Pension Investment and Risk?

chesky369

"I wonder if dunston is Ed's IFA in real life... "

I think they're husband and wife.........

Dick_here

chesky369 wrote: »

"I wonder if dunston is Ed's IFA in real life... "

I think they're husband and wife.........

George and Mildred :cool:

jamesd

I did a detailed comparison of HYP1 with Invesco Perpetual High Income through the start of 2007: Invesco Perpetual High Income: 159,886 HYP1: 153,590 in total return, including costs for the fund, excluding costs for HYP1.

Even after showing that just buying the Invesco Perpetual fund would have beaten the hype with lower risk EdInvestor still made bogus claims about it being better.

EdInvestor

IP High Income is an excellent unit trust (I hold it) but it does not perform the function of the HYP.

The idea of the HYP is that you take an income (of around 5% a year, higher at present for a new investor) from the dividends. All the capital is just left invested.It is a buy and forget strategy. Like an investment linked annuity, but you get to keep the capital

To get a similar income from the fund you would have to cash in units.That would incur costs and reduce capital invested.

Most investment startegies are designed to help people accumulate capital.This one is desgned for people who've already done that.This point is often missed and tends to mean people fail to grasp the reasoning behind the HYP.

jamesd

Use HYP1 instead of Invesco Perpetual High Income and you'd have been worse off by an average of 1,200 income a year per 75,000 invested.

The cost at Hargreaves Lansdown to sell is zero and to take an ad-hoc payment is 25 Pounds. Doing that once a year for the five years reduces the 6,296 advantage of the fund by 125 leaving it ahead by 6,127. That's an extra 1,200 a year of average income someone could have had by using the fund.

There's no extra fee at all for those who are already in drawdown. Just sell some whenever you like and it's added to the cash pot that's used to pay the drawdown payments. Real extra cost: zero.

HYP can't be a buy and forget strategy. You have to keep on watching the markets to avoid disasters like Northern Rock, instead of just leaving it to the manager to do the day to day watching for you.

EdInvestor

I won't bother arguing the toss about this any more as it's completely pointless and we've done it all before, but for anyone interested, here's a link to the basic articles on the strategy and the performance of some demo portfolios.

http://www.fool.co.uk/Investing/guides/The-High-Yield-Portfolio.aspx

whiteflag_3

So ED, as you have effectively thrown in the towel on this one, it would appear there is no strong evidence to suggest that "direct" investment can reduce risk in the long run.

Anyway, any investor worth their salt will know that asset alloction and not stock selection is the most important thing in long term investment management.:D

Retired_I.F.A.

!!!!!!_here wrote: »

I wonder if dunston is Ed's IFA in real life...

Nah, his mother in law maybe.