Income investors struggling with today's low interest rates, afraid to adjust portfolios

Feb 05, 2013, 06:00 ET from CIBC

Despite concerns about making their money last, many of today's income investors are sticking to low-yielding investments

TORONTO, Feb. 5, 2013 /CNW/ - A new CIBC (CM: TSX; NYSE) poll reveals that today's lower interest rates are taking a toll on investors who named income generation as their primary investment objective, with 42 per cent saying they are not satisfied with the returns they are currently generating in their portfolios. In fact, only 10 per cent are completely satisfied with their returns.

Key poll findings include:

  • Among those who stated that income generation was their primary investing goal, 42 per cent of this group say they are not satisfied with the income they are currently generating from their portfolio; in fact, only 10 per cent said they were completely satisfied.
  • Despite the concern, there is strong resistance to change with 54 per cent of income investors in low-yielding products saying they are not considering moving funds, with 52 per cent of that group citing "too risky" as the reason.

Fear Prevents Investors from Changing their Approach

"The fact of the matter is that fear is driving the decisions of many investors," said Steve Geist, President, CIBC Asset Management. "As a result, they have stopped taking an objective look at their investment options and are simply parking their money in low-yielding products - but ones that often guarantee a return that's less than inflation. In this new economic reality, Canadians need to review their portfolios for investments that will generate the income or return needed to meet retirement goals."

"When you combine this extended period of rock-bottom interest rates with the fact that people are living longer after they retire, you reach a point where you need to consider a new investment path," said Mr. Geist. "The good news is that there are investment strategies and solutions that can help, and by working with an advisor you can find that right balance."

Advice on Generating Income from your Retirement Portfolio

For investors who need to generate more income from their retirement portfolio, while still managing risk, CIBC offered the following tips:

  • Meet with an Advisor to review your finances - An advisor can help you determine how much income you will need to generate from your retirement savings and whether adjustments to your current portfolio would make sense based on your financial goals.
  • Diversify your fixed income investments - Just like investing in equities, the benefit of diversification holds true for fixed income as well. A managed approach that spreads investments across a number of different types of fixed income assets such as corporate and global bonds can yield better results.
  • Move gradually up the risk spectrum - You can generate additional yield for your portfolio by moving into high-yield corporate bonds, Real Estate Investment Trusts or dividend stocks.
  • Use specialized expertise - The investment universe is more complex than ever, but there are excellent opportunities which experts can help identify. Professional money managers can evaluate risk and identify the most favourable investment opportunities

Results are based on a CIBC poll conducted by Leger Marketing via a Web survey conducted from December 21, 2012 to January 4, 2013 among a representative sample of 1541 English- and French-speaking Canadians with an investment portfolio for retirement. Using data from Statistics Canada, the results were weighted according to gender, age, region, language spoken at home, education and presence of children in the household to ensure a sample representative of the entire population under review. In comparison, a probability sample of the same size would yield a margin of error of ±2.50%, 19 times out of 20.

CIBC is a leading North American financial institution with nearly 11 million personal banking and business clients. CIBC offers a full range of products and services through its comprehensive electronic banking network, branches and offices across Canada, and has offices in the United States and around the world. You can find other news releases and information about CIBC in our Press Centre on our corporate website at

CIBC Asset Management, the asset management division of CIBC, is responsible for the CIBC and Renaissance Investments families of mutual funds, Imperial Pools, Frontiers Pools and the CIBC family of managed portfolio solutions - Axiom Portfolios, CIBC Managed Portfolio Services and CIBC Personal Portfolio Services. CIBC Asset Management manages more than $55 billion in assets.