Investing for income
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pip895
Posts: 1,178 Forumite
I am trying to help out a friend of mine who is in her 80s and lost her husband some 10 years back. He left her quite well provided for, but as their IFA retired many years back, nothing much has changed since. The majority of her assets are in property but she does have a S&S ISA worth about 70k.
In it she has two funds :- Fidelity MoneyBuilder Income (Inc) 40% and Fidelity WealthBuilder (Acc) 60%. I think originally there was considerably more in the bond fund than the equity one but over time, as she has been taking the income from the bonds, the equity portion has grown to its present proportion.
Apart from the possibly inappropriate equity proportion I also think the funds may not be in modern unbundled units. As she rather likes getting monthly income from the ISA, I was contemplating
1. Transferring a portion of the WealthBuilder (Equity) fund into the MoneyBuilder (Corporate Bond) fund – which would increase the monthly income and reset the equity proportion. I don’t much like CBs at the moment though??
2. Transferring both funds into VLS40 (Inc) which would reduce fees and mean no further rebalancing would be required – but because of the lower yield (wouldn’t increase the income much if at all).
3. Transfer both funds into a high yielding multi asset fund such as Kames Diversified Monthly Income , which has a yield around 5% and an OCF of 0.61%. This would potentially give the best of both worlds.
Although the income isn’t core – i.e she has plenty from property and pensions to cover her needs, the extra cash would be useful, and accumulating more in the ISA is a relatively low priority. I am leaning towards option 3, although I don’t have any specific knowledge of this particular fund – it is globally diversified, multi asset and not too expensive (cheaper than the fidelity one). What are your thoughts, does this sound sensible? Do you have alternative suggestions that might be better?
In it she has two funds :- Fidelity MoneyBuilder Income (Inc) 40% and Fidelity WealthBuilder (Acc) 60%. I think originally there was considerably more in the bond fund than the equity one but over time, as she has been taking the income from the bonds, the equity portion has grown to its present proportion.
Apart from the possibly inappropriate equity proportion I also think the funds may not be in modern unbundled units. As she rather likes getting monthly income from the ISA, I was contemplating
1. Transferring a portion of the WealthBuilder (Equity) fund into the MoneyBuilder (Corporate Bond) fund – which would increase the monthly income and reset the equity proportion. I don’t much like CBs at the moment though??
2. Transferring both funds into VLS40 (Inc) which would reduce fees and mean no further rebalancing would be required – but because of the lower yield (wouldn’t increase the income much if at all).
3. Transfer both funds into a high yielding multi asset fund such as Kames Diversified Monthly Income , which has a yield around 5% and an OCF of 0.61%. This would potentially give the best of both worlds.
Although the income isn’t core – i.e she has plenty from property and pensions to cover her needs, the extra cash would be useful, and accumulating more in the ISA is a relatively low priority. I am leaning towards option 3, although I don’t have any specific knowledge of this particular fund – it is globally diversified, multi asset and not too expensive (cheaper than the fidelity one). What are your thoughts, does this sound sensible? Do you have alternative suggestions that might be better?
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Comments
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I appreciate that you are trying to help your friend but please, just be aware of the potential downsides.
This isn't meant to be critical or preachy but I have seen a few situations where money has broken friendships and familiy relationships.
Whilst things are good your proposed changes may be the best thing since sliced bread, but in the event that yields or capital values fall you could get the blame. Your friend may not blame you, but if there are any children / potential inheritors they might.
Why does she not link up with a new IFA, you could help her with that?
If there is property income I guess she may be over the IHT threshold, an IFA could look at the overall situation and make suggestions.
As for the funds, sorry I can't help as I am still in "grow the pot" mode, not "take an income".0 -
This lady is a friend of my Dads and the start of my involvement was sitting in on a meeting between her and a potential IFA because my Dad was worried that she might get taken for a ride. The IFA was actually very nice but there wasn't much he could do - he actually said there would be little point in her spending the money on his fees. I have a feeling most IFAs would be similarly uninterested as apart from this ISA the great majority of her assets are in property and she has no interest in making any changes.
On the investment front, like you, I have always been more interested in growth, but for her she is much happier taking a natural yield and something that is simple and will need minimal intervention is also desirable.
She does have children but they are apparently all far to busy to sit down with her and go through all this :huh:
I think I will suggest both option 1 and 3 and let her decide between them - she may prefer option 1 as it is just resetting things back to where they were - but I will at least make sure she is in clean versions of the funds.:)0
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