Warning re Stakeholders/Personal Pension vs SIPPS

dunstonh

Whiteflag, from old posts it suggests that kitties old portfolio was low risk in nature and she has moved to higher risk.

She is basically doing what the daily mail did many years back when it compared corporate bond funds against tech funds in the same league table and said how much better tech funds were.

whiteflag_3

dunstonh wrote:

Whiteflag, from old posts it suggests that kitties old portfolio was low risk in nature and she has moved to higher risk.

She is basically doing what the daily mail did many years back when it compared corporate bond funds against tech funds in the same league table and said how much better tech funds were.

Exactly DH, I would hazard a guess that the "underperforming" funds were commodity / emerging markets.

cheerfulcat

Hello, whiteflag and dunstonh,

I obviously can't speak for Kittie but I started my HYP at the same time as I dopily bought a selection of income-producing funds in an insurance " bond " as recommended by an IFA. Mostly equity income, higher income, property and fixed interest. The funds way underperformed the HYP, which was one of the reasons I ditched the " bond ". It is undeniable fact that individually held shares will outperform similar shares held in a fund.

dunstonh

CC (and Kittie), the issue we have is that the comparisons are HYP vs pension wrapper. Its not comparing like for like. Its like saying that I have sold my old rubbish car and bought petrol instead.

It is undeniable fact that individually held shares will outperform similar shares held in a fund.

If you found an exact match, then yes. However, you are comparing like for like. That has not been happening in past posts.

Its also likely that a diverse portfolio of funds with an avearge risk profile matching the HYP would outperform the HYP over the long term as well.

Every dog has its day and equity income was the key place to be invested (for UK stocks) for the five years until 2005. Since then, it hasnt been. Its easy to pick short periods when something is better than another after the event.

[Deleted User]

It is impossible to compare like with like when referring to a high yield portflio v funds. The comparison must be between vehicles which contain, or did contain, my money

I only speak from my experience ref my sig. My HYP is now UP in value and I still expect £**,000 dividends during the next 12 months. The market has been very volatile and it has been enormously interesting to me to see how little the top HYP stocks moved down, compared to the wider market

The particular funds I withdrew from are still down over 11% and my HYP is up 1%. I bought both around the same time. The HYP stocks I bought with the fund proceeds are up 5% and 1% since I bought them plus they have a yield of approx 5%. I do, of course, choose these HYP stocks very carefully wrt a number of criteria

[Deleted User]

Cheerfulcat you have to be `brave` to ditch anything recommended by an IFA. The average person is like a rabbit in headlights when the market falls

cheerfulcat

Hi, kittie,

Yes, it is difficult, isn't it, particularly when the industry is very keen on persuading people that it is horribly dangerous to invest directly in shares. I have the advantage of having been at this for some years now, though I only went into investing full time three years ago. The IFA thing was an aberration :-).

You seem to have done your research pretty thoroughly; I am not surprised that you are doing well. Best of luck!

Cheerfulcat

EdInvestor

kittie wrote:

The market has been very volatile and it has been enormously interesting to me to see how little the top HYP stocks moved down, compared to the wider market.

Many HYP newbie investors comment on this as soon as they experience their first market "wobble".It's very encouraging when you see your HYP not going down as much as the rest of the market and then recouping any losses more quickly. I've observed this phenomenon several times now.

Surprisingly however, this defensive aspect of the HYP doesn't seem to stop it from making strong capital gains when the market is in a more positive mood.I'm sure that this won't happen every single year forever, but so far so good.;)

Details of the HYP idea for anyone interested

[Deleted User]

I have to say that I added to five of my sipp HYP core holdings this morning. Personal pensions are now a distant memory

EdInvestor

Just a small caveat on trading, probably doesn't apply to you Kittie, but for others looking at using an HYP in drawdown: do try to keep trading to an absolute minimum or the dealing costs can rapidly make inroads into your income.

Unless your HYP is in growth mode and you are still building it up,, once bought - as would usually be the case in a drawdown fund - there should be little need to trade shares in an HYP. Indeed that's a major point of it - it's a low cost, low maintenance strategy.