Income and Accumulation Units

loobs40

What are the advantages/disadvantages of investing in an income fund as opposed to an accumulation fund ?

Thanks

oldfella

with an income fund you have the option of the cash being sent to you or reinvested, an acc fund is reinvested

Mike

carnet

loobs40 wrote:

What are the advantages/disadvantages of investing in an income fund as opposed to an accumulation fund ?

Think you may be mixing up Income/Accumulation UNITS/SHARES with Income/Growth FUNDS.

Many funds offer both Inc and Acc units/shares although some some offer one type only.

If both are offered it depends on whether you require the income paid out - in which case go for the Inc units/shares. Otherwise go for Acc.

If you have to take Inc units/shares (eg because acc units/shares are not offered) and wish to have the income reinvested, check if any charges are levied on the units/shares purchased.

If there are, it might be cheaper just to take the cash, save it up and buy more units/shares, or a different fund altogether, yourself through a discount broker (IFA).

loobs40

Thanks, I am only looking to invest a £1000 or so I guess the income would not amount to much.

I am looking at the Invesco Perpetual Income fund. There appears to be two, one is Income the other is Accumulation.

INVESCO PERPETUAL Income (Accumulation)
UK Equity Income 1,769.78 +11.73 2.75 02-01-2007
INVESCO PERPETUAL Income (Income)
UK Equity Income 1,360.63 -11.50 2.75 02-01-2007

dunstonh

Pick one and be done with it. You are looking at 0.00001% difference or something stupid like that in any given period. Sometimes the income version is better, other times the accumulation but it isnt worth worrying about.

bobdauilda

What would be the best way to invest a lump sum of £250000 for a guaranteed monthly or annual income? So far I have found the NS&I income bonds which offer upto 4.6% are there any better ones?

dunstonh

Income bonds @ 4.6% minus 20% tax = 3.68% net. That makes it lower than inflation meaning you money is going down in value in real terms.

If you are drawing the income, you are in effect giving your capital the equivalent of a stockmarket crash every 5 years due to inflation.

There are better options available but they involve investment products. If the income is important (above all else) then a 5% net option guaranteed for life is available.