£10,000 a year from 10 shares?

Aged

This article might be of interest to those thinking of making the transition from saving to 'investing'

http://www.moneywise.co.uk/investing/stocks-and-shares/10-shares-to-give-you-10000-annual-income

TheTracker

It might be, but it shouldn't be. Moving your life savings into the shares of ten large UK companies alone would be widely considered folly.

Gram_Parsons

You "only" need an intial wedge of £182K. Wasn't much point in me clicking the link then.

Aged

Jeez, enough with the snidey comments already! I said it might be of interest to some people, if it doesn't interest you feel free to move on along.

longwalks1

I followed a fairly well know, public trader and done really well in a couple of years. I will never hold any real amount of money in a savings account again I doubt

verybigchris

What a bizarre article.

It starts by talking about ISAs, but then they decide to invest 12 years worth of ISA subs in one lump sum, and from then on they seem to forget that it was an ISA article.

They invest exactly £21,532 in each of eight companies, with no explanation of that figure. Is that their lucky number? Was a relative born on 21st May 1932? What did the other two firms do wrong to only get £5,000?

gadgetmind

I CBA to read the article, but -

1) 10 companies isn't enough. Figure on 15-20 as a bare minimum, and I'd prefer 25+ for this sum.
2) Wanting £10k from £182k is a 5.5% yield, which is a *lot* to shoot for at the outset and risks both capital drops and dividend cuts.

So saying, my wife owns shares in many of those listed, but a whole load of others too.

Yes, a bad article that glosses over a lot of important detail.

bowlhead99

Well, it would be a bit crazy to invest more than £5k in each of the two AIM companies given the generally high risk of that exchange compared to the average "savers" appetite and the fact that they haven't both actually paid a dividend yet...

Then the question is just, if I needed to get 10k income from a portfolio of 10 companies and I had already picked these two allegedly high-yielding companies here for £10k investment total, what equal amounts of money would I need to put into my next 8 favourite shares to create a portfolio of 10 companies and top me up to 10k income (assuming historic yield level is maintained)...

Then the 21.5k falls out as the reverse engineered answer.

Maybe they gave up on the ISA angle as they realized that investors with £10k of basic rate tax band wouldn't need it because they wouldn't have divi tax to pay anyway...

jimjames

Aged wrote: »

Jeez, enough with the snidey comments already! I said it might be of interest to some people, if it doesn't interest you feel free to move on along.

I don't see it as being snidey comments, more that people are pointing out the obvious flaws in the article that otherwise wouldn't get highlighted.

A mix of income & corporate bond unit trusts would give a similar result with far less risk and hassle.

gadgetmind

adindas wrote: »

Hmmm 5.5% yield with high risk exposure and 3% interest WITHOUT ANY risk ??? No brainer Simple decision.

No, not really. If you're talking about interest from cash savings, or a fixed interest bond, then the interest received won't rise and then value of the capital will slowly fall due to inflation.

Yield from dividends rises over time, usually at greater than the rate of inflation (but this depends on mix of income/growth companies) and the value of your capital will also grown, albeit in a rather "lumpy" way.

Over long (multi-decade) periods, fixed interest alone can't deliver the goods.

Cherokeebluesome

Hi All, I've read the article referred to and TBH IMO it's a load of tosh ! I've tried the calculations to ascertain if the figures quoted are correct. Well, on the basis that the TOTAL investment for each of the 1st eight stocks is £21,532 ( prior to purchase ) then the number of shares purchased I calculate, bears no resemblance to the figures quoted, irrespective of whatever transaction costs I use ( including zero ). Further, I cannot find figures for the dividend quoted (pence/share ) that match what are quoted in the article apart from that for GSK. Consequently the figures for annual income expected, would, using the quoted figures be less than £10,000. Perhaps more knowledgeable forum members can shed any light on what I can only describe as discrepancies or perhaps I'm calculating wrongly. Needless to say IMO I believe it would folly to think about, or, actually invest in the quoted scheme.