Look further afield to make up for the reduced income

An online survey conducted by fund manager Schroders found that Aussie investors expect their investments to return 7.1% over the next 12 months and 8.9% over the next five years.

“Australians’ return expectations have decreased from the unrealistically high level of 10.9% from the last survey. But overall, against a backdrop of market turbulence, expectations for income and returns are still high,” says Chris Durack, Schroders chief executive.

While such returns are still possible, it would generally involve taking on more risk.

Simon Doyle, also from Schroders, believes that an 8% return in this environment would require investors to take on additional volatility of around 11% to 12%. “The net result of that to me is that expectations of 8.9% are optimistic.