatsoever to generate a higher return. Finally again when looking at those statistics, only 22% of people surveyed are comfortable investing in the stock market. We know historically the stock market has been a better source of return, definitely a better source of income currently than cash. And turning to cash, 68% of the people’s portfolios is invested in cash, with the remainder, the remaining 32% split relatively evenly in terms of stock market, property, gilts etc. So there’s a huge preponderance of people in the UK, and globally the survey is very similar, that hold a lot of cash in their portfolio. Cash is definitely not your friend. Cash at the moment in the UK with interest rates at ½% isn’t going to generate you an income at all in real terms. In fact in all likelihood depending on where you invest it, even in a good quality building society, you’ll probably be only just about keeping pace with inflation or maybe even behind inflation, and that’s a real risk to people’s assets and the accumulation of their wealth that they’re just not considering. And one of the reasons that people are concerned about their future and probably holding cash, the top four concerns in fact of the people we surveyed are domestic economy, job security, am I going to have some sudden expenditures that I can’t account for, and fuel prices or oil prices which seems whimsical at the moment with oil so low, but nonetheless these are concerns that play on people’s mind. So one thing we looked at is the trends. We’ve done this survey a couple of times now, and we’re due to do another one the tail end of 2014 which is when we’re recording this, and actually the concerns have remained relatively static in terms of people continue to be concerned about losing their money, about having guarantees for example. One of the key features of the report is actually what would make people invest, move from cash into something else? And that’s a trend that’s continued for the last couple of years, and I think probably has been consistent in terms of the pulse of the nation, it’s the Pulse survey, a little bit of a pun there, probably from 2008. So 2008 is a shock that continues to resonate we think, and we’re finding, the survey’s telling us through the marketplace in general. Consumer attitudes to the value of financial advice So one of the things we found when we surveyed people is we asked them simply do you value the advice that you’re getting if you have a financial adviser, and do you feel more confident in the advice that you’re getting, or in your portfolio construction as a result of the advice, and the statistics are quite extraordinary. And so we asked people where they sought financial advice, and over half of them said from myself, my own thoughts and ideas. About a quarter or 28% or so said family and friends. A similar amount said financial websites. You have to go right to the bottom of the tree before you find about 19% of people are using financial advisers. Really important for people, again living longer, back to that longevity, planning for all their lifecycles, through that accumulation phase, partial decumulation and then finally more focus on decumulation, that they get the right advice, and that again comes through in the survey. So when we look at the numbers we found that people with financial advisers felt much more comfortable about their future. And that financial adviser is providing them with sentiment, control, confidence. So when we have our little barometer and we asked people what they felt about each of those three categories, where their sentiment was in terms of the market, how confident they felt about the market, how in control they felt, the barometer swing was quite marked - way under 50% in terms of confidence, sentiment, control for those without an adviser, and significantly higher for those with an adviser, up to 70% in terms of confidence with an adviser. So really important to get the right adviser working for individuals to provide them with those three building blocks - control, sentiment, confidence - in terms of building a future for themselves financially. Consumer attitudes to income generating assets One of the things we then turn to is the sources of income. And actually only 40% of people think income is important, so a fair chunk of people, but only 19% we found knowledgeable about sources of income. When we looked at where they expected to get income from, no surprise there, salary was top of the tree for those working; next in the list of the source of income, so they expected somewhere around 25-30% of the source of their income to come from cash. Now that’s relatively unlikely in today’s environment, because cash is yielding so little. You need to go fairly low down the cap scale before you start to hit investment income as being one of the key sources of income. And again that’s just a misconception, that’s the concern people have in the market perhaps, some of the volatility we’ve seen although less so recently, but some of the volatility since 2008 putting people off investing, stopping them making a sensible decision, starting to stockpile cash for a rainy day, and that’s simply not going to be their friend when it comes to the crunch because yields are so low on cash investments. Again, we found the survey then they’re not confident they have a lot of knowledge in income investing. There’s misconceptions in terms of where they can get yield from. There’s misconceptions that fixed income for example is yielding you a lot of income, and it simply isn’t. We know that treasury yields have been compressed and compressed and compressed, and depending on which market you look at, German bund yields under 1% recently, as we sit here today in 2014. So no yield really from fixed income, and that’s where people naturally think they’re going to get yield from. Cash, as we mentioned earlier, definitely not a yielding asset class. And equity income, which often depending on the market you can get 3, 4, 5% yields from equity income, so quite an attractive source of income, often again through people’s asset allocation being overlooked as a source of income. And it’s incumbent on all of us, those watching the video, all of us in the industry, to actually talk to their clients, very important the advice factor we mentioned earlier, and educate clients on where they can get income, because they’re going to need it through their increasingly long lifecycle. So risk reward comes into it, doesn’t it, in terms of people’s perception. And I think people think of fixed income for example as being relatively low risk, it’s government backed, but the challenge is with interest rates likely to rise in the UK not necessarily any time soon but over time, you end up with this potential capital loss in fixed income, which should be a concern to investors. So you’re yielding hardly anything at all in real terms, in conventional fixed income, treasuries for example, but you have a risk there in terms of your capital. When we come to equity income, we think of that naturally as a higher risky strategy overall. Over the short term, it certainly can be in comparison to a lot of different asset classes. But over the long term you’re going to earn a significant amount of money, more in a total return basis than you are in fixed income or cash, and that’s the last 25 years of data. We can see that from the slide on the screen there. So we know that equity income investing is relatively shunned by end investors without advice, and there’s definitely a differentiator there in terms of people being more knowledgeable with expert opinion and help, rather than necessarily just relying on their own thoughts, and their perception of ultra-safe treasury bonds in the UK for example, probably are safe from default, never say never, but the reality is they’re not safe from interest rate rises which will actually depreciate the capital value of those gilts over the short term. One of the things that came out of the survey is people’s attitude to risk effectively. And we asked them what they would invest in to protect against a loss, to grow their investment, to protect against inflation, or to provide them with a yield. And the results were quite interesting. Whilst investors recognise that holding cash protects them against loss, which I think bank collapses aside is generally true, 30% thought that it would provide them with a hedge against inflation, which clearly isn’t the case. Slightly more comforting I guess with affluent investors is that 46% of those surveyed recognised that they can get income from equities. And again that’s a slight shift, still a concern, still a low number, and that’s affluent investors rather than general investors, but we’re starting to see slowly people recognising that there are alternative sources of income that they can look to, and recognising that the risks in real terms of default for equities against the rewards if you’ve got a longer term horizon, and give you’re likely to live longer and retire later you probably have are worth considering. How much capital is needed to generate an income: beliefs and reality So the reality is in the UK people want to retire on something like £27,500 a year, that’s what their aspiration is just generally across those that we surveyed, and they think they need a pot of just over £250,000 to do that. So they think that if they get that pot, they save for that pot, £250,000 should do it. The reality is for a retirement nest egg to generate £27,400 worth of annual income, it’s got to be more than twice that, over £500,000 needed to actually have that pot in retirement to generate the income that you need. And again, thinking about it, the whole theme of this presentation is you’re not going to build that pot unless you can either save very aggressively or you can save in something that’s going to actually generate a nice yield in retirement, but also the growth that you need to build the pot in the first place, and that’s what people should be thinking about. Certainly cash today in the UK is going to get nowhere near that amount of money unless you save very aggressively. One of the things we found is that people have perhaps a lack of understanding as to how much they need to save at what age. So to amass that pot of about £500,000, £520,000, to get to the £27,400 that they need, they’d need to save significantly more if they were saving later. Kind of makes sense, but you’re talking about something like £360 a month when they’re aged 25, and about £3,500 a month when they’re aged 55. Quite dramatic, fairly obvious but nonetheless something that needs to be really focused upon. Because if you don’t start young enough you’re really going to find it very tough indeed to get that pot to the size you need it to be. When we look at what people are investing in, if we’re thinking of cash and we’re looking at fixed income. With cash, the returns on that have been relatively uninspiring for a long time. We’ve had base rates at 0.5% in the UK for many years now, and that doesn’t look like it’s going to change any time soon. If you look at fixed income, the picture looks much more interesting, and here’s where investors just need to be concerned about what might be around the corner, Duration risk in bonds We’ve talked a little bit about the yields available in the market, German bund yields being under 1% for example, and what’s happened over the past 25 years is as interest rates have come down globally, if you think about it 25 years ago interest rates in some places were 15-16% even in developed countries, and in the UK not uncommon to find that level around about the mid ’80s. They’ve come down and down and down, yields have become compressed, bond prices have gone up as a result of that throughout the developed world, the UK, US, Europe, three cases in point. And so what you have there is you’ve got very low yields, and you’ve had some exciting performance in fixed income. Even today for example the corporate bond market in the UK is up 5, 6, 7% or so year to date in 2014 - that’s a really good return. The challenge is then as the world continues to recover, and let’s hope that recovery does continue and doesn’t falter, and it looks like it’s going to go that way but sluggishly. So interest rates will rise naturally to curb natural inflation that probably comes back into the marketplace, less so in Europe right now certainly, maybe in the US and maybe in the UK. As that happens interest rates go up, bond prices come down. And so people who have found value not only from a yield, although it’s less so in terms of fixed income right now in terms of yielding characteristics, but capital so they might get caught in a trap. And just mathematically if you have sensitivity to interest rates of a 10-year bond, so a 10-year duration, if interest rates go up by 1%, you effectively lose 10% of your money - and I don’t think investors are always tuned into that. So they’ve bought traditional fixed income assets hoping for a yield, which has been relatively compressed, not recognising that there’s a capital loss around the corner if interest rates go up. Finally on that point, where we’ve looked across the spectrum of risk, and this again is something that investors need to be very conscious of, some of the high yielding countries, sovereign debt, Greece, Italy, Portugal, Spain, some of the peripheral European countries being good examples, and you can look at emerging markets as well, they’re yielding historically two or three years ago very attractive yields, 13, 14, 15% sometimes in a low yield environment, it was perhaps worth taking that risk. What you’ve seen, particularly in peripheral Europe, is yields come down and down and down in the last couple of years, so you’re not always being paid for the risk you’re taking. So you might find high yield in Europe attractive because it still pays 4, 5, 6%, perhaps, but you’re into peripheral European countries. In some cases those countries are questionable in terms of the reliability of them giving you back your money. So the risk that you’re prepared to take is not always understood, and certainly our survey is helping us to focus on that and make sure investors’ minds are really quite keenly attuned to the risk that they’re taking in some of these countries. Low beta and higher yield stocks So one thing we think about when we look at equities for yield is what’s called beta. So it’s the market risk if you like. And I think we mentioned earlier in the presentation that some of the high yielding companies within the UK, for example, have some of the lowest risk characteristics just naturally. They’re bigger companies, they move slower effectively when the market goes up, but they move slower when the market goes down. So the beta of a high dividend paying fund or portfolio will typically be less than 1%. So the risk is less than the market, that’s what we mean by that. And for example some of the products that we have at BlackRock, some of the equity income products, have a beta of 0.8, 0.85%, something like that, so significantly less risk than the market, and attractive yield, and the opportunity to grow your assets. You’ll lose value if the market turns tail, but you’ll lose less value than if you’re in a more higher octane perhaps less dividend focused strategy. The impact of inflation on real incomes And inflation is something that we’ve touched on, but it’s really important when you’re thinking about saving for retirement, saving for a rainy day, just building a nest egg. And sometimes the inflation numbers that we see in the press or we see from the Government are slightly misleading. And what we’ve found recently is everyday items, everyday, so sustenance is food, milk, you know, those sorts of things are relatively low in terms of inflation. But actually where people are spending their money, and where they’re forced to spend their money, so either leisure goods, luxury goods in some cases, fuel is a good case in point, albeit the oil price is on the wane but nonetheless over the last five years fuel prices have increased significantly as we know, things like telephony, and certainly medication and hospital charges for example if you need to seek some medical attention and you want that to go privately, these have gone up significantly higher than the rate of inflation. So there’s almost a two tier market in the UK if you like, in terms of people’s perception of inflation. The headline news, the price you can buy your staples at, at a food retailer that you’ll be familiar with near you, or indeed the real cost of the things that you genuinely do buy, the luxury goods or even the clothing and oil and gas etc. to keep yourself warm, some of these items have been going up significantly. So you’re ravaged by an inflationary market that you don’t always see in terms of the numbers from the headlines. One of the features we’ve seen, it’s a low inflationary environment, excepting what I just said, you need to be careful in terms of not getting caught out by understanding inflation just to be the number you see in the headlines. But at the same time deposit givers, so the banks and the building societies are giving you a relatively low rate of return. So for example if you invested £1,000 five years ago - if you invested it, if you put it aside, didn’t earn any interest - that would only be worth £846 today, so inflation has eroded £150, 15%-odd of your pot five years ago without you having to do anything at all. You still have £1,000, it’s now just worth less in real terms in real money, and again that’s something that people need to think about. The same common theme, you’re living longer, you need to build a nest egg, you can’t afford just to have your cash idle sitting there, you have to invest wisely, you have to invest for the future, and that’s where equity income, or income in general but equity income specifically can be an attractive place to consider. The importance of portfolio diversification Naturally that lends itself then as a question as to how you build a portfolio. And obviously the first point I would come to, the survey says this, get some expert advice from an adviser who can give you the right things to think about, discuss with you your plan and put in place something that’s going to be suitable for you. But ultimately he or she is likely to decide on something that’s a little bit diversified. Don’t put all your eggs in one basket. It sounds very simple, it’s almost a tenor of our very existence, but what you don’t want to do is find that you’re lured into the attraction of perhaps the high yielding sovereign fund in one of the peripheral European countries that might have a problem in terms of default, that you’re not stuck in terms of something that’s not yielding you anything at all without any chance of you actually gaining any true value, or indeed something that actually provides you with an income, but again you still have some market risk, so again even low beta funds have a market risk. So the likelihood is that you’ll be encouraged to pick something that’s diversified; some fixed income, some cash alternatives definitely have their place in a modern portfolio, equities of course in the mix as well. So you want different sources of alpha, so added value in terms of what fund managers can deliver. You want different sources of beta, so market risk, to spread your risk across. And you want different sources of income. I mentioned fixed income potentially being more risky that people think of because of the likelihood of interest rates falling, but nonetheless you want some fixed income in your portfolio to diversify your portfolio. You definitely want some equity income to provide you with the yield, and the market exposure which will grow over time, but you have to recognise the risk inherent in that. And again you may well be keen to search for that extra yield from peripheral European or other emerging market countries that can provide you with that, but be mindful of the risk. Diversify your portfolio, don’t put all your eggs in one basket, have a nice mix of funds that should do quite well, others that will perhaps fall over the short term and then reverse that trend and balance out over the long term - definitely one of the key tenets of investing, and something that an adviser will help people to understand more fully. Going global in search of income One of the things that we think about a lot is, is the world shrinking or is it growing? Is there globalisation or is there a local investment strategy to follow? And increasingly we’re finding people adopting more of a global strategy. So understanding for example the dynamics of a China with their reforms, or an India with their new prime minister and leading to reforms indeed. Versus the US, nicely developed, coming out of the problems that spun out of 2008, and developing at a different pace. And so typically what we’re expecting is people to look across the spectrum of the investments. One specific example we talk about a lot is global emerging markets. And depending on your attitude and depending on your abilities, increasingly the emerging markets area is not homogenous. You have countries as disparate as Brazil and China and Russia and India in that mix. And if you think about it, Russia, case I point at the moment, lots of issues out there, the Ukraine etc. People would be questioning whether they should invest there or not. Don’t have a view personally, we don’t have a house view necessarily, but it probably desires more scrutiny. Whereas India and China, I mentioned the reforms. Brazil, the new elections taking place, that’s an interesting story, you’ll have a different view. So increasingly people are starting to focus the spotlight on individual markets within say a global emerging markets context and picking the winners. But you definitely want to ensure you explore all of those opportunities globally. Don’t get stuck in one asset class, because you can sometimes be a hero or you can be a zero. If you take Japan for example in 2013, with the currency removed, you got 55% return - fantastic. You’d have done less well in other years, less well this year in that marketplace. You don’t want to put all of your eggs in there. Look globally, build a diversified portfolio. Equity income is probably more prevalent in the UK than a lot of other markets. The UK market is yielding quite nicely. We see quite a lot of equity income interest in the States and increasingly in Europe, and actually it’s often multi-asset income. So when I’m thinking about the UK it’s a strong market, it’s an international market, it gets its dividend yield from companies as diverse as BP and Shell right through to a Sainsbury’s and the food retailer market for example. So you’ve got different companies, some of them more local, some of them more international. Whereas actually what you’re looking at if you look at multi-asset income, then you’re looking at a global opportunity set. So the UK I think has more a prevalence to equity income, perhaps the US as well, but increasingly people are seeking different sources of income from a global context. So global multi-asset income is a strategy that we certainly run at BlackRock - it’s been very popular, and one that investors are starting to take a lot of interest in, yielding over 5% in that case from various different sources of income across the globe. Conclusions I think if we wrap this whole piece up together, we understand several things. We understand people are living longer and they have by and large happier and healthier retirements, which is wonderful news. We understand that there’s a misconception both in terms of the pot that they think they need to amass for a happy retirement fund and indeed the time they need to start investing to get that pot to a level which is going to provide them with that income. There’s also a misconception, it’s changing subtly, but there’s a misconception in terms of what provides them with an income. It’s not cash, certainly isn’t in this environment, not realistically. It isn’t fixed income either in this environment unless you go further down the risk scale, and those yields have compressed as well, so you need to be conscious of that. Equity income definitely has its place to play in the equation, and people are starting to recognise that. So a strategy that has in mind the three stages of life. So building a portfolio, accumulating wealth, spending some of that wealth on acquisitions, school fees or whatever, and then retirement and actually winding down some of that pot, although perhaps maintaining your pot for those that you would pass it to, your inheritors, then that’s something that people need to focus on. And I think the key message really is that cash is not king. That’s coming through in the survey, people are still investing in cash, and then equities are well worthy of consideration for your portfolio. Balance your risk, make sure that you have not all of your eggs in one basket, because that can lead to disappointment when one thing that worked one year suddenly doesn’t work, and you’ve put all your money to work in that strategy. Balance your risk, balance your opportunity set. And the one stat I would just listeners to or watchers of this video with is a good one. If we go back to 2013, the end of last year, if you invested cash over 10 years you’d have had a 2.2% return. That’s not inflation adjusted, that’s just the return. Take off inflation you’re probably underwater over that period of time. If you look at the UK equity market, with dividends reinvested, the power of compounding very important when you think of this, 8.7% per year, and that’s over 10 years ending 2013. And that includes 2008 which is the worst financial crisis in living memory. If you take those stats and you use those, then you can convince people that even through adversity equity income investing, investing for the future, having more money at work than just leaving it in cash is definitely something that you need to consider depending on your individual circumstances if you want a pot to build and enjoy for the future.