Monthly income

JohnRo

DAY 1408 - update for those interested.

tl;dr - Monthly income hits £400, LSLI gone, JPGI replacement, deployment of new £20K allowance.

Monthly Income hit the trailing annual £400 a month mark in April, by this time next year it should be close to £500 a month. The next target I'm aiming to achieve is this thing producing a five figure annual income as soon as possible, so still a few years off that.





The LSLI cash settlement finally landed, which closes out my involvement, a real shame that's gone, it was a steady earner.

The investment plan for the FY ahead is shown in the rebalancing schedule below.

The big purchases this year, other than the JPGI replacement for LSLI, will be NAIT and BRNA in May which have thankfully pulled back from their recent 'Trump trade' highs. Hopefully they stay that way or slide further, allowing the purchase of somewhat cheaper US income than looked likely a month ago. US stocks will probably crash the day after I buy but I'm used to that happening with uncanny regularity.

While on that subject, ADIG seems to be steadily clawing it's way back, under new management. I'm happy to hold that long term and see where it goes. ALAI, BRWM and PEW continue to climb out of deep holes they dug for themselves with some rebalancing assistance.



The BEE tender offer went through and seems to have worked out quite well. A cheap, timely rebalance that's helped to divert some of the gains it's made this past year.

Future purchases are timed loosely prior to XD dates. I want to get things bent into shape this year so it's going to require an extra purchase in 6 of the 12 months starting April, May and June. Rather than the ideal one each month at CSD, this allows more lines of stock to be included, given the new larger ISA allowance and income pool. I also want to capture the dividends earlier in the year rather than later.

Purchase plan is..

EAT & EDIN (April) done
BRNA & NAIT (May)
JETI & JPGI (June)
SOI & UKML (July)

beyond that I'll have to see how performances change the priorities.



I'm not going to worry about a few extra transactions in cost terms, the equivalent annual cost percentage is starting to fall away nicely so a small blip will soon be absorbed by capital growth and an increased income stream, longer term at least.

Total costs are also reduced, I've been calculating SDRT on a couple of holdings it doesn't apply to, so fixed that silly mistake. It means despite including this years planned transactions the total cost is little changed and the related cost percentages are all a chunk lower.



Anyway here's another wall of squiggly lines showing how everything is rattling along.





That's all folks, hope those interested find it mildly amusing, next update probably towards the back end of this year.

If you spot any errors please let me know. Much appreciated. Over and out.

MrLeek

Fascinating to read and the graph !!!!!! is excellent - and something that I'm starting to think about as I start my own investment journey to better understand its performance. Possibly a combination of MoneyDance to understand day-to-day spending and basic investments planning supported by spreadsheets to capture the detail (which I need to design).

Your screenshots has given me a few ideas to implement some useful features - thank you for sharing.

JohnRo

That's the intention, just to give a little back hopefully, I've had plenty help on here in the past and no doubt will again in the future.

Visualisation serves a useful purpose imho which is why I like to chart the data, a picture paints a thousand words and all that.

green_man

Great info John.

I have a similar portfolio with the aim of providing £400+ per month tax free income to supplement my pension in 4 years time. Mine is slightly more focused (12 stocks) but I have a number of the same stocks as yourself (TFIF,MYI,EAT,BRWM,ALAI,AAIF) and have recently added PEW.

I admire your dedication to maintaining your preferred sector balance, I'm really struggling adding A North American fund due to me believing it is largely overvalued and provides insufficient income.

JohnRo

Cheers, with regard to the US, I reason that the current price is what it is, I don't have the inclination or ability to determine whether that price is more than it should be now, or will be in the future.

I also believe that the US allocation I've chosen is reasonable, others may disagree, that's fine.

The priority this year as detailed is to get the allocations I have chosen, for better or worse, realigned and into some sort of shape as they aren't currently.

I'm also reasoning that the US purchases this month mean the subsequent income generated can be used now. Should the US prices fall further then that income can be ploughed back in and add some extra value to the process in terms of reducing average costs.

Conversely should the US trust prices continue to bounce around current levels or rise then now is as good a time as any to be purchasing US income, given the above.

I accept the relatively low income on offer from the US trusts as simply a cost of diversification and I'm comfortable with that.

I would also add, when the US sneezes the rest of the world catches a cold.

My favourite investment quote from Uncle Warren.

'We don't have to be smarter than the rest. We have to be more disciplined than the rest.'

JohnRo

Assessing whether this is worth the effort, in light of recent threads, I've decided to add a parallel VWRL portfolio into the spreadsheet using the same contribution/purchase points and including the dividend being reinvested.

It's not a benchmark and doesn't strictly replicate the addition of existing holdings, as some of the IT purchases were delayed quite considerably and also some contributions were split between two ITs so costs are also a factor there but it's close enough to give a side by side comparison imo.

On the face of it, it looks disastrous but I'm not so sure that's the case at all. Bearing in mind the first year was a bit of a cement mixer and the last three have been 'under construction', whereas VWRL will have had the consistent growth benefit or otherwise of all it's constituents at all times throughout.

Looking individually at VWRL versus the components in this portfolio on trustnet I can see that the EM, Oriental and specialists components have held back relative performance in recent years, also the debt vehicles will never compete with equities in this sort of environment so they're causing a drag effect currently which VWRL doesn't suffer.



All in all I think it's not looking too bad in terms of being worthwhile. If in a year or two the gap has continued to expand then I may have to start rethinking things but I'm expecting it to start narrowing.



This is how trustnet interprets the relative performance,
A is VWRL
B is this portfolio

although no account of purchase dates is being taken there.

I've recently added VTA and RDL to the debt category, a longer term boost to income and exposure to higher risk US debt. At the same time a bit of a punt on RDL turning around after the Argon debacle.

Comments welcome.

bigadaj

Interesting, maybe this is just an example of how difficult it actually is to beat the market over the longer term.

JohnRo

Yes, the thought has definitely crossed my mind. I do think it'll be the next couple of years that determine whether it's going the right way now that the bulk of it is in place.

The quoted income stream is more than double that of VWRL so that ought to make up some ground when the current equity trend changes direction. I wouldn't expect it to keep pace with VWRL when equity markets are breaking records like they are currently, which is why I'm far from unhappy about the situation, quite encouraged if anything.

As always time will tell.

JohnRo

DAY 1522 - update for those interested.

tl;dr - Additions, cash reserve, more of the same.

Monthly Income is nearing the trailing annual average £450 mark, heading towards the monthly ~£500 projected for April 2018 or thereabouts.




Planned purchases since April have changed slightly but the double monthly purchases are complete for now, from here I'm expecting a rebalance purchase once a month. The equivalent annual dealing costs have continued to drop away in percentage terms as expected.



Looking to add more... I can picture eyes rolling and heads shaking

JAI was intended to replace AAIF but recent performance has made me question that, I've decided to hold and add instead, reasoning that the Asia region is vast and that there's enough latitude to hold four trusts in that region. The thought process being that given the scope of that region there is a fair chance the sum may prove greater than the parts with rebalancing.



THRL is on the specialist radar as a tilt on UK demographic trends and the ongoing privatisation of UK healthcare in general, it straddles UK healthcare and property, it's a misfit geographically. Good yield though.

I've decided for now that IBT is a better specialist healthcare fit after recent structural changes. Gives opportunity for some good growth, is somewhat globally oriented (US mainly) and now provides decent income to redistribute as required.

VNQI is a longer term possibility, pencilled in for now and designed to get some exposure to eastern and oriental real estate markets. I'm considering moving VNQ and VNQI into a SIPP for dividend tax purposes but given the amounts invested it's looking an unlikely move, haven't weighed the relative costs of a suitable provider yet.



RDL's valuation slid soon after purchase, as seems to be the way for me, however that's no bad thing going forward if the income stream is maintained. I'm still hopeful there's a recovery story, spectacular or otherwise, on the cards there.

Decided to start building an internally generated cash reserve with a view to redeploying it strategically, it may prove a pointless exercise that simply drags on overall performance but with the possibility of ISA allowance rises in the future, market wobbles, corrections, crashes and the fact I may not be in a position to make maximum ISA contributions each year (at current allowance levels) it will perhaps at least create a buffer and allow me to extend the process a year or so should that prove the case. At what cost will have to be seen.

I don't expect annual average values to maintain their current levels but for now projections are looking healthy.




That's all folks, hope those interested find it.. interesting, next update towards the end of this year.

Over and out.

takesyourchances

Great to read through John, excellent keep it up