Begin your incomeIQ journey

Nobody knows quite what the future holds. Changing life plans and priorities will mean you encounter varying income needs and goals throughout your life and when investing, certain innate behavioural traits will influence your decision-making.

Schroders incomeIQ is a knowledge centre with guides, tips and tools to help you understand these issues and make more informed investment decisions to meet your income needs effectively. We have developed the incomeIQ test which will reveal your behavioural biases and provide useful tips to empower you to make better investment decisions.

Become an empowered investor today with Schroders incomeIQ.

Understanding incomeIQ

What would you like to achieve in life, both personally and financially? Do you fully understand your income needs, for now and the future? The resources below can help you to answer these questions and develop your income plan.

What kind of income investor are you?

Planning your income needs isn’t all about the numbers – it should take into account your current circumstances as well as establishing a realistic view of how you want to live in the future. There are a number of points in your life when income-producing investments might come in handy, whether to pay for school or university fees, a lifestyle change such as setting up your own business, or as supplemental income to earnings as you approach and go through retirement.

Making use of income investing requires a thorough and honest understanding of what you want to achieve, both personally and financially, and the level of risk you’re prepared to take with your money.

  • Funding futures

    Have you considered how an income could help you pay for the costs of raising a family? Many parents expect to have to help their children with university costs or buying a home. Favouring investments with the potential for growth and flexibility to provide income can be an effective strategy for saving for such events.

    Are you saving for a specific goal, such as a deposit on a new home? Income earned on savings can be reinvested, and the accumulation of dividends over the long term should boost total returns.

    Why should you start planning for your future now? Retirement might seem like a long way off if you are in your early 20s, but the sooner you plan for it financially, the less you are likely to have to put aside. Planning for your financial future early in your working life will allow you to make longer-term and potentially more rewarding investments.

    If you are this kind of income investor, your typical income goals and attitudes to risk are:

    INCOME GOALS

    • School fees
    • University fees
    • Retirement
    • Help child onto property ladder
    • Career change
    • Business start-up

    ATTITUDE TO RISK

    • Focus on long-term investments with the ability to accept a higher level of risk
    • May be able to make additional investments as finances allow
  • Finding freedom

    Are you ready to start a new venture? You’ve spent years working and you’d like to start out on your own. Once you’ve accumulated a decent pot of capital, an income investment can help provide a regular income.

    Do you have a realistic view of your future income needs? Even though you no may no longer have a mortgage to pay during retirement, the other costs of living won’t differ dramatically from when you’re working. According to the Office for National Statistics (ONS) Family Spending 2014 survey, a retired couple in the UK spends £463 on average. By comparison, the average worker earns £474 per week.

    If you are this kind of income investor, your typical income goals and attitudes to risk are:

    INCOME GOALS

    • Retirement lifestyle
    • New hobbies
    • Travel
    • Living abroad

    ATTITUDE TO RISK

    • Focus on medium to high risk but with an eye on de-risking
    • Looking to generate income without excessive capital risk
  • Retirement ready

    Have you considered all the potential costs of your new lifestyle? People often find their expenses fall once their working life ends, but don’t automatically assume that all your expenses will go down – some may increase, such as heating and leisure costs.

    Do you plan to make further changes? If you have identified more than one main retirement goal, it’s worth considering the level of risk you are prepared to take and the income you need to support each goal. Would you be prepared to accept a higher level of risk for the proportion of your capital that is earmarked for funding a new hobby, for example?

    If you are this kind of income investor, your typical income goals and attitudes to risk are:

    INCOME GOALS

    • Retirement lifestyle
    • Travel
    • Living abroad

    ATTITUDE TO RISK

    • Typically, focus is on medium-risk investments
    • Need to avoid significant drawdown on capital
  • Careful comfort

    How long does your retirement income need to last? As people are living longer, their income needs are higher than in the past. ONS data suggests that in the UK, 1 in 3 babies born today are expected to celebrate their 100th birthday. While it’s difficult to put a number on how much you’ll need, a well-structured income plan can help fulfil requirements over the long term.

    Are you likely to face additional healthcare costs? Over the coming decades, many more people will require some form of part- or full-time care during retirement as life expectancy continues to rise.

    Are you thinking about providing for future generations? Leaving a legacy is not an exact science. However, adopting a balanced approach to financial planning throughout retirement could increase the chance of having something to leave behind.

    If you are this kind of income investor, your typical income goals and attitudes to risk are:

    INCOME GOALS

    • Estate planning
    • Additional healthcare costs
    • Full or part-time care

Discover your behavioural biases

Learn more about behavioural biases

 

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