Help with choosing investments

gadgetmind

Ark_Welder wrote: »

The potential problem with relying on capital gains for income is volatility,

Th alternate argument is to ask why you expect better long term sutainable income from taking (say) 4% pa from a portfolio of only solid equity income holdings versus a portfolio that holds a variety of shares across multiple territories, sectors and cap sizes?

Ark_Welder

gadgetmind wrote: »

Th alternate argument is to ask why you expect better long term sutainable income from taking (say) 4% pa from a portfolio of only solid equity income holdings versus a portfolio that holds a variety of shares across multiple territories, sectors and cap sizes?

Why assume that solid equity income holdings are the only source of income? Why assume that solid equity income holdings are not provided by multiple territories, sectors and cap sizes? Why assume that all equity income holdings are solid?

As an income investor, I do not need to try to time markets to sell at an optimum level - and that would be a temptation. Generators of sustainable equity income do so (or should be doing so) from the operations of the business. Relying on gains from capital relies on market sentiment. Whilst both rely on management and economic factors, in the event of a downturn I would expect capital values to be less reliable than income. And I do tend towards a more cautious and pessimistic nature...

...However, acknowledging that income is not all, I do hold growth-oriented equities with a view to using them to generate income in ten years or so. They include SMT (which also has a policy of growing its income, by the way), and also private equity investment trusts. There are also a few individual equities which are as much to feed a habit rather than being overly sound investment strategy: if they work, the capital gain will be nice; if they don't, the income from elsewhere will (should) suffice.

I was fortunate (eh?) enough to have started investing in 1986, 20 months before Black Monday 1987. Nothing like having personal experience as a teacher!

Now, I cannot state categorically that every quid spent is from income and not from capital: it all goes into 'Cash Holdings'. The excess gets re-invested: sometimes for income, sometimes for growth - but my timescales for the two are different.

The main problem with equity income at the moment is that it is still quite faddish. Plus, too many are chasing yield at the higher end. If anything, these are probably good indicators that low/no yielders might be a better bet over the longer term, starting from here. Certainly the reason why I've been moving in that direction. Although I'm happy to allow (mainly income generated) cash to accumulate right now.


Apologies to d.white for going off track...

d.white

gadgetmind wrote: »

I hold that ETF but didn't before reading the book I recommended.

Yes, this is a hint.

Good to know maybe I am looking along the right lines! Thanks.

d.white

Ark_Welder wrote: »

Why assume that solid equity income holdings are the only source of income? Why assume that solid equity income holdings are not provided by multiple territories, sectors and cap sizes? Why assume that all equity income holdings are solid?

As an income investor, I do not need to try to time markets to sell at an optimum level - and that would be a temptation. Generators of sustainable equity income do so (or should be doing so) from the operations of the business. Relying on gains from capital relies on market sentiment. Whilst both rely on management and economic factors, in the event of a downturn I would expect capital values to be less reliable than income. And I do tend towards a more cautious and pessimistic nature...

...However, acknowledging that income is not all, I do hold growth-oriented equities with a view to using them to generate income in ten years or so. They include SMT (which also has a policy of growing its income, by the way), and also private equity investment trusts. There are also a few individual equities which are as much to feed a habit rather than being overly sound investment strategy: if they work, the capital gain will be nice; if they don't, the income from elsewhere will (should) suffice.

I was fortunate (eh?) enough to have started investing in 1986, 20 months before Black Monday 1987. Nothing like having personal experience as a teacher!

Now, I cannot state categorically that every quid spent is from income and not from capital: it all goes into 'Cash Holdings'. The excess gets re-invested: sometimes for income, sometimes for growth - but my timescales for the two are different.

The main problem with equity income at the moment is that it is still quite faddish. Plus, too many are chasing yield at the higher end. If anything, these are probably good indicators that low/no yielders might be a better bet over the longer term, starting from here. Certainly the reason why I've been moving in that direction. Although I'm happy to allow (mainly income generated) cash to accumulate right now.


Apologies to d.white for going off track...

Not necessary. There is a lot to be learned from this type of discussion, I welcome it.

kidmugsy

The trouble is that all assets look expensive, bonds particularly so. Cash can be reasonably safe if widely distributed, but guarantees that you lose in real terms. ns&i ILSCs are a favourite of ours but have not been on sale for some time. It's a !!!!!! and no mistake. If I had somewhere safe to store it I'd be looking at buying gold, in the form of sovereigns. Instead I have a gold ETF in my SIPP.

You might consider defensive investment trusts/companies such as Personal Assets Trust or Ruffer Investment Company.