Principal Payments Research Articles

PENGARUH NON PERFOMING LOAN (NPL) TERHADAP RETURN ON ASSET (ROA) PADA BANK MANDIRI,TBK

This research aims to find out the influence of Non-Performing Loans (NPL) on ROA at Bank Mandiri. Correlational quantitative research is the research method used. Financial reports, profit and loss statements, balance sheets and cash flow reports for the years 2013–2022 are the research samples. For this particular case, purposive sampling was used. The relationship between the NPL variable and ROA was tested using simple linear regression, correlation coefficient, coefficient of determination, and two-square t-test. Analysis was carried out using SPSS v.22 software. In line with the high level of non-performing loans faced by banks. This is because the higher NPL level indicates that banks are not managing their credit optimally and are not providing adequate protection to their customers. As a result, the absence of principal and interest payments on credit facilities causes the bank's return on assets to decline along with the increase in the non-performing loan ratio

Survival of Rural SMEs During Covid-19 Lockdown in Southern Region of Kwazulu Natal

Many nations had implemented travel restrictions and movement bans as a result of 19 pandemic outbreaks. One of the industries in South Africa that is most immediately impacted by the movement's control order is rural small business. In actuality, smaller businesses are more significantly impacted than their larger counterparts. Due to the closure of numerous supporting industries including retail and transportation, entrepreneurs endure business cancellation or closure as well as loss of revenue. Studies on the effects of a pandemic epidemic on microbusinesses in underdeveloped nations, particularly with regard to business continuity and recovery plan, are still lacking.The research was conducted in Umzinto and Scortburgh town in Umdoni Municipality. The research recommended that government should be forced to refrain from implementing complete lockdowns. But if the government decides that lockdown is the only workable alternative, it must start financial support programs, such as emergency loans and suspensions of principal and interest payments.

Amortizing Loans under Arbitrary Discount Functions

A general methodology for loan amortization under arbitrary discount functions is discussed. It is shown that it is always possible to uniquely define a scheme for constructing the loan amortization schedule with an arbitrary assigned discount function. It is also shown that, even if the loan amortization is carried out from the sequence of principal payments and the sequence of accrued interest, the underlying discount function can be uniquely determined at the maturities corresponding to the installment payment dates. As a special case of the proposed approach, we derive the amortization method according to the law of simple interest.

A Comparative Study of Non-Performing Assets of Foreign and Local Banks in Ghana: The Case of GCB Bank Ltd and Standard Chartered Bank in Ghana.

The Ghanaian banking system plays an important role in the development of a country’s economy and its financial stability by acting as an intermediary between depositors who have excess funds and borrowers who are in need of funds. In recent times banks have become cautious in extending advances as a result of the rise in non-performing assets. A non-performing asset (NPA) is a debt obligation where the borrower has not paid any previously agreed upon interest and principal repayments to the designated lender for a period beyond 90 days thus not yielding any income to the lender in the form of principal and interest payments. The study employed quantitative research design with secondary data for the period 2008-2017. An attempt was made to study the trend of total advances, net profit, Gross Non-Performing Asset and Net Non-Performing Asset of GCB Bank Limited and Standard Chartered Bank Ghana Limited. The results showed a general increasing trend of Total advances, Gross Non-Performing Asset and Net Non-Performing Asset for both banks over the past 10 years. In addition, there was a positive relationship between the Net profit and Non-Performing Asset of GCB Bank Limited whilst a negative relationship existed between the Net profit and Non-Performing Asset of Standard Chartered Bank Ghana Limited.

Financial Performance Analysis of PT XYZ and Compliance Of Financial Loan Covenant Toward Debt Repayment Capability

In 2022, PT XYZ faced a decline in net sales of -16.42%. At the same time, Indonesia's furniture industry also faced a decline in export value. This research analyses PT XYZ's financial performance from 2018 to 2022, specifically regarding its debt repayment capability. Financial ratios from several aspects, such as profitability, liquidity, activity, and solvency ratios, will be generated to reflect the firm's performance and trend in the past five years. Other than evaluating the firm's financial ratios, this research will also evaluate the firm's compliance with financial loan covenants in existing bank loans and bond issuance. From the financial ratio analysis, the firm's performance plummeted in 2022, mainly due to the decline in sales experienced by PT XYZ. There may be some issues regarding the firm's liquidity performance. However, it can be seen from the solvency ratios such as DSCR and Interest Coverage Ratio that the firm can still meet its obligations in paying its debt interest and principal payments. Compliance with financial loan covenants indicates a covenant breach in the debt-to-EBITDA ratio, which is applied as a financial loan covenant by Bank DEF and Bank JKL. However, the firm can still pay its debt principal and even pay off the credit facilities. The research found that the decline in sales faced by the firm significantly impacted the firm's weakened financial performance in 2022. Regarding compliance with financial loan covenants from bank loans and bond issuance, the covenant breach does not affect the firm's capability in debt repayments.

Analisa Menambah Surat Gugat dapat dilakukan Sepanjang tidak Merubah dan Menambah Kejadian Materiel Berdasarkan Pasal 127 RV (Perkara No. 79/Pdt.G/2020/PN JKT.SEL)


 Sri Bintang Pamungkas, as Plaintiff and Fahrizal Fardiansyah as Main Director of PT. Eora Mitra Sejati as Defendant. The Plaintiff prevented the auction process for the Wilis parcels by the Auction Center through BCA, which was borrowed incorrectly by the Defendant as Collateral to obtain a credit facility from BCA in the amount of Rp. 1,800,000,000,- which ended in default by exchanging Collateral from the Wilis parcels with the central Kalibata parcels. The plaintiff intends to obtain control over all assets of PT. Eora Mitra Sejati which is still left from the proceeds from receiving the BCA credit facility. On July 16, 2014, a Bank BCA credit agreement was held. Based on the credit agreement, BCA agreed to provide local credit facilities not exceeding Rp. 1,200,000,000.- to the Defendant (PT. Eora Mitra Sejati) Which facility will be used for the company's working capital, the length of the loan extension as of July 17 2014 ending July 17 2015 credit interest must be paid at 14.25% per year on loans made stated that it is paid every month, which credit interest can be reviewed, for the first time on May 9, 2019 by providing details of the amount of debt that must be repaid without notification to the Plaintiff and Mrs. Emalia. According to his statement, the Plaintiff has paid more than 5 years to BCA approximately 60 times each in the amount of Rp. 20,000,000, - which is considered as a loan interest payment, while the principal loan payment is only paid once, namely in November 2019 in the amount of Rp. 100,000,000, - then the Plaintiff and Mrs. Emalia on 23 December 2019 met the head of the BCA office in the Bidakara building and the Plaintiff added a payment of Rp. 70,000,000, - the plaintiff requested permission to change to the Panel of Judges to include certificate of ownership no. 03554/Mampang with an area of ​​2,114 m2 in the name of Defendant (now please call Defendant I) MA jurisprudence No. 547K/SIP/1973 states: changes to the lawsuit regarding the subject matter of the case are changes to the subject matter of the lawsuit. Therefore, it must be rejected. 03554 Mampang with an area of ​​2,114 m2 on behalf of the Defendant (now please call it Defendant I) considering that because the Plaintiff had crossed the tolerance limit in changing the lawsuit, the panel of judges considered that the plaintiff's lawsuit must be rejected.

Програми реструктуризації кредитів в умовах пандемії коронавірусу: порівняльний аналіз вітчизняної та міжнародної практики

Introduction. Loan restructuring is one of the toolkit for the resolution of problem loans. It directly affects the quality of assets, profitability and capitalization. This credit risk management tool always requires fine-tuning with the involvement of the regulator, as problem loans may be misclassified, namely restructured rather than classified as non-performing, and provisions may be inadequate to the risk, i.e. understated. Problem Statement. In the conditions of a systemic crisis, the probability of defaults on loans increases, and it is extremely important that lenders go to exactly those borrowers who maintain their viability and are ready to resume debt service immediately after the normalization of working conditions. It depends on the position of the regulator to what extent this practice is uniform among banks to prevent distortion of reporting. Along with this, reaching an agreement between the parties is always a difficult process of finding compromises and balancing interests. Purpose. To study the domestic and international experience of commercial banks and banking supervisory bodies in restructuring problem loans for borrowers who have experienced financial difficulties due to the coronavirus pandemic. Methods. The study was conducted by comparing domestic and international practice in the field of credit restructuring regulation and analyzing the disclosure of relevant information in financial statements by banks using the methods of statistical analysis of series dynamics and factor analysis of data. Content analysis was used in the review of scientific publications and reports. Results. The actions of the National Bank of Ukraine on the regulation of credit restructuring can be assessed as palliative, since they do not establish clear rules and do not guarantee the prevention of manipulations by banks, and also do not encourage creditors to grant concessions to borrowers. Banks with foreign capital (of Western countries) were guided by the instructions of the European supervisory authority EBA and the instructions of the parent bank regarding the recognition of the quality of restructured loans. Independent auditors of Ukrainian banks used different approaches to disclosure of information about restructuring in annual reports. In Ukraine, as in most countries of the world, the regulatory body gave temporary consent to the exclusion of restructured loans from the amount of problem loans. The benefit for banks is the ability not to accrue reserves for such exposures. However, the suspension of principal payments did not exempt him from paying interest, and in fact the borrower overpaid for the loan. It seems correct if the regulator would require recognition of the loan as problematic in case of repeated restructuring. Conclusions. The NBU is called upon to summarize the results of the work carried out by banks on credit restructuring and to provide banks with specific recommendations so that the banking sector would be ready for possible new upheavals It is expedient to determine 9 months as the maximum period of moratorium (credit holidays) that can be applied by banks.

Penerbitan Obligasi Negara Sebagai Alternatif Pendanaan Defisit APBN Indonesia

Deficit funding for the State Revenue and Expenditure Budget (APBN) is an important challenge for the government in maintaining fiscal stability and supporting development policies. In order to find an effective funding alternative, the issuance of state bonds has become an option. This study aims to analyze the position of issuing state bonds as an alternative to funding the state budget deficit. This study uses a descriptive-analytical approach by collecting data from various related sources. The analysis was carried out through a literature review, data from the Indonesian Ministry of Finance, and regulations regarding the issuance of Government Bonds. The results of the study show that the issuance of state bonds has several benefits as an alternative to financing the state budget deficit, namely diversifying government funding sources, reducing dependence on tax revenues and other income, providing flexibility in the schedule of interest and principal payments, in accordance with the government's financial capacity, attracting investor participation. institutional and retail, increasing financial market liquidity. APBN Deficit Funding is dominated by State Bonds, which of course the issuance of state bonds as an instrument for funding the APBN deficit makes fiscal space narrow. When the space for fiscal movement becomes limited, it means that the government faces limitations in collecting revenue or in managing government spending.
 

Treasury Safety, Liquidity, and Money Premium Dynamics: Evidence from Debt Limit Impasses

AbstractTreasury securities enjoy a “money premium” because they are ultra‐safe and liquid. However, during debt limit impasses, the safety and liquidity of Treasury securities temporarily deteriorate, eroding the money premium. Using past impasses, we find the money premium eroded by roughly six basis points across all Treasury securities and up to 50 basis points for the shortest maturities at the greatest risk of a delayed principal payment. Safety and liquidity each accounted for about half of the erosion. The deterioration of safety and liquidity also appears to interact, consistent with theories of default‐driven liquidity risk and the information sensitivity of debt.

The Effect of Public Debt on Economic Growth in Kenya

Using annual data from 1980 to 2019, this study examined the impact of public debt on Kenya's economic growth. Financing Gap theory served as a guide for the investigation. An explanatory research design was adopted in this study. The analysis of the long-run and short-run effects used a customized version of the Vector Error Correction Model (VECM) Model. The R-square value from the VECM model was 58.62, and the Chi-square was 26.913 (p > Chi2 = 0.0494), indicating that the VECM was suitable for parameter estimation. While external debt revealed a coefficient of 0.0003 with a p-value of 0.001 had a significant positive impact on economic growth, domestic debt reported a coefficient of -0.266 with a p-value of 0.019, supporting the debt overhang effect. If the marginal output of an available external debt is greater than or equal to the principal and interest payment, the study found that external debt had a positive impact on the economy of the borrowing country. On the other hand, domestic debt has a significant negative impact on economic growth. The government will be able to develop sound fiscal and monetary policies with the aid of the study's findings. The study demonstrates that increasing domestic debt levels in Kenya during the study period negatively and significantly impacted economic growth. As a result, this study suggests that the Kenyan government reduce domestic borrowing to avoid the crowding out effect, which has a detrimental long-term impact on economic growth. The government should use the borrowed domestic money to diversify the economy's productive base. This will boost long-term economic growth, widen the base of taxation, and increase the country's ability to pay off its obligations when they are due.

THE PUBLIC DEBT PHENOMENON IN FISCAL SUSTAINABILITY, AND FINANCIAL DEVIATIONS IN SELECTED OECD COUNTRIES

In this study, we attempt to put forth the sustainability phenomenon, an empirical that occurs a significant fiscal impact on developing countries, which aim to reach the desired economic growth levels. Sustainability of public fiscal balances, especially in terms of debt policies, refers to a structural impact mechanism that means paying debts without default and restructuring them without risk in a period when the payment and redemption deadlines have come, especially in terms of external debts. This mechanism of influence is also expressed in the restructuring of a financial process, which can be expressed in different values, especially in developing countries, and whether the defaulted public liabilities refer to the later debt phenomenon. In this respect, public fiscal sustainability means that the real level of future primary surpluses is equal to the current real value of the public debt at a fundamental level. In our analytical study, the four countries were taken as the basis and the analytical values of these four countries in the financial balances were determined as emerging economies on the basis of these selected countries as Turkey, Poland, Chile, and Mexico. Besides, based on debts and public deficits, this fact also means a sustainable fiscal structure that can emphasize all kinds of debt phenomena at different levels, especially local governments, and the central government throughout the country. In addition, a debt obligation covering the entire public sphere also expresses sustainability in the narrow sense, representing the central government budget, which is essential in terms of sustainable budget balances. On the other hand, the sustainability of debts in developing countries where foreign public debt is in question, especially the public debt of central banks, can also lead to unexpected financial weakness and vulnerabilities. The policies as public borrowing instruments can create uncertainty about the level of financial-institutional impact in terms of future principal and interest payments and negatively affect fiscal policies sustainability. In this context, the acceptability of this fiscal process regarding the receivables of all institutions such as private bondholders, banks, and the World Bank is accepted as the sustainability of the debts in an ongoing process with mutually positive financial formations. When countries demand debt from financial markets, they have to maintain their fiscal sustainability regarding whether they should retake financial risks, especially in developing countries. This approach, which can also be expressed as the stability of debts, also puts forward a position identical to the expectations of stable ground for developing economic growth potential and financial infrastructure.

Основные механизмы и принципы кредитования в коммерческих банках Российской Федерации

The article presents the results of analyzing the characteristics of the basic mechanisms and principles of lending in Russian commercial banks. The study highlights the fact that understanding the practical principles and mechanisms of lending can allow us to identify activities aimed at ensuring the effective operation of credit institutions in loan financing. The paper considers the basic principles of lending in commercial banks of the Russian Federation. The author analyzes the role of each principle in ensuring the effectiveness of banking organizations in terms of lending to the population and businesses. The article considers the main mechanisms of organizing the lending process in Russian commercial banks. The amount of interest on loans depends on many factors. However, the main indicator is the level of the discount refinancing rate set by the Bank of Russia. Therefore, the country’s commercial banks refer to these indicators to set their interest rates for lending. The lower the loan interest rate, the more financially stable the monetary market conditions. If there are negative trends or lending risks, the level of interest rate increases while respecting the principal payment. Compliance with the principles and mechanisms of lending provides financial stability for commercial banks in the monetary and credit market.

Design & Pricing of Islamic Asset-Based S. ukuk¯ Strips: An Endeavour towards Financial Development

Purpose: The efficiency of the Islamic Financial Industry suffers from a lack of liquidity instruments and shallow secondary markets. This paper reviews the financial intermediation theory and the complementary role of debt and money markets towards the broader goal of allocative efficiency, asset transformation, and diversification for the welfare of all economic agents. Separately Tradable Registered Interest & Principle (STRIPs), created by disintegrating coupon and principal payment to be traded as discount bonds, have been effectively employed in the west for liquidity management. This paper proposes a novel idea of ij¯arah s.uk¯uk STRIPS (ISS) that splits the payoffs of ij¯arah s.uk¯uk. Method: The design and pricing of ISS are modeled employing lease valuation, certainty equivalent (C.E.), and bootstrapping. Instead of the prevalent capital asset-pricing model, volatility of ij¯arah s.uk¯uk payoffs is modeled using certainty equivalents, which extend the analysis to micro-level investor utility function. Also, the viability of ISS design is substantiated by numerical illustrations. Findings: We found that the proposed ISS can serve as a short-term liquidity management instrument, facilitate price discovery and define the term structure in Islamic debt markets. For sovereign issues, ISS can enable efficient monetary policy transmission, market completeness, and public finances for the underdeveloped Muslim world. Significance: To the best of our knowledge, this is the first study proposing the ISS as a financial innovation. The ISS proposed in this study will be a valuable addition to the arsenal of Islamic Financial offerings - augmenting the financial deepening and development of Islamic Financial Markets.

COVID-19 Lockdown Restrictions and Small Business Survival Strategy: Government Supporting Schemes

From antiquity to the present day, the contribution of small businesses to the economic development of a country is overwhelming. Nowadays, COVID-19 lockdown restrictions have exerted an outrageous impact on small businesses survival. In developing countries where government-supporting capacity is low, the severity is substantial. The present study predicts the impact of COVID-19 lockdown restriction and government supporting schemes on small business survival. To meet this purpose, the study primarily used PLS-SEM and binary logit models. The results confirmed that over 44% of small businesses would fail in the first month of lockdown restriction. Moreover, only 6% have cash reserve to survive twelve months. In this regard, the present study suggested that the government should have to abstain from total lockdown measures, without government-supporting schemes. As such, the study has examined the relative importance of COVID-19 based special loan, suspension of payments, withdrawal of restricted funds, and exemption of tax and penalty payments. Among these supporting schemes, COVID-19 based special loan is the most important government-supporting scheme followed by the suspension of interest and principal payments. However, the exemption of tax payments and withdrawal of restricted funds were not significant.

Amortization of gene replacement therapies: A health policy analysis exploring a mechanism for mitigating budget impact of high-cost treatments

With gene replacement therapies (GRTs) increasingly and rapidly reaching the healthcare marketplace, the vast potential for improving patient health is matched by the potential budgetary impact for healthcare payers. GRTs are highly valuable given their potential life-extending or even curative benefits and may provide significant cost-offsets compared with standard of care. Current healthcare systems are, however, struggling to fund such valuable but costly therapies. Some payers have already implemented specific financing models to account for the new treatment paradigms, but these do not address the budget impact in the year of acquisition or administration of these costly technologies. This health policy analysis aimed to assess the rationale and feasibility of amortization, within the context of financing healthcare technologies, and specifically GRTs. Amortization is an accounting concept applied to intangible assets that allows for spreading the cost an intangible asset over time, allowing for repayment to occur via interest and principal payments sufficient to repay the intangible asset in full by its maturity. Our systematic scoping review on the amortization of healthcare technologies found a very small literature base with even that being unclear and inconsistent in its understanding of the issues. Where amortization was proposed as a solution for funding costly, but highly valuable GRTs, the concept was not fully investigated in detail, nor was the feasibility of the approach fully challenged. However, by providing clear definitions of relevant concepts along with an example of amortization models applied to some example GRTs, we propose that amortization can offer a promising method for funding of extraordinarily high-value healthcare technologies, thereby increasing market and patient access for these technologies. Nonetheless, healthcare accounting principles and financing guidelines must evolve to apply amortization to the rapidly developing GRTs.

Forecasting and Measuring The Impact on Non-Tax Revenue of Its Principal Determinants in Nepal

This study aims to examine the impact on non-tax revenue of its principal determinants like charges, fines, fees, forfeiture, dividend, principal and interest payment, income received from sales, Royalty, and sales from fixed assets. It also explores the ex-post forecasting of non-tax revenue. It is based on the secondary data taken from various economic surveys of Nepal covering from 1980 to 2019. Descriptive and exploratory research designs are used to examine the impact and forecast the dependent variable. Some statistical and econometric tools like descriptive statistics, unit root testing, ordinary least square, serial correlation, heteroscedasticity test, and dynamic ex-post forecasting approaches. There is a positive impact on non-tax revenue of its principal determinants. The income received from principal and interest payment is found more consistent, whereas the non-tax revenue from sales government goods and services is found more inconsistent than other variables. The value of root means squared error is encountered very small (i.e., 0.7865). So, the gap between actual and forecasted nom-tax revenue is tiny. The results, design, and techniques of this study are not affected by the results and findings of other researchers

THE IMPACT OF SOLVENCY AND WORKING CAPITAL ON PROFITABILITY

Every business requires working capital for its survival. A solvent company has assets that exceed its liabilities sufficiently to reinvest in its growth. Solvency refers to company's ability to fulfil its obligations. Assessment of a company's ability to pay it obligations such as to make interest and principal payments generally include analysis of the components of its financial structure. The degree of solvency in a business is measured by the relationship between the assets, liabilities and equity of a business at a given point in time. The company should determine the appropriate solvency levels in increasing profitability. The purpose of this research is to know whether solvency and working capital have an impact on profitability at CV Masindo Electric Medan. The research design used in this research is a descriptive research design with conducting financial statement analysis. Research methods used are descriptive statistic analysis with financial ratio analysis, coefficient correlation, coefficient of determination, linear regression analysis, t test and F test.This research concludes that solvency and working capital have impact on profitability at CV Masindo Electric Medan. Based on T-test, the value of Tcount is higher than Ttable. Therefore, the solvency and working capital have a significant impact on profitability at CV Masindo Electric Medan partially. Based on the F test, the value of Fcount is higher than Ftable. Therefore, the solvency and working capital have a significant impact on profitability at CV Masindo Electric Medan simultaneously. The profitability can be explained by working capital and solvency in 99.8%, while the remaining in 0.2% is explained by other factors. Based on the working capital analysis, there is decrease in working capital in the year 2012-2016. It shows that the company doesn't conduct working capital management appropriately. Based on solvency analysis, there is increasing insolvency in the year 2012-2016. The company has limitations from internal fund from profit and capital from the owner. Therefore, the company finds a way to conducting business with external funds such as from account payable and bank loan. Based on profitability analysis, it can be known that there is decreasing of profitability in year 2012-2016. The company cannot increase the sales price to a high level because there is low-profit margin. Keywords: Solvency, Working Capital and Profitability

UBI in Times of Crisis: The Net Basic Income Discussing the Case of Germany

Abstract The measures taken to contain the Covid-19 pandemic have resulted in, among other things, massive loss of earnings. Many people are therefore increasingly experiencing an income crisis in addition to the acute health crisis. Permanent existential insecurity remains for too many despite the numerous aid packages. The principle of need-based assistance and the determination of need for the provision of aid are proving to be insufficient. In the current crisis, earned incomes are affected most of all due to the measures taken. This leads to an asymmetric distribution of the crisis-induced burdens and thus to an asymmetric distribution of risks and burdens between performance-related and non-performance-related income, which exacerbates the redistribution in favor of capital income. The model of net basic income (NBI) shows one way to come to a solution of these problems in the crisis. Every adult person in Germany receives a monthly unconditional basic income of e.g. 550 Euros (calculated in this approach) during the crisis period. This amount is supplemented by the suspension of rent, lease, repayment and interest obligations during this period of income loss. The amount of money paid to each person is the net share of the crisis basic income. The household savings from suspending rent, lease, principal, and interest payments is the gross. After the crisis, the NBI can be raised to a full participatory UBI as economic momentum increases. In step with this, rental, lease and capital services are to be paid again in full contract amount.

Оцінка умов укладання між пов'язаними особами угод купівлі-продажу кредитних портфелів як інструмент пруденційного нагляду національного регулятора

The article proposes to use the market value of the loan portfolio as a criterion for compliance with the terms of its purchase and sale agreements, between related parties, the normal market and use it as a tool in the supervision of the national regulator. The developed methodological support for assessing the compliance of the conditions for concluding purchase and sale agreements of loan portfolios, between related parties, normal market conditions is based on the characteristics of the elements, properties and features of valuation as an economic category. The proposed algorithm for assessing the terms of conclusion between related parties of purchase and sale of loan portfolios for their compliance with normal market conditions allows to take into account the essential characteristics of loans and complies with current legislation of Ukraine governing banking. On the example of contingent portfolios of cash and consumer loans, the stages of forecasting cash flows from the payment of outstanding balance of principal, interest, commissions and other payments on debt service, as well as income from the sale of default loans are disclosed.

Practical Applications of Securing Replacement Income with Goal-Based Retirement Investing Strategies

In <b><i>Securing Replacement Income with Goal-Based Retirement Investing Strategies</i></b>, from the Spring 2020 issue of <b><i>The Journal of Retirement</i></b>, authors <b>Lionel Martellini, Vincent Milhau</b> (both of <b>EDHEC-Risk Institute</b> in <b>Nice, France</b>) and <b>John Mulvey</b> (of <b>Princeton University</b>) address how to provide investors with their minimum required retirement income while offering the flexibility to invest for growth (and potentially higher retirement income). Annuities and target-date funds offer either guaranteed income or flexibility, but not both at the same time. Martellini, Milhau, and Mulvey recommend a goal-based investing (GBI) strategy that consists of building blocks designed to realize different goals. The first building block is a retirement goal-hedging portfolio (GHP) consisting of bonds whose principal and interest payments can generate sufficient income for the first 20 years of retirement. After that, a deferred annuity can cover retirees’ income needs for the rest of their lives. The second building block is a performance-seeking portfolio (PSP) of long-term growth investments that offer the chance for upside and higher income after retirement. Financial advisors can be of great help to clients who adopt this strategy—constructing and managing GHPs and PSPs and recommending specific deferred annuities. <b>TOPICS:</b>Retirement, pension funds, wealth management