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Ideas Please on my Income Portfolio.
GCH.
Posted: 03 November 2012 10:11:37(UTC)
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I have recently taken early retirement at 58 and am looking to Invest for income purposes £100k which is in ISA wrappers. I am looking for ideas on how to get 6%-10% over the next 10 years I am prepaired to take some risk, however I do not want to spend each day involved in its day to day running and would prefer to hand over the bulk of this to fund Managers however, I am aware of the need to diversify the risks in both area and sectors and would like to know who to turn to who would be more interested in my needs rather than their own? Also I presume that they would charge me for this so what are the typical setting up and ongoing charges and is there anybody who is prepaired to be held accountable? Your ideas and suggestions would be most welcome.
Mike P
Posted: 03 November 2012 14:32:04(UTC)
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Suggest you look at Invesco Pertutual High Income Fund which has a 5 star rating and buy and hold it through a fund 'supermarket' such as Fidelity's FundsNetwork which is a self adminstered relatively cheap way of holding ISA's and funds outside ISA's as well. Have a look at their Select List of vetted best of breed funds from varoius providers- thats what I do.
1 user thanked Mike P for this post.
GCH. on 04/11/2012(UTC)
Roydo
Posted: 03 November 2012 20:04:22(UTC)
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@ Mike P.

Yeah, put 100% of your cash in one fund. Great.
2 users thanked Roydo for this post.
rtrader on 06/11/2012(UTC), alan thorburn on 11/11/2012(UTC)
TJL
Posted: 03 November 2012 20:55:37(UTC)
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What to do with £100,000 is a very big question, to which there is no one or easy answer, and to which everyone (professionals included) will give you a different response.
If you mean you want 6%-10% income p.a., you are searching for the holy grail.
Nothing against IP High Income (where about 14% of my portfolio is invested) but if you want a total convenience, one stop shop suggestion, how about Jupiter Merlin Income? - top quality, diversification built in, but you'll pay for this convenience with a very high TER.
You could possibly do just as well yourself by splitting the total amount into smaller pots, say, top quality UK income fund or funds (or investment trusts), top quality Asian income fund/trust, top quality global income fund/trust, and a top quality fixed income fund/trust.
But, the possibilities are literally endless based upon asset classes, countries, regions etc., all depending on your attitude to risk and opinion on the future direction of world markets.
You either need to hand over responsibilty to an advisor and pay the fee (would not be my choice) or do it yourself and get at least a little bit involved, or run the risk of losing money.
It's all a bit of an educated gamble in any case, we're all taking a bets on the future, and the only way to mitigate the risk is to diversify, try to make sensible choices, and not be too greedy.
This isn't meant to sound like a lecture!
Good luck.
6 users thanked TJL for this post.
GCH. on 04/11/2012(UTC), Clive B on 05/11/2012(UTC), masud butt on 05/11/2012(UTC), rtrader on 06/11/2012(UTC), BOB 2 on 06/11/2012(UTC), Stephen Garsed on 02/05/2013(UTC)
Lyndon Edwards
Posted: 04 November 2012 10:37:46(UTC)
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What is your taxable income following retirement? Are you married? ISAs are great for the taxfree income but bear in mind that regardless of the taxfree status there is now a 10% non-reclaimable with-holding tax on dividend income. If we are in a low growth period you will need income producing funds provided from dividends, and will not be able to fall back on drawing on growth. Also take care with fund of fund (FoF) offerings such as Miton, a great fund by the way. Your investor protection is with the total invested in the manager, not each individual fund holding within the F o F portfolio. You only get protection on individual holdings through a discretionary portfolio of direct purchases.
If you have any room for manoeuvre on the income tax side, either for you or a spouse, go and discuss the concept of 'bond laddering' with a stockbroker. (No, I'm not one, I'm a retired IFA)
This is an interesting concept which can provide a sound, lower risk steady income stream, and is used by charities etc. Basically, the broker will buy individual corporate bonds paying interest, with redemption dates stretching from 1 - 10 years, like the rungs of a ladder, and as each year's holding comes to maturity will reinvest the redemption proceeds for further income. I doubt you will achieve 6-10% but if you can combine tax free income from your ISAs and a savvy use of tax allowances where available, this may be right for you. Also bear in mind that for every year you postpone taking the State pension the income increases by 10.2%, or you can draw the cash equivalent and start at the original pension level.
Good luck and enjoy your retirement.
3 users thanked Lyndon Edwards for this post.
GCH. on 05/11/2012(UTC), rtrader on 06/11/2012(UTC), Stephen Garsed on 02/05/2013(UTC)
Clive B
Posted: 04 November 2012 16:23:19(UTC)
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Firstly, I wouldn't put the whole £100K in any one investment (single share or single fund), no matter how attractive it looked. Who's to say that's the only area that will grow in future ? Secondly, I wouldn't set an arbitrary target for returns, e.g. 6-10%. Higher return tends to go with higher risk. If the figure you're seeking isn't "normal", all you're doing is pushing yourself towards higher risk investments. Probably not the thing to do with a retirement pot.

How to proceed: Decide whether you wish to invest the money yourself, or give it to others to manage.

If you're going to do it yourself, you need to read freely available info such as Citywire (http://www.citywire.co.uk/funds?section=money) and numerous other sites to see how different investment areas differ by return and risk. See which one(s) you're happy with. That probably doesn't mean simply going with the one that returns the most money in the short term - as that'll probably be the most risky/volatile. Always tends to come back to that - the balance between risk and return that an individual is happy with. What works for one might be completely unacceptable to another. You might also have views on which areas of the world you think might do better/worse over the coming decade(s).

If you want others to manage your money for you, you could ring up the likes of Hargreaves Lansdowne, BestInvest or an IFA and say "I have £100K, here's what I want to accomplish over the next N years, can you help me achieve that. If so, what will it cost". Make sure it's you that's driving the direction of your investment, not them as ultimately it's your money that's at risk.
5 users thanked Clive B for this post.
TJL on 04/11/2012(UTC), GCH. on 05/11/2012(UTC), masud butt on 05/11/2012(UTC), rtrader on 06/11/2012(UTC), Stephen Garsed on 02/05/2013(UTC)
dd
Posted: 04 November 2012 23:24:52(UTC)
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I agree with much of the above but would like to add that it is important to take natural income (whatever the interest or dividends produce, lumpy if necessary) rather than an artificial rate which is likely to erode capital.
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GCH. on 05/11/2012(UTC)
Mickey
Posted: 05 November 2012 09:56:26(UTC)
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Aiming to get 6-10% income or growth? If income then that could be difficult, if growth then it might be worthwhile taking a look at the Vanguard Life Strategy funds, perhaps the 40/60 or 60/40 might be contenders for you. The benefit of these is that you don't need to do much other than perhaps a once-a-year check, Vanguard will rebalance the portfolio etc. The yield is only around 2% so not much good if it is income you want.

You could use the Vanguard fund as a core to which you add a few racier or more defensive holdings, the negative to Vanguard is the lack of UK performance history. Currently the tables show them as average which imho is not bad when you consider that they would be used not to chase the highest returns but to have a blend of the market.

Regards,
Mickey
3 users thanked Mickey for this post.
GCH. on 05/11/2012(UTC), rtrader on 06/11/2012(UTC), Stephen Garsed on 02/05/2013(UTC)
Dividend Income investor.com
Posted: 05 November 2012 18:44:23(UTC)
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Why let a fund manager decide which investments to chose?

Why not put together a 20 company portfolio of high quality dividend paying companies investing in each up to £5,000 and secure increasing dividends for years to come in your ISA taking your income tax free if and when you need it.

For ideas on dividend paying companies subscribe to our free Dividend Alerts at http://www.early-retirem...hares-and-dividend.html

Hurry, as we are about to release information on GSK, AstraZeneca, BP, Royal Dutch Shell and Unilever.

Best regards

Steven Dotsch
Managing editor
Dividend Income Investor.com
2 users thanked Dividend Income investor.com for this post.
rtrader on 06/11/2012(UTC), GCH. on 07/11/2012(UTC)
Geoff N
Posted: 05 November 2012 19:02:24(UTC)
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I would be careful about investing 100K all at once - you could face a sudden drop in capital very quickly if unlucky enough.Perhaps drip feed over 12- 18 months.
We all know what we should have done - on hindsight!

You must also be thinking of staying invested for at least 5 years.

If you want an income circa 8% then you can find it however almost invariably at the expense of a decline in capital values.There are many high yield bond funds which bear testament to this.Higher income means higher risk.
If you want a steady income then initially look at UK equity income funds paying 4-5%.If you feel knowledgeable enough check recommendations on Citywire,Hargreaves Lansdown and Bestinvest but then make your own decisions.Invest through a discount broker which saves considerably on purchase fees.Remember that no broker or Financial Advisor knows which investment will do best in the future,they can only point you in the right direction based on how much risk they perceive you wish to take.Read up on "Attitude to Risk" guides which many discount brokers such as Hargreaves Lansdown can supply free of charge
Also look to diversify at least a little into a good Asian income ,Global income fund and a corporate bond fund.
All depends on your attitude to risk again and how you might feel if your capital suddenly dropped - maybe 25% or more.
Above all keep enough ready cash in order to avoid having to sell your funds at a low point in the market.
Ultimately if it all worries you too much and gives you sleepless nights thinking about it then spread it around a few building societies instead and just accept the probable lower return.
2 users thanked Geoff N for this post.
GCH. on 05/11/2012(UTC), Clive B on 06/11/2012(UTC)
lost
Posted: 05 November 2012 20:01:17(UTC)
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Hi

If you go to trustnet website and look for Income-based investing has a long and distinguished history. In this free edition of MarketViews™, Peter Temple highlights key features that can make income-based investing generate such good results.
You will be able to request a copy


Good Luck
2 users thanked lost for this post.
GCH. on 07/11/2012(UTC), Stephen Garsed on 02/05/2013(UTC)
Roger Bacon
Posted: 05 November 2012 20:31:16(UTC)
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Joined: 04/04/2007(UTC)
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No way I'm afraid , and dont let anyone kid you its on.
6% to 10% .... wow , wouldnt we all like that. See the latest moves from the FSA about projections ! ..
High risk , high return ... only if you're lucky, watch daily and pounce like a cat.
rik
Posted: 05 November 2012 21:13:45(UTC)
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I'm in a similar position. I've just invested 75k in all the usual FTSE suspects when it comes to dividend income, spread over 14 different individual companies. I expect to spend about an hour or two a month along with a reasonable awareness of the current trends in the business world, 'looking after' thes investments. They average about 4.3% income at present levels. No commission, no management fees, and no one to blame if it goes t**s up but hey, its only money!
I don't think 10% income is possible without utilising some capital gain, and doubt that 6% is without significant risk.

Must state that I carry no debt, own my own home outright, and have a similar amount in cash. (varying different fixed income deposits)
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GCH. on 07/11/2012(UTC)
Spartacus
Posted: 05 November 2012 22:10:43(UTC)
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Would agree with posters who've recommended a spread of funds, having said that - one fund sticks out as being a top class retirement fund. City of London IT (CTY) has been running over a century and has grown the dividend for forty years.

As for getting 6-10% risk free, you won't get it. CTY yields 4.4%, but this is after tax...
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GCH. on 07/11/2012(UTC)
Tractorboy 11
Posted: 06 November 2012 09:30:52(UTC)
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Why not look at this website which is also on Citywire

Fixed Income Investments.

This is run by Mark Taber as a labour of love, it seems. It has one of the most comprehensive resources on UK fixed-income securities, including price and yield data as well as information about redemption and calls. The website also provides well-informed comment on market developments.
2 users thanked Tractorboy 11 for this post.
GCH. on 07/11/2012(UTC), Ron M on 12/11/2012(UTC)
SKYSHIP
Posted: 06 November 2012 11:37:01(UTC)
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Many good recommendations above.

My principal recommendation is that you do it yourself. Learn about the investment game - in the long run it will prove both profitable and fun. Why would you want to delegate responsibility for your cash to an IFA or wealth asset manager who will merely seek to track a benchmark. The more you learn the more you will outperform - securely.

Of course higher performance requires more commitment in time. There are those in that excellent read FREE CAPITAL (by Guy Thomas) who compound their portfolios by 25%pa; but they are exceptional and also work full-time on their investments. I have compounded by 13%pa over the past 10yrs with an active but low risk approach. I allocate c3hrs/day, but could do only marginally less well on only 1hr/day.

So my advice is to allocate your 100k with 10k into each of 8 different investment trusts (inc. Private Equity & Property Trusts), and learn the investment game by actively investing the other 20k in smaller packages. Don't play the bulletin board penny stocks; but do read and learn from the bulletin board comments on ADVFN & TMF. NB - there are many serious threads where you will be able to ask questions and receive sound advice - try these threads on ADVFN - SHA, PE, CP+, SL & try the investment trust board on TMF.

Finally - one earlier comment caught my eye:

"If you want an income circa 8% then you can find it however almost invariably at the expense of a decline in capital values.There are many high yield bond funds which bear testament to this.Higher income means higher risk."

ANSWER: BUY Real Estate Credit Investments 8% Pref @ 99.5p (RECP). The difference with this preference share is that it redeems at par in 2017, so it is underwritten against a nasty rise in interest rates. Regrettably it is now too late to buy in an ISA (sub 5yrs to redemption); however a few buyers have reported that they have successfully bought into their ISAs post the mid-Sept’12 cut-off date.

An alternative would be to BUY the ords @ 100p (RECI) with a higher prospective yield of 8.4%. The end Oct’12 NAV revealed yesterday is 133p. The portfolio of distressed debt is a highly popular and high performing sector; and the NAV is generally expected to grow at more than 10%pa – NB: more than 25%YTD!
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GCH. on 07/11/2012(UTC)
TJL
Posted: 06 November 2012 11:56:21(UTC)
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This thread (number 3 particularly) may be of interest.

http://boards.fool.co.uk...12253942.aspx?sort=whole
SKYSHIP
Posted: 06 November 2012 11:56:33(UTC)
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Sorry - slight edit:

RECI prospective yield = only(sic!) 8.1%

RECI NAV growth YTD = 39%, not a mere 25%

See Post No.362

http://uk.advfn.com/cmn/.../thread.php3?id=23353700
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GCH. on 07/11/2012(UTC)
Trevor Lee
Posted: 06 November 2012 22:08:48(UTC)
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Do yourself a favour and get a copy of 'The Naked Trader' by Robbie Burns it's a cracking read and full of useful information written in lighthearted and humerous style yet will tell you all you need to know about share trading and investing etc.

Lets be really honest here the only person who's going to look after your money is you

No IFA has a crystal ball and nobody will ever guarentee you 6% - 10% income

All the information required to be a successful investor is right there at your fingertips ...... go on read all you can ... then dive in ...... the water's not as deep or as cold as you might think!!!!!!
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GCH. on 07/11/2012(UTC)
Brian Barber
Posted: 07 November 2012 15:51:39(UTC)
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Most of the issues have already been well covered already. However, if you are contemplating using a fund supermarket for your ISAs (you may already be in one) I would recommend that you look carefully at what selection of funds each supermarket offers before committing yourself. They do not all offer the full range of funds, and some exclude highly recommended funds altogether. For instance, you will not be able to invest in Troy's Trojan Income fund if you go with FFN, but you can if you are with Cofunds. Neither of these allow you to invest with Unicorn.
One other thought is: why not set up a hypothetical income portfolio with your selection of funds, and monitor its progress weekly for a while. You will soon see how fund values move up and down in response to the changing sentiment, and may get a better feel for what you really want to risk. Certainly, as others have already said, you will not achieve 6% (let alone 10%!) with any acceptable level of risk, and not at all from a pure income fund.
Best of luck.
1 user thanked Brian Barber for this post.
GCH. on 07/11/2012(UTC)
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