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  • FIRST POST
    • Peelerfart
    • By Peelerfart 17th Sep 17, 8:57 PM
    • 1,814Posts
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    Peelerfart
    Advice, comments please,newbie
    • #1
    • 17th Sep 17, 8:57 PM
    Advice, comments please,newbie 17th Sep 17 at 8:57 PM
    Having recently retired/ made redundant, I have paid all debts off including mortgage, my pension is due to start and overall, with my wife still working until she joins me in 4 or 5 years, we are comfortable.
    I am in the position for the first time in my life to consider investing. I have a rainy day fund in an isa, a medium term in a one year fix with atom, and am now looking for an investment of between £40k and £50k.
    My main purpose would be a blend of income,circa £150 per month and anything above that, reinvested. Is this atainable,achievable within the amount of capital invested?
    My aversion to risk is low, and I do intend to consult an ifa before committing.

    Any suggestions., comments?

    Cheers

    PF
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Page 1
    • Linton
    • By Linton 17th Sep 17, 9:21 PM
    • 8,325 Posts
    • 8,221 Thanks
    Linton
    • #2
    • 17th Sep 17, 9:21 PM
    • #2
    • 17th Sep 17, 9:21 PM
    £150/month is 3.6% of £50K. This should be fairly easily achievable. Where things start to get more difficult is if you want this figure to be index linked. This requires your capital to increase by inflation as well as generating 3.6%. This level of return would require you to accept some moderate level of risk as it is only equities (shares) that can provide a long term good chance of at least matching inflation.

    The other question is whether you would be prepared to accept some level of variability in your drawdown. You really need this if you are investing in equities as during the bad times you don't want to be forced to sell the core of your investment thus reducing the capital required to generate future income. The easiest way to manage this is to hold a reserve in cash to take as income when required.
    • Peelerfart
    • By Peelerfart 17th Sep 17, 9:33 PM
    • 1,814 Posts
    • 1,585 Thanks
    Peelerfart
    • #3
    • 17th Sep 17, 9:33 PM
    • #3
    • 17th Sep 17, 9:33 PM
    Thank you Linton,
    Index linking is not high on my priority list as this is only intended as a top up, and not as something that I would rely on to eat. My pension is both rpi/CPI linked and forms the basis of my income. Such that if my preferred £150,falls to eg £100, it ain't no big deal, my prime concern is to protect my initial investment and generate some income.

    Income bonds would have been ideal, but we all know how bad they are these days.
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    • Alexland
    • By Alexland 17th Sep 17, 9:52 PM
    • 441 Posts
    • 261 Thanks
    Alexland
    • #4
    • 17th Sep 17, 9:52 PM
    • #4
    • 17th Sep 17, 9:52 PM
    Do you wish to 'protect your investment' to pass on in your estate or are you OK to draw capital with the aim it could reduce to zero over your remaining life?
    • Peelerfart
    • By Peelerfart 17th Sep 17, 10:06 PM
    • 1,814 Posts
    • 1,585 Thanks
    Peelerfart
    • #5
    • 17th Sep 17, 10:06 PM
    • #5
    • 17th Sep 17, 10:06 PM
    Hi Alexland,
    My goal with this is simply to generate an income and protect my investment until my wife retires,I've read up on the 4% rule, which isn't gospel I know but seems like a good yardstick from where I am.
    It's just an short/medium term thing,not looking to pass on in my estate at this stage in my life.

    As far as I'm aware lol
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    • Alexland
    • By Alexland 17th Sep 17, 10:25 PM
    • 441 Posts
    • 261 Thanks
    Alexland
    • #6
    • 17th Sep 17, 10:25 PM
    • #6
    • 17th Sep 17, 10:25 PM
    I agree with Linton that investing could generate the desired returns (but I am more in the 3% rule camp especially for early retirement) and I would probably use a low cost stocks and shares isa which would give a tax efficient wrapper to £20k pa (or less if you have contributed to your cash isa this year) maybe also using your wife's allowance to get it wrapped quicker?

    Investment comes with some risk and volatility and unfortunately the traditionally low risk bonds/gilts are looking a bit high risk these days. In your position I would open a Vanguard direct ISA in the Life Strategy 60 fund and draw down £100 per month initially increasing to £150 per month if the investment performs well. Or if you want more money in early years start at £150 and be willing to drop back to £75 if you start to see too much capital errosion.

    Also up to the age 75 (or until the money runs out) then I would withdraw 2880 per year to contribute to a private pension and the government will boost it to 3600. You might be able to contribute more in the first year matched against your earnings or use your wife's pension. It doesn't matter if you are withdrawing from the isa when markets have dropped as you will be buying in the pension when markets are cheap.

    Make sure you are maximising the use of your annual income tax allowance and tax free element each year. Also check there are no missing NI contributions you could make to get full state pension.

    Finally - how did you get your wife to agree to retire after you? Mine is 6 years younger and wants to retire no later than me!
    Last edited by Alexland; 17-09-2017 at 10:38 PM.
    • kidmugsy
    • By kidmugsy 17th Sep 17, 10:33 PM
    • 9,665 Posts
    • 6,422 Thanks
    kidmugsy
    • #7
    • 17th Sep 17, 10:33 PM
    • #7
    • 17th Sep 17, 10:33 PM
    Having recently retired/made redundant, I have paid all debts off including mortgage, my pension is due to start and overall, with my wife still working until she joins me in 4 or 5 years, we are comfortable.
    I am in the position for the first time in my life to consider investing. I have a rainy day fund in an isa, a medium term in a one year fix with atom, and am now looking for an investment of between £40k and £50k.
    My main purpose would be a blend of income,circa £150 per month and anything above that, reinvested. Is this atainable,achievable within the amount of capital invested?
    Originally posted by Peelerfart
    You are presumably a tax-payer. Is your aim to bridge the gap until your state pension begins?

    There are "funds" - roughly what used to be known as unit trusts - that pay a higher income than an ordinary equity fund because they essentially give up some of their hoped for future growth to generate more income now. Might a mixture of those appeal? Here's one.

    http://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/s/schroder-income-maximiser-income-inclusive
    • grandst
    • By grandst 17th Sep 17, 10:51 PM
    • 30 Posts
    • 18 Thanks
    grandst
    • #8
    • 17th Sep 17, 10:51 PM
    • #8
    • 17th Sep 17, 10:51 PM
    There are multi asset income funds with fairly low volitility which might suit your risk level.
    • chiang mai
    • By chiang mai 18th Sep 17, 12:08 AM
    • 62 Posts
    • 14 Thanks
    chiang mai
    • #9
    • 18th Sep 17, 12:08 AM
    • #9
    • 18th Sep 17, 12:08 AM
    Some thoughts:

    Confirm your risk tolerance level;
    Take your time finding an IFA you're happy with;
    Work out your asset allocation percentages, what percentage in bonds, gilts, property and equities;
    Avoid becomming UK centric. If your risk profile allows, spread your assets globally in order to lower your risk.
    Don't start picking funds until you've done those things.
    • Peelerfart
    • By Peelerfart 18th Sep 17, 8:23 AM
    • 1,814 Posts
    • 1,585 Thanks
    Peelerfart
    Thanks all,
    There's some good stuff here and once again the forum hasn't let me down. It sounds like my goal is achievable which is good to hear.
    I'm going to book an appointment with my ifa soon and will report back here with what he suggests.
    @ Alexland, my wife is also 6 years younger but I kinda got away with it by saying stuff like. It's not my fault,they made me redundant,I didn't ask for this! She seemed to buy it :-)
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    • Peelerfart
    • By Peelerfart 29th Sep 17, 8:59 PM
    • 1,814 Posts
    • 1,585 Thanks
    Peelerfart
    Not a shameless bump, but family circumstance has delayed my contact with my ifa.

    Will post back when information/advice obtained.
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    • Peelerfart
    • By Peelerfart 9th Oct 17, 1:16 PM
    • 1,814 Posts
    • 1,585 Thanks
    Peelerfart
    Had meeting with my ifa today, and apparently I'm a medium risk kinda guy not a low. Which is kinda nice!

    He has recommended a Prudential stocks shares isa,
    Putting in £20k in each year for the next two,as I haven't used my annual allowance yet

    Thing is each transaction will attract 3% commission. I know the guy has to make a living but £600x2=ouch!

    Is this the norm? Seems expensive to me
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    • chiang mai
    • By chiang mai 9th Oct 17, 1:24 PM
    • 62 Posts
    • 14 Thanks
    chiang mai
    Take his advice under consideration, then get independent advice from a further two or three IFA's, it doesn't cost anything. When all the advice is in, weigh it up and decide which way to go, then........do it yourself.
    • Alexland
    • By Alexland 9th Oct 17, 1:52 PM
    • 441 Posts
    • 261 Thanks
    Alexland
    I think you know what to do.... Most people don't need too much advice for a S&S ISA.
    Last edited by Alexland; 09-10-2017 at 1:57 PM.
    • Peelerfart
    • By Peelerfart 9th Oct 17, 1:59 PM
    • 1,814 Posts
    • 1,585 Thanks
    Peelerfart
    I think you know what to do.... Most people don't need advice for a S&S ISA.
    Originally posted by Alexland
    I'm not without experience in the murky world of numbers. Think I shall read and learn.

    Thank you all.
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    • bigadaj
    • By bigadaj 9th Oct 17, 4:09 PM
    • 10,300 Posts
    • 6,605 Thanks
    bigadaj
    Take his advice under consideration, then get independent advice from a further two or three IFA's, it doesn't cost anything. When all the advice is in, weigh it up and decide which way to go, then........do it yourself.
    Originally posted by chiang mai
    They won't normally provide advice, of any detail at least, during the free consultation. It's normally an assessment of risk profile and likely needs and a suggestion of how targets might be achieved, they'd normally want some money before making any firm recommendations; and apparently they'd be right to do so.
    • Peelerfart
    • By Peelerfart 11th Oct 17, 10:10 PM
    • 1,814 Posts
    • 1,585 Thanks
    Peelerfart
    Bit the proverbial yesterday and slung £10k into a stocks and shares isa via Charles Stanley. I know it's probably not a great deal to some of the seasoned guys here but.

    I came here via the DFW board, the MFW board, and the loans board.
    Damn! It's a squeaky bum feeling when you press that button.
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    • Alexland
    • By Alexland 11th Oct 17, 11:28 PM
    • 441 Posts
    • 261 Thanks
    Alexland
    Have you decided on a investment? I think my younger wife now wants to retire before me...
    • chiang mai
    • By chiang mai 12th Oct 17, 3:23 AM
    • 62 Posts
    • 14 Thanks
    chiang mai
    What I've suggested is that the OP understands the look and feel of the various approaches and not steal detailed portfolio construction! Who knows, he may come across an IFA with thinking that appeals and the right chemistry, alternatively he may decide he is able to do it all himself which is an approach I would support.
    • Peelerfart
    • By Peelerfart 12th Oct 17, 8:16 AM
    • 1,814 Posts
    • 1,585 Thanks
    Peelerfart
    @alexland, yes I've split the investment into 2, 1 low risk and the other not so low. Just a first toe in the water. I'm gonna sit back and monitor now, see how they do. I can't really comment on your wife's retirement Wannabe status
    But it beats the hell out of work ��
    @ Chiang Mai, to be fair to your good self it's comments like yours that can strip away any mystery and doubts that a first time investor,like me, had. I'm no expert, but hopefully my choices will be sound and I might put a little more in.

    Thanks both
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