£10,000 a year from 10 shares?

Linton

My income portfolio provided 5.5% dividends and 3.3% capital growth in the past year. Dividend paying shares have for a while been performing better than "growthy" shares. And a number of FTSE250 sharers have been both good dividend payers and significantly growthy.

chucknorris

Linton wrote: »

3.8% dividend is pretty poor to attract someone seeking to live off natural income. A broadly diversified range of dividend paying shares and funds could provide more like 5%.

However the fund is a lot safer than just holding 10 UK shares. I cant see why the original article should make a point of such a small number.

I have no interest in individual shares, I don't like that level of risk, our plan for retirement income is:


40% Investment property
20% Dividend income (from funds)
12% Fixed pension (DB + state pensions)2
28% Drawing down assets (at a rate of about 3.5%)

chucknorris

gadgetmind wrote: »

We're currently living in low return times.



It could, but the more you strive for yield, the more risk you take on and the fewer "growthy" companies you'll have in the mix.



That it never mentioned diversity, and how their approach was critically short of it, is definitely its major flaw.

I would be very happy to take a lower return from a fund rather than attempt to achieve diversity with a basket of individual shares. I'm not criticising those that prefer that method, it is just that I want less risk and input.

gadgetmind

Linton wrote: »

Dividend paying shares have for a while been performing better than "growthy" shares.

Yes, there is a dash for yield. Quite a few shares in our high yield portfolio have been pushed down to yields of close to 2%.

Linton

chucknorris wrote: »

I would be very happy to take a lower return from a fund rather than attempt to achieve diversity with a basket of individual shares. I'm not criticising those that prefer that method, it is just that I want less risk and input.

Its not either/or, both makes more sense especially as there are useful dividends to be taken internationally where funds are the only practical option. Which is where you get extra diversity. Though in any case you do need a fair number of different shares - 10 is much too low a number.

Linton

gadgetmind wrote: »

Yes, there is a dash for yield. Quite a few shares in our high yield portfolio have been pushed down to yields of close to 2%.

I sell when the current yield drops below 3-3.5%.

chucknorris

Linton wrote: »

Its not either/or, both makes more sense especially as there are useful dividends to be taken internationally where funds are the only practical option. Which is where you get extra diversity. Though in any case you do need a fair number of different shares - 10 is much too low a number.

I just don't want to go anywhere near individual shares, we have become quite wealthly and we can't really spend what we have, unless we start investing in things that could lose a lot of value. Hence my (probably irrational) avoidance of individual shares.

gadgetmind

chucknorris wrote: »

I have no interest in individual shares, I don't like that level of risk

Unless you are either prepared to diversify widely, or unless you're using some specialist knowledge to select shares, then I agree.

But apropos nothing, I do hope some time that my daughter goes to see an IFA and shows them her current portfolio. One (very!) high beta tech share, one subordinated bank preference share, yikes! And then they could move to IRR ...

chucknorris

Linton wrote: »

I sell when the current yield drops below 3-3.5%.

Believe me I have taken all the risks amassing our wealth, now is not the time for us to continue with risk. We can't actually spend what we have, so there isn't any point in taking on risk.

Thrugelmir

Aged wrote: »

Those are EXACTLY the sort of people the article is aimed at (in my humble opinion of course). Its aim is to show that if you are looking to derive an income from your pension pot, you will be far better off 'investing' it than handing it over to the banks.

Why have you singled "banks"? Vast majority of fund managers have no connection to banks.