Creating a HYP

Welshy213

Hi all,

New to all this so please be nice and I hope you can all point me in the right direction.

So I thought it is about time to do some more investing.
I currently have 20k in equities on the aim market, this was money I am prepared to lose for a chance at a good return.

I now want to build a HYP to start bringing in some money, I want to set up a S&S ISA self select if possible, keeping Tax as low as possible 40% tax.

Is it a good idea to self select just equities, I was looking at maybe the below split evenly to full ISA value or is it better to spilt across a number of funds, I know this will have a higher cost be should offer a little more diversity, in percentages if nothing else.


Aviva
Man Group (May be swap with RSA)
BAE Systems
Scott. & South. Engy
AstraZeneca
Sainsburys
British Land Co
Vodafone Group
HSBC Hldgs
Royal Dutch Shell A

Many thanks

mike88

I would consult the Motley Fool Board. Some pretty savvy investors over there that are obsessed with HYP and will give you 20 or so of the highest yield shares. There is a special HYP board. Link here:

http://boards.fool.co.uk/high-yield-share-strategies-51166.aspx

Welshy213

Thanks Mike, I will do

gadgetmind

You'll get far better advice from the Motley Fool HYP Practical board, but ...

Aviva, accident waiting to happen, but I hold some anyway.

Man group, not for me. All over the place.

The rest are all HYP favourites, but most go for Tescos rather than Sainburys. I hold the later.

As for diversity, you do ideally need cash, bonds, global, (maybe) small cap, and property alongside. Or maybe look at what the Vanguard UK Equity Income tracker covers? If you hold a mix of this, and global equity, and bonds, and then maybe boost areas such as EM that you think stand the chance of better growth, you might be sorted.

My HYP (well, my wife's actually!) is unwrapped (not in an ISA!) and is balanced against our NS&I index linked certs and cash. If you hold in an ISA, you ideally need something uncorrelated alongside, that ideally rises as equities crash, so you can rebalance.

Have you read any books on balanced portfolios and why they beat pure equities? Recommendations available on request.

Ifts

As previous 2 posters suggest Motley Fool Board is a good place to go.

If you are considering Shell then if I was you instead of going for the 'A' shares, I would go for the 'B' shares (RDSB)

http://www.shell.com/home/content/investor/share_price_information/difference_a_b/

Welshy213

Thanks again all.

A quick look at the motley site, its bloody awful to read but a mind of information.

Gadget,

After the HYP I will still have circa 200k to play with, some will go into a 2 year cash bond, and yes I will be looking at EM, China, US UK small cps etc. As for books no nothing so far

Ifts, I will take a look at that one.

Cheers

John

gadgetmind

welshy213 wrote: »

After the HYP I will still have circa 200k to play with, some will go into a 2 year cash bond, and yes I will be looking at EM, China, US UK small cps etc. As for books no nothing so far

Stop!

That's a fair wodge and needs investing with care. You first need to decide how much to run in pensions, how much in ISAs, and what will (have to!) be unwrapped. This is a long-term tax and life planning issue that goes far beyond asset classes or individual companies. Please backtrack and look at the big picture first. What wrappers you use for investments is in many ways more important than the investments themselves. Yes, pensions sound boring, but it's really just all the same investments in a different wrapper.

After that, invest £15 in a copy of Smarter Investing by Tim Hale and 2-3 hours of your life reading it.

Only after that will you understand this next bit. -> Yes, I run a HYP, but it's a tax-efficient dividend play that runs alongside a few low-fee balanced portfolios. I'm a pretty shoot-from-the-hip guy, but no way would I use a HYP as the core of my investments. Some would, not me.

Once your money (and future streams) are in the right wrappers, and the right asset classes, (maybe) you can have fun with a HYP.

mike88

I've dabbled with HYP and I soon came to realise that shares are high yielders for a reason. As the unit cost falls the yield rises so those who invested in high yielding shares in banks for example lost a packet. Lloyds was a favourite and look where the share price is now. Remember that the FTSE is down over 20% since its peak in March 2000. The NIKKEI 225 is down 75% since its peak in 1989. And bear in mind that Thomas Cook shares fell 65% yesterday. Do not think investing in shares is the be all and end all as it isn't.

With £200k to spend I would invest gradually (drip feed) in as tax efficient a manner as possible as previously advised. With that amount of money to invest you need to be very careful as stock markets and currency exchange rates are so volatile leading me at least to the conclusion that shares are unlikely to recover markedly in the forseeable future. You need a very balanced portfolio in order to reduce risks.

However, if you still favour HYP there is also the Motley Fool HYP Practical board to look at as mentioned above - link here:

http://boards.fool.co.uk/high-yield-hyp-practical-51676.aspx?mid=12410679

IronWolf

gadgetmind wrote: »

After that, invest £15 in a copy of Smarter Investing by Tim Hale and 2-3 hours of your life reading it.

Yes...do this...you should absolutely not google smarter investing tim hale pdf....

Welshy213

gadgetmind wrote: »

Stop!

That's a fair wodge and needs investing with care. You first need to decide how much to run in pensions, how much in ISAs, and what will (have to!) be unwrapped. This is a long-term tax and life planning issue that goes far beyond asset classes or individual companies. Please backtrack and look at the big picture first. What wrappers you use for investments is in many ways more important than the investments themselves. Yes, pensions sound boring, but it's really just all the same investments in a different wrapper.

After that, invest £15 in a copy of Smarter Investing by Tim Hale and 2-3 hours of your life reading it.

Only after that will you understand this next bit. -> Yes, I run a HYP, but it's a tax-efficient dividend play that runs alongside a few low-fee balanced portfolios. I'm a pretty shoot-from-the-hip guy, but no way would I use a HYP as the core of my investments. Some would, not me.

Once your money (and future streams) are in the right wrappers, and the right asset classes, (maybe) you can have fun with a HYP.

Gadget,

Many thanks I will look at the book, and possibly the PDF first (thanks IronWolf)
Pensions, I am currently running with a contributor pension 5% plus 8% employer, only 34 so still have a few years to pay into that.
I was hoping to put Full S&S ISA allowance for this year and next into a HYP and leave it there for a good while.

In the meantime, I'll take a read of the PDF/Book to see where I am going wrong or missing completely.

Thanks again

John

moneylover

You are being put right by some excellent people above and thats the path to follow including the book
I agree with what has been said about MAN - I bought it when it dropped in price a while ago and now wish I hadnt. I am quite a new investor and have learnt now that shares often drop in price for good reason. Its dropped again today becasue it went ex dividend. Investors Chronicle don't like MAN at the moment, even when it was down to 140 they said it was fair value.
Investors Chronicle ran an article about three weeks ago they screeened for good dividends from strong companies that should stand the test of time - I will try and dig the article out and post the list, however it included Vodafone, Cineworld and Sainsburys. There were about 7 or 8 companies from memory.