Many investors are seeking alternative investment options as reducing interest rates affect the returns on their bank term deposits. Income Funds are designed to provide investors with the option of having the income earned on their invested funds paid regularly or added (capitalized) to their investment, similar to term deposits. They can be a useful part of anyone’s retirement investment plans.

Income Funds can provide a better rate of return over time than a bank term deposit strategy, making them a good alternative for funds invested for a 3 to 5 year period. Let’s delve into the advantages of investing in income funds using the example of the Milford Diversified Income Fund compared to traditional bank term deposits.

Milford Diversified Income Fund (Rated 5 Stars by Morningstar Research)

The Milford Diversified Income Fund offers a balanced approach, investing in a mix of 40% growth assets and 60% income assets. This fund is designed to provide both income and capital growth over a minimum recommended investment timeframe of four years. Key benefits include:

• Diversification: Investments span fixed interest and equity income-generating securities.
• Potential for Higher Returns: The fund has a track record of consistently outperforming its benchmark.
• Balanced Risk: A well-balanced portfolio with reduced risk while aiming for growth.

Bank Term Deposits

While bank term deposits offer fixed interest rates and predictable returns, they lack potential for capital growth and flexibility. Key considerations include:

• Predictable Returns: Fixed interest rate for a set period.
• Lower Returns: Generally lower returns compared to the potential of income funds.
• Limited Flexibility: Early withdrawals may incur penalties.

Conclusion

Investing in the Milford Diversified Income Fund can provide potential for higher returns, diversification, and flexibility, making it an attractive option for income investors compared to traditional bank term deposits. An income fund is ideal for investing funds that you do not need to draw on in the next 3 to 5 years, while bank term deposits are better for funds you will need to draw on in the next 12 to 24 months.

If you are looking for alternatives to funds you have invested in bank term deposits, contact us. We have a number of options we would be happy to discuss with you.