The goal of wealth creation is to increase the value of your investment portfolio over time, to help you meet your long-term investment objectives and provide you with greater financial security.
Equity-based funds are often a staple ingredient in a wealth creation strategy, because they generally offer the prospect of capital growth as the companies they invest in grow their own profits and balance sheets.
However, not all equity funds are the same, and you should read the information about each Copia wealth creation style fund to understand the nature of its investments and risks.
For example, some Copia equity funds can invest globally, while others are Australia-only. Others can invest in large listed companies, while others focus on mid-sized or even smaller-sized companies.
While equity funds can provide excellent growth potential for your portfolio, they can introduce increased risk and capital volatility, particularly in the short term. Generally, by adopting a longer time horizon a lot of this short-term risk can be reduced, because there’s a greater chance any decline can be followed by a period of positive performance.
Studies show that more than half of Australians fear they will outlast their retirement savings.1
A key challenge is that during retirement, Australians are no longer receiving a regular wage, and outside of the pension, we often need to rely on the performance of our retirement nest egg (the wealth we have created) to fund our lives.
In a low interest rate world, the options for an investment product to provide reasonable income above say 4%, with relative safety of your capital becomes more limited. The returns of both term deposits and annuities tend to suffer as interest rates decline.
While equities can provide attractive income and capital growth potential when interest rates are low, there is a higher risk of capital loss in the short term.
What if an equity fund can target the attractive income and still focus on preserving capital when markets are volatile?
Copia’s flagship equity income offering seeks to deliver exactly that, and is designed to meet retiree needs of income with less volatility than the sharemarket.