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21 November 2024

Home / White Papers 2015

CRIR: Spinning the wheel in retirement

  •   19 November 2015
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Challenger Retirement Income Research, November 2015


Equity risk in retirement

Spinning the chocolate wheel in retirement

Equity investing in retirement is like spinning a chocolate wheel. There are plenty of winners, but also losers. Even a 20-year period does not ensure that taking equity risk will be adequately rewarded and this is important for retirees to understand.

Long term equity risk premiums (ERP) in Australia are far less predictable than currently thought according to new research from Drew, Walk & Co. The research report shows that equity return (out)performance over government bonds is volatile, and its timing and magnitude, unpredictable.

Conventional wisdom suggests that the share market will always beat government bonds over the long term. But this actually isn’t the case.

It’s important for investors to be aware of equity risk, but also recognise that equity investments can play an important role in investor portfolios to add diversification and growth.

The full White Paper, Spinning the wheel in retirement, is available here.

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