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    1. Solving for income

    Solving for income

    Using Market Insights to achieve better outcomes

    Since 2004, J.P. Morgan has produced market insights to help individual investors understand and make their way through rapidly shifting markets.

    Today, with the general population living longer than ever, we believe that providing a reliable source of income throughout an investor’s life in an ever changing investment environment is vital. “Solving for income” takes a look at the role of income and how it will benefit investors by keeping it as a key investment objective.

     


    1. CASH ISN’T ALWAYS KING

     


    Cash pays less

    Investors often think of cash as a safe haven. Many investors shy away from the stock market, unwilling to take on the added risk. However, even with interest rates on the rise, returns on cash are still low and even negative in real terms for many countries. Even with policy normalizing, cash returns may be negative for some time in real terms as inflation will take time to return to acceptable levels.

     


    2. PLAN ON LIVING A LONG TIME

     


    LEFT: We are living longer

    Thanks to advancements in medicine, people are living longer and healthier lives. This chart shows that the share of population in retirement age will rise sharply across Asia over time.

    RIGHT: The benefits of saving and investing early

    It is important for investors to start saving and investing early in order to maximize the benefits of compounding. This chart illustrates three different scenarios: one in which the investor starts savings early, but keeps those savings in cash only; one in which the investor both saves and invests in financial assets early; and one in which the investor starts later, but still allocates these savings to financial assets. The investor who started early and invested in a well-balanced portfolio is far better prepared for retirement than those who started late or invested only in cash. 

     


    3. THE IMPORTANCE OF INCOME

     


    The Importance of income

    The total return on an investment typically consists of two components: price appreciation and income, which usually is paid in the form of coupons or dividends. This income stream can offset the risk of price declines and serve as a critical buffer for portfolios. While these payments do not imply or guarantee a return, they can boost the total return.

    Fixed income investors use yields to gauge the income stream they can expect from their investments.

     


    4. NOT JUST FIXED INCOME

     


    LEFT: Not only fixed income

    Even with yields on the rise as central banks normalize policy to bring inflation under control, the search for yield is still a popular theme for investors, as it is another source of income.

    Fixed income often comes first to mind as a source, but dividends also offer a yield payout to investors. In addition to paying a higher yield, high dividend equities have tended to provide a better risk-adjusted return than broader equity indices over the long term.

     


    5. HARNESS THE POWER OF DIVIDENDS AND COMPOUNDING

     


    The power of dividends and compounding

    Harnessing the power of compounding can greatly impact investor returns. Placing an initial $100 into the MSCI World Index in 1970 would have given an investor nearly $2,500 today if we merely looked at the price returns.

    The compounding effect could greatly increase these returns if the same investor reinvested the dividends paid out by this equity market over time. Investing the same $100 in the MSCI World Index in 1970, but reinvesting the dividends received, would have grown this $100 to over $11,500 today.

     


    6. A RANGE OF SOLUTIONS

     


    A range of investments available

    In the search for income, there are a broad range of solutions available to investors. The universe of income-paying assets is not limited to fixed income or equity products.

    Alternatives and other riskier assets can compensate for the higher risks they carry with higher returns, and often pay investors higher yields to both attract new capital and make it worth investors’ while to tie up their money in these typically longer-duration investments.

    A diversified portfolio allocated across many different assets can help mitigate risk while generating income, whether we are heading into a period of difficult or good investment performance.

    0903c02a82026724

    The Market Insights program provides comprehensive data and commentary on global markets without reference to products. Designed as a tool to help clients understand the markets and support investment decision-making, the program explores the implications of current economic data and changing market conditions. 

    For the purposes of MiFID II, the JPM Market Insights and Portfolio Insights programs are marketing communications and are not in scope for any MiFID II / MiFIR requirements specifically related to investment research. Furthermore, the J.P. Morgan Asset Management Market Insights and Portfolio Insights programs, as non-independent research, have not been prepared in accordance with legal requirements designed to promote the independence of investment research, nor are they subject to any prohibition on dealing ahead of the dissemination of investment research.

    This document is a general communication being provided for informational purposes only. It is educational in nature and not designed to be taken as advice or a recommendation for any specific investment product, strategy, plan feature or other purpose in any jurisdiction, nor is it a commitment from J.P. Morgan Asset Management or any of its subsidiaries to participate in any of the transactions mentioned herein. Any examples used are generic, hypothetical and for illustration purposes only. This material does not contain sufficient information to support an investment decision and it should not be relied upon by you in evaluating the merits of investing in any securities or products. In addition, users should make an independent assessment of the legal, regulatory, tax, credit, and accounting implications and determine, together with their own financial professional, if any investment mentioned herein is believed to be appropriate to their personal goals. Investors should ensure that they obtain all available relevant information before making any investment. Any forecasts, figures, opinions or investment techniques and strategies set out are for information purposes only, based on certain assumptions and current market conditions and are subject to change without prior notice. All information presented herein is considered to be accurate at the time of production, but no warranty of accuracy is given and no liability in respect of any error or omission is accepted. It should be noted that investment involves risks, the value of investments and the income from them may fluctuate in accordance with market conditions and taxation agreements and investors may not get back the full amount invested. Both past performance and yields are not reliable indicators of current and future results.

    J.P. Morgan Asset Management is the brand for the asset management business of JPMorgan Chase & Co. and its affiliates worldwide.

    To the extent permitted by applicable law, we may record telephone calls and monitor electronic communications to comply with our legal and regulatory obligations and internal policies. Personal data will be collected, stored and processed by J.P. Morgan Asset Management in accordance with our privacy policies at https://am.jpmorgan.com/global/privacy.

    This communication is issued by the following entities:

    In the United States, by J.P. Morgan Investment Management Inc. or J.P. Morgan Alternative Asset Management, Inc., both regulated by the Securities and Exchange Commission; in Latin America, for intended recipients’ use only, by local J.P. Morgan entities, as the case may be. In Canada, for institutional clients’ use only, by JPMorgan Asset Management (Canada) Inc., which is a registered Portfolio Manager and Exempt Market Dealer in all Canadian provinces and territories except the Yukon and is also registered as an Investment Fund Manager in British Columbia, Ontario, Quebec and Newfoundland and Labrador. In the United Kingdom, by JPMorgan Asset Management (UK) Limited, which is authorized and regulated by the Financial Conduct Authority; in other European jurisdictions, by JPMorgan Asset Management (Europe) S.à r.l. In Asia Pacific (“APAC”), by the following issuing entities and in the respective jurisdictions in which they are primarily regulated: JPMorgan Asset Management (Asia Pacific) Limited, or JPMorgan Funds (Asia) Limited, or JPMorgan Asset Management Real Assets (Asia) Limited, each of which is regulated by the Securities and Futures Commission of Hong Kong; JPMorgan Asset Management (Singapore) Limited (Co. Reg. No. 197601586K), this advertisement or publication has not been reviewed by the Monetary Authority of Singapore; JPMorgan Asset Management (Taiwan) Limited; JPMorgan Asset Management (Japan) Limited, which is a member of the Investment Trusts Association, Japan, the Japan Investment Advisers Association, Type II Financial Instruments Firms Association and the Japan Securities Dealers Association and is regulated by the Financial Services Agency (registration number “Kanto Local Finance Bureau (Financial Instruments Firm) No. 330”); in Australia, to wholesale clients only as defined in section 761A and 761G of the Corporations Act 2001 (Commonwealth), by JPMorgan Asset Management (Australia) Limited (ABN 55143832080) (AFSL 376919). For all other markets in APAC, to intended recipients only.

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    Copyright 2023 JPMorgan Chase & Co. All rights reserved.

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    Important: This area of the website is intended only for distributors of JPMorgan Funds (Asia) Limited. Information is not intended for retail or public distribution.

    Investment involves risk. Past performance is not indicative of future performance. In particular, funds which are invested in emerging markets and smaller companies may involve a higher degree of risk and are usually more sensitive to price movements. Investors should carefully read and consider the fund offering document(s), which contain details on investment objectives, risk factors, charges and expenses of the fund, before making any investment decisions. Information in this website does not constitute investment advice, or an offer to sell, or a solicitation of an offer to buy any security, investment product or service, nor a distribution of information for any such purpose. Informational sources are considered reliable but you should conduct your own verification of information contained herein. The above information has not been reviewed by the SFC, issued by JPMorgan Funds (Asia) Limited.

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