Looking for 8%pa income. Where to start?

grumpycrab

Hi, I'm a newbie to the game...looking to achieve an approx 8%pa income from a reasonably sized pot. I have a bit of spare time, so thinking of having a look myself. I've seen an IFA but I think my risk profile put him off (low-medium risk). And he said they were expensive.

My starting point is the gauranteed approach IE fixed save X% such that that plus interest = 100% of my original capital. And do something "creative" with the other 100-X% And the other extreme is to throw the pot (or part of) into the multi(cautious)managed sector.

I guess the market performance over the last 6 months has got me inspired. But then I was warned that that may be coming to an end soon (or not).

Time for me to get a little bit more involved methinks.

p00hsticks

Do you mean 8% gross or net ? And is the 8% you want in real terms or ignoring inflation ?

Personaly I think unless you are prepared to take more risk (and therefore potentially lose money) you won't be able to get anywher near that return, but I'll await other replies with interest....

Gordias

If you ignore inflation and mean gross 8% you'll be able to achieve that from well selected Corporate Bond funds... roughly 6% yield, 2% capital growth per annum... They are not risk free (kiss goodbye to FSCS) however, if you look some up at a well known fund supermarket you will see that most are back in value to what they were before the big dip... Question you have to ask yourself is whether you think there are any financial disasters looming worse that what we've already been through?

PolishBigSpender

You can get 8% easily if you want to put your money into Polish Zloty - banks here are offering anywhere between 6-9% on PLN savings. Add this to the fact that the Zloty is predicted to strengthen a bit more and you'll be getting what, maybe nearer 10% in reality?

Browntrout_2

Send it to me.

I can personally guarantee you'll get 12 to 15% returns year in year out*

* note the return of your capital once I've spent it all is only a very slight possibility depending on how many others I can dupe in the future.


If it looks to good to be true, it probably is.

grumpycrab

p00hsticks wrote: »

Do you mean 8% gross or net ? And is the 8% you want in real terms or ignoring inflation ?...

Ok lets go with gross and ignoring inflation becaue that's what the next poster assumed :-)

Gordias wrote: »

If you ignore inflation and mean gross 8% you'll be able to achieve that from well selected Corporate Bond funds... roughly 6% yield, 2% capital growth per annum... They are not risk free (kiss goodbye to FSCS)...
Question you have to ask yourself is whether you think there are any financial disasters looming worse that what we've already been through?

Thanks for your replies. This is going to be tricky. During the January blip I asked the Halifax for investment withdrawal forms...not filled them in yet...perhaps I need to think a little bit long term?

Stupid question time. What is the "usual" way to get income from investments? Is it just a case of selling assets when you need the cash?

Lokolo

No you can get income from dividends, usual big suspects are Vodafone and Shell. There aren't necessarily high as 8% though.

Corporoate Bond Income Funds
http://www.h-l.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results?companyid=&tab=prices&sectorid=150&tab=prices&x=6&y=8

A list there with the yield. The ones with (income) by the name supplies the yield as income (well duh)

None of this is gaurenteed.

Rollinghome

Gordias wrote: »

If you ignore inflation and mean gross 8% you'll be able to achieve that from well selected Corporate Bond funds... roughly 6% yield, 2% capital growth per annum...

I'm afraid that isn't realistic. Corporate bond values have risen for reasons that aren't likely to be repeated, most markedly the fall in interest rates. Interest rates aren't able to fall much further and if rates rise then the capital value of bonds will fall.

jon3001

grumpycrab wrote: »

...looking to achieve an approx 8%pa income from a reasonably sized pot.

An 8% withdrawal rate from passive investments won't be sustainable. Eventually you'd deplete your capital or lose your purchasing power to inflation.

You could target an 8% return. That might be a combination of income and capital gains. However you'd only want to withdraw about 4-5% and reinvest the rest against inflation.

cheerfulcat

grumpycrab wrote: »

Stupid question time. What is the "usual" way to get income from investments? Is it just a case of selling assets when you need the cash?

The usual way is through dividends and interest.

There is a dedicated Investing for Income board on TMF which may be of some use.

CLAPTON

There is no way you can get 8% (net or gross, inflation adjusted or not) without also risking losing some or all of your capital.
Its that simple.

you can get 1% inflation adjusted
or 3% in a saving a/c (capital guarenteed but not inflation adjusted)