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Generating an income from large lump sum
Comments
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gadgetmind wrote: »Where does that 2% come from?0
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Earlier upthread there was a mention of 3%, so I knocked half off that to be pessimistic.
Ah right. I thought you were trying to work out how much annual income you could take from that £50k. Not enough to live on is the unfortunate answer.
You *might* be able to put £2880pa into a pension, which HMG will bulk up to £3600, but this depends on what other pensions you have and what benefits you might stand to lose in retirement.I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
I am not a big believer in gilts in the current climate but do hold various PIBS and corporate bonds which provide an average yield of 7%. However I would not class them as uncorrelated to equities - as we saw in 2008/09, when the storm hits everything is affected.
With PIBS, the important criteria is the solidity of the issuer so hold Nationwide and Coventry.
Also forgot to include Aberforth Smaller in previous post (yield around 4%)
The only issue I have with gilts is that if thing do improve in the future, they could take a massive hit, so you need to be prepared to get out fast.0 -
gadgetmind wrote: »Ah right. I thought you were trying to work out how much annual income you could take from that £50k. Not enough to live on is the unfortunate answer.0
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I'm British, but live and invest in the USA. I'm thinking of retiring back to the UK, so I'm starting to learn about the investing world in the UK. Two things immediately occur to me; there has been no discussion of Asset Allocation or fees so far. To produce a certain return risk also has to be considered so I thought there would be some discussion of portfolio theory.
I've been looking at the fees UK brokerages charge for unit trusts etc.....man they are expensive.0 -
ukexpatriate wrote: »Two things immediately occur to me; there has been no discussion of Asset Allocation or fees so far. To produce a certain return risk also has to be considered so I thought there would be some discussion of portfolio theory.
Some early messages discussed equity/bond mixes and uncorrelated assets.I've been looking at the fees UK brokerages charge for unit trusts etc.....man they are expensive.
Yes, which is why I prefer using low-fee trackers (mainly Vanguard), ETFs and (to a less extent)) Investment Trusts and even some OEICs (modern UTs).
The book "Smarter Investing" by Tim Hale is very UK-centric and covers portfolio theory, fees, asset allocation, and much more. It really is a "one top shop" IMO.
As for how to reduce fees, that's frequently discussed hereabouts but the answer depends on whether you want active or passive, how your investments are wrapped (pension, ISA, etc.), and how large various pots are.I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
gadgetmind wrote: »Some early messages discussed equity/bond mixes and uncorrelated assets.
Yes, which is why I prefer using low-fee trackers (mainly Vanguard), ETFs and (to a less extent)) Investment Trusts and even some OEICs (modern UTs).
The book "Smarter Investing" by Tim Hale is very UK-centric and covers portfolio theory, fees, asset allocation, and much more. It really is a "one top shop" IMO.
As for how to reduce fees, that's frequently discussed hereabouts but the answer depends on whether you want active or passive, how your investments are wrapped (pension, ISA, etc.), and how large various pots are.
Good to know. I'm definitely a passive investor, but still the UK Vanguard and Fidelity offerings are not that attractive when I compare them with what I can get in the US. My US Vanguard expense ratios are about 0.07%. Also the UK market seems to be dominated by firms selling income products that have ridiculous fees and expenses. Because of tax issues and US restrictions on foreign investing by US citizens, I'll probably keep most of my money in the US, but take advantage of the larger interest rate on cash saving accounts in the UK.0 -
ukexpatriate wrote: »My US Vanguard expense ratios are about 0.07%.
Is that for US holdings? Other markets have higher frictional costs, and Vanguard's US Equity Index tracker in the UK has z 0.2% Total Expense Ratio (TER) so not silly. Their Global Ex UK tracker is about 0.3%.Also the UK market seems to be dominated by firms selling income products that have ridiculous fees and expenses.
Just because that's what many firms here are selling doesn't mean it's what wise investors are buying. Remember, the UK is the market where a (foreign!) beer company used the advertising tag line "reassuringly expensive" here so we're clearly not the most cost-sensitive consumers on the planet, at least not when taken as a group.Because of tax issues and US restrictions on foreign investing by US citizens, I'll probably keep most of my money in the US, but take advantage of the larger interest rate on cash saving accounts in the UK.
<head asplodes>
We have high savings interest rates? Sub-inflation, for the most part IME.I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
Back on the subject of investment trusts, what the consensus as to either purchase amount or number of funds to buy for a lump sum investment of £50k? My next purchases would likely be around £30k-£40k but not until this time next year.
I'm thinking maybe 5 good funds at £10k a go. Probably City of London, Murray International, Aberforth Smaller Companies, Aberdeen Asia Smaller Companies and maybe F&C Commercial.0 -
The real IT experts are on MF, but ...
The high yield ITs tend to be on premiums as income is the new black, but the more growth oriented ones are still good buys. I have Aberforth and Murray on my watch list.I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0
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