In a market with over 900 unit trusts and numerous product providers, it is difficult to make meaningful and accurate predictions when consolidating all the available information. Whilst it may seem prudent to spread investments into a pool of different balanced portfolios across multiple managers, this action compounds the problem. The reality is that trying to predict the future will become infinitely more difficult each time a new fund is added. Furthermore, an exclusive focus on capital price will ultimately subject an investor to the vagaries of the markets and a future that could be quite different from the original plan or expectation.
A greater focus on the income produced by an investment gives one the necessary information to plan more effectively for the future. A characteristic of the income element of an investment is that it is far less subject to market volatility. There are certain companies that will continue to produce both reliable and growing income regardless of global slowdowns, exchange rate volatility and declining interest rates. It is this fundamental that allows Marriott to predict an investor's future with a high degree of certainty.
The recent launch of the Marriott retirement annuity has given Marriott the ability to answer the pre-retirement investor's question today - what will my pension be when I retire? When transferring an investment into, or making a new investment in the retirement annuity, the online investment tool will be able to demonstrate not only the income currently generated by that investment, but will also reflect a reasonable expectation of the monthly income and capital value upon that investor's chosen retirement date.
This is based on the principle that Marriott only invests in reliable income streams, and that it is growth in income, and the re-investment of that income that ultimately drives capital value growth. This information will allow the investor to make investment decisions that are well informed, and to make additional contributions or defer retirement should they require more income. This, we believe, is the essence of a financial plan.
When an investor retires and wishes to draw the expected pension or annuity, they may do so by transferring seamlessly into Marriott's living annuity, the Perpetual Annuity, which is a product designed to pay the annuity from the income produced by the underlying securities rather than the capital itself. By retaining the companies and instruments the investor had in their retirement annuity, fluctuations in prices, or market declines around retirement will not impact the pension or annuity the investor will earn at that time.
Because the income is reliable, and the investor remains invested in the same underlying instruments, price changes will have no impact on the income produced by the portfolio. A market decline at or near retirement age will not affect the value of a pension earned by a Marriott investor. By not funding their annuity from capital, but rather sustainable and growing income, the annuity or pension will last.
