Fund acc or income ???

mitchell

HELLO ALL,

Im looking at investing in a couple of funds but would like to clarify what the difference is between accumalation or income when buying the funds?

i know this may be a stupid question but hey ho

:rotfl:

Aegis

Income units pay out a sum on a regular basis as a dividend. Accumulation units reinvest this dividend for you automatically.

If you need income, then income units are simplest. If you're looking for growth, then accumulation units tend to be preferable.

grumpycrab

I've got a pot which has to last more than 10 years; the pot is unlikely to last long enough without investing some or all of it. Are income funds therefore the obvious option for me?

dunstonh

grumpycrab wrote: »

I've got a pot which has to last more than 10 years; the pot is unlikely to last long enough without investing some or all of it. Are income funds therefore the obvious option for me?

Depends. One assumes from the above that you are looking for income. Will you back making fixed regular withdrawals or taking natural income? (tax implications vary). What tax wrapper are you investing in (ISA, Investment Bond or unwrapped unit trusts)?

mitchell

it will be in an isa i have opted for invesco high income income and m&g recover accumalation

jamesd

If you need income you should really use the income forms. Then pick a mixture of funds that will both provide income and growth so the income can grow with inflation. Invesco Perpetual High Income, income units is one fund that tries to both pay income and grow.

M&G Recovery is more a growth fund so that's more for the inflation cover. You'd also really want to consider some funds with bonds, something like Invesco Perpetual Monthly Income Plus in income unit form.

I'm assuming that you need income from the ISA. If you can use money from elsewhere it's possibly better to not take income from the ISA yet so that the fund income increase the proportion of your investments that are inside the ISA tax protection.

mitchell

http://www.trustnet.com/Factsheets/Factsheet.aspx?fundCode=JTF88&univ=U

this is another fund i have opted for as its cautious

mitchell

yeah i have the hargreaves lansdown vantage account, due to being young i want to save for as long as possible and keep re-investing dividends ect.. to build up a healthy portfolio. happy to leave for 10yrs

jep49

jamesd wrote: »

If you need income you should really use the income forms. Then pick a mixture of funds that will both provide income and growth so the income can grow with inflation. Invesco Perpetual High Income, income units is one fund that tries to both pay income and grow.

M&G Recovery is more a growth fund so that's more for the inflation cover. You'd also really want to consider some funds with bonds, something like Invesco Perpetual Monthly Income Plus in income unit form.

I'm assuming that you need income from the ISA. If you can use money from elsewhere it's possibly better to not take income from the ISA yet so that the fund income increase the proportion of your investments that are inside the ISA tax protection.

What are the benifits in getting some bond funds in the present evonomic climate. Which would you recommend.

jamesd

Bond funds generate income. That's useful for people who want income. I mentioned some funds in the quote. Other than that, funds in the strategic bond sector rather than gilt of high quality seem like a better idea at the moment because QE is probably still driving a bubble in the high quality types.

Primrose

If you're planning to invest for the long term, I suggest you don't rule out Equity Income funds. The best ones aim to invest in companies which over time will pay a higher dividend, so if you buy accumulation units in an Equity Income fund and reinvest, hopefully you will be achieving the same goal as investing in a Growth fund, but going a different route.