Transition from Growth to Income in ISA Funds?

StuartGMC

I usually post in my thread on the mortgage-free wannabe board, but, thankfully will soon be mortgage-free. However, we have taken some opportunities to invest in Funds in our ISAs commencing gently in June 2006 with UK funds, then stepped out to Latin American and Russia/Greater Russia in May 2008... had the >50% loss in Oct 08, now back to breakeven (continued to invest and in Jan rebalanced portfolio as below to bring in four new funds and freeze Russia until there's an upturn in energy and minerals) I'm still learning but it's a fun jpourney so far!

The most recent data can be seen here:
http://forums.moneysavingexpert.com/showpost.html?p=25637795&postcount=903

We pound-cost-average via monthly investing (only £300 per month) which seems ok in the present climate. At 44, we're looking at growth presently and I'm happy that to achieve this requires investing in funds in the Medium and High Risk categories, as below given as % of holdings, name and gain/loss%

20.77% - Neptune Russia and Greater Russia (NERGRA) -15.00%
35.60% - Investec Fund Mgrs UK Smaller Cos Acc (GMTBUA) +9.78%
28.34% - Threadneedle Latin America Ret 1 Acc (ADLAG) +7.05%
New funds from Jan 2009
3.94% - BlackRock UK Absolute Alpha P Class (MYAAP) + 2.45%
3.81% - M&G International Sovereign Bond (MGISA) +3.08%
4.06% - First State Asia Pacific Leaders (CFAPLA) +20.60%
3.48% -Neptune US Opportunities A (NEUSA) +8.40%

Once we are mortgage-free (we're 100% offset, just need to get cash savings built to then clear just under 10yrs early) we'll be hoping to save/invest 50% of net income. That in the ISA Funds will increase each month and I'll be looking over a range of additional funds which I need to research in detail over the next 2-3months.

The question is one of what strategies are recommended for capturing growth and moving to income?

We both have final salary pensions (presently but we all know this is no longer a sure bet), I have an annuity with spouse pension which kicks in at 60 (only £4500 per year in 2025 but not bad for 3.5yrs service 1989-1992 when employer went bust) and we'll be saving cash too for daughter's needs in 6yrs time when she's 18, our usual requirements for replacement cars, annual holiday etc.

So the ISA Funds are there to grow and give us additional cash and income later in life perhaps allowing retirement (or reduced hours) from our 60th birthday in 15yrs time as an example.

I anticipate maintaining investments into growth funds for next 8yrs or so, but anticipate I need to also build in lower risk income funds too (via monthly investment and also realising some gains from the growth funds from that point on). As it is not our pension pot (well not provided the pensions we have are still there!) then I think we could consider retaining some monies in funds for growth post-retirement too.

So, based on the foregoing, can you comment on typical strategies to go forward over the next 10-15yrs i.e. keep ploughing into growth funds for now with some lower risk ones too, but say 7yrs hence start to take 30% of annual profits from growth funds and move to lower risk absolute return (income) funds / move into index linked gilts?

A few ideas and pointers would be much appreciated, and I do realise that we may well need to consult an IFA (fee-based ideally) to firm up on plans.

StuartGMC

bump - no takers I guess?