Investing for income?

Thrugelmir

Ryan_Futuristics wrote: »

Well I don't think we've had the same kind of problems Japan or the Eurozone's had ... Japan's been trying to work itself out of an economic hole since the 80s - by most accounts things here look relatively good

An economic hole caused by excessive credit and leveraging of asset prices. Sound a little more familiar now.

colsten

Ryan_Futuristics wrote: »

I suppose the diplomatic thing to say is we don't know - but I place a bet on rates rising or otherwise ... which, in a sense, a bonds fund is

Agree, nobody knows how interest rates will develop. Not sure tough I can follow you on why you would want to invest much in bonds if you expect interest rates to rise.

Ryan_Futuristics wrote: »

However, if you measure passive vs *cheap* active fund performance (anything charging less than 1.5%), or passive vs very actively managed, or passive vs UK equity income performance ... active typically wins all three[/url]

I don't mind how you measure it, you won't convince me of the long term merits of active funds as I have lost my soul many a moon ago to passive investing and it's served me very well to date.

atush

They are higher risk as they are in equites.

As an example of capital fluctuation, check the performance graph for the Woodford fund mentioned. See how it fluctuated in the recent did to see if that level of risk is comfotable for you.

As Linton says, splitting your money into different pots with different risks is likely for you

Ryan_Futuristics

planteria wrote:

interesting Ryan. i always choose managed funds ahead of trackers. i have no problem with a portfolio manager being very long-term & patient though, with very low turnover of holdings.

Absolutely - I think there are very good arguments for both

But I think the real issue is that the index is a sort of abstract concept, and detracts from what you're actually trying to achieve with an investment (in terms of risk, return and investment horizon)

I certainly find at today's prices (with Woodford as cheap as 0.6%) good active management often represents much better value than it used to

Thrugelmir wrote: »

An economic hole caused by excessive credit and leveraging of asset prices. Sound a little more familiar now.

And THAT's why I'm staying between 25 and 50% in equities at the moment

Although to put it in perspective, Japanese assets were trading at 91.6x their adjusted earnings value in the 80s ... thankfully ours are only at about 12.5x (but the US makes me nervous)

colsten wrote: »

Agree, nobody knows how interest rates will develop. Not sure tough I can follow you on why you would want to invest much in bonds if you expect interest rates to rise.

Well a bond ladder means at least you don't risk the capital loss is you choose to hold to maturation ... and you pick up bonds with better yields as rates rise

I'm not holding bonds at the moment because I think for a bond ladder to be worthwhile (with dealing charges and diversification) you'd need about £300k invested in fixed income

I don't mind how you measure it, you won't convince me of the long term merits of active funds as I have lost my soul many a moon ago to passive investing and it's served me very well to date.

Well it never ceases to amaze me how little difference it actually tends to make when you measure across a portfolio

Woodford's only about 12% of my portfolio, so even if it consistently beats the index, it's a relative drop in the ocean compared to my fixed income and emerging markets allocations

There are just *some* regions and sectors where the odds are at least in your favour with actives ... but if I didn't use actives I'd use equal cap-weightings (equal parts FTSE 100, 250 and Small Cap) for my UK exposure as I think there's just much better growth potential than an All Share tracker

TheTracker

Oh look, this looks familiar.

Another plain and receptive OP asking for advice on a common situation - the desire of someone with a considerable sum of money, with little investment experience, and apparently little risk appetite, asking how best to take forward that money. Typically and understandably not enough information is in the OP and the community tries to elicit the vitals. How long? How risk averse? Circumstances?

Then up pops The Woodford Pumper.

TheTracker

Ryan_Futuristics wrote: »

The safest option would probably be a bond ladder

But you said this 6 weeks ago...

Ryan_Futuristics wrote:

I've pondered a 3 year bond ladder, but I think it's questionable whether current yields justify default risk

Has your opinion changed in the last few weeks, or do you have different thoughts on what might be safe for your money versus safe for the OPs £300,000?

Then, after the OP asked for options ...

to provide an income without exposing the capital to too much risk?

You said

Ryan_Futuristics wrote:

If you can ignore what happens to capital, and just want a decent return, I'd probably go ...

Kendall80

I dont mean to intervene in yours and Ryans protracted 'cold' conflict but it is necessary to point out the performance of the Woodford fund thus far.

Since its inception (June?) it has returned 6.5% compared to the sector average of around 0% and the all share return of almost -2%

So, point being, at least Ryan is pushing a pretty good fund that is providing sector/index beating returns.

Its also worth mentioning at this point that the 0.67% annualised one wouldve saved by opting for a passive index tracker over the Woodford fund since June is negligible as the difference in performance is near enough 8.5% That's worth paying a manager for in my opinion.

Aged

TheTracker wrote: »

Oh look, this looks familiar.

Another plain and receptive OP asking for advice on a common situation - the desire of someone with a considerable sum of money, with little investment experience, and apparently little risk appetite, asking how best to take forward that money. Typically and understandably not enough information is in the OP and the community tries to elicit the vitals. How long? How risk averse? Circumstances?

Then up pops The Woodford Pumper.

I beg your pardon?

colsten

Kendall80 wrote: »

Since its inception (June?) it has returned 6.5% compared to the sector average of around 0% and the all share return of almost -2%

So, point being, at least Ryan is pushing a pretty good fund that is providing sector/index beating returns.

Don't be ridiculous, nobody would seriously judge investment performance on a mere 6 month period.

Which "sector" are you comparing with, btw? And are you mixing up returns with price?

Kendall80

colsten wrote: »

Don't be ridiculous, nobody would seriously judge investment performance on a mere 6 month period.

Which "sector" are you comparing with, btw? And are you mixing up returns with price?

I don't think a personal insult is necessary, especially from someone who is usually so well-mannered, helpful and constructive. I was not being ridiculous. I was also not projecting current performance into the future. I was merely surmising the situation as is. In the absence of further data points that is all one can do in truth. Of course the Woodford fund may well fall below the index over defined time periods in subsequent years. Its off to a pretty good start though it would seem.

As for the sector comparison - IMA UK all companies. It was also trended alongside the vanguard FTSE UK index tracker and no I do not believe I was mixing up returns and price. I was just elucidating the fact that a tracker may save you 0.5% to 1% annually but if the managed fund regularly outperforms by a greater margin than this it would seem sensible to choose the latter.