What is Durable Income?
Durable Income is an investment strategy designed to optimize the performance of traditional retirement portfolios through incorporating investment classes whose risk-return characteristics are complementary to those of stocks, bonds and fixed income.
Durable Income was created in order to help make investors aware of the financial danger they may be exposing their loved ones and themselves to if they are planning for retirement, predominantly invested in stocks, bonds, and fixed income instruments. This site is intended to support/advocacy for a better alternative to long-term financial planning by promoting conversations between registered investment advisors and investors who need help:
Compared to a traditional portfolio allocated between stocks, bonds and fixed income exclusively, Durable Income producing portfolios offer investors the benefits of lower volatility, lower correlation to the broader market, and more predictable income streams. These benefits are of particular value today with low yield and rising interest rates and inflation threatening the value of traditional portfolios.
Durable Income, unlike traditional fixed income is intended to be more resilient to economic downturns, to changes in credit and market risk and to macro-economic conditions. Moreover, Durable Income, unlike traditional fixed income, has its foundation in multiple resilient drivers of return; interest rates, credit spreads, illiquidity and alternative risk premiums amongst others. The more the sources/drivers of return, the lesser the dependence on a particular market factor and the more resilient the investment strategy.
No. The Durable Income strategy’s greatest strength is that it can be added to virtually any preexisting financial plan. That’s because the Durable Income strategy is designed to complement traditional investment allocations such as allocations to fixed income.
In addition to stocks, bonds and fixed income, and as a part of a well-balanced, fully diversified durable income producing portfolio, financial advisors must consider allocating to alternative investments. Alternative investments, may potentially serve as the cornerstone of a well-balanced, fully diversified durable income producing portfolio. That’s because alternatives are capable of employing an immensely broad range of markets and complementary strategies historically unavailable through traditional investment. Alternatives include real estate investment trusts, (REITs), business development companies (BDCs), open-end mutual funds, variable annuities, structured notes, hedge funds, and closed-end mutual funds. Each of these asset classes come with their own unique investment characteristics, yet share a potentially attractive risk-adjusted return profile and historically have enjoyed lower price volatility compared to the broader market. When combined with traditional portfolio allocations, alternative investments can play an integral role in establishing a durable income producing portfolio.