Do these sorts of funds/products exist?

lesta1980

was chatting the other day with someone and they quickly mentioned a fund that works on an income sort of basis paying out a set %, say 5% for sake of the thread, each month but the conversation quickly moved so I got no info. basically you still have access to withdraw if need be and it did rather appeal to me to be able to compound that each month and actually know it fixed and steady. But do these really exist? Any info would be greatly appreciated

dunstonh

was chatting the other day with someone and they quickly mentioned a fund that works on an income sort of basis paying out a set %, say 5% for sake of the threa

The mention of 5% suggests an investment bond. That has a tax deferral limit of 5% p.a. The investor can draw 5% a year and not give rise to an immediate tax liability. These used to be very popular in retirement. No so much nowadays as the tax changes in recent years have made them less favourable and more niche.

However, it is a withdrawal rate. It is not a rate of return. The investment will fluctuate in value as per normal. It could go up 10% one year, down 8% the next, up 3% the following etc etc. However, you would get a continuous 5% withdrawal.

Nowadays, you tend to use ISAs and unwrapped UTs to do the same unless you fit a certain niche.

lesta1980

would you be able to point me in the right direction to have a look at these products or even better compare a few of them. More out of interest really

Edit - just to mention I saw the tax thing you mentioned above, capital gains tax was mention and a quick sum was i'd just be under the limit to pay that if it makes any difference at all of what the thing was?

dunstonh

Edit - just to mention I saw the tax thing you mentioned above, capital gains tax was mention and a quick sum was i'd just be under the limit to pay that if it makes any difference at all of what the thing was?

Capital gains tax does not apply to investment bonds.

would you be able to point me in the right direction to have a look at these products or even better compare a few of them. More out of interest really

Lookup onshore investment bonds (there are offshore versions too). However, you really unlikely you would use them now as S&S ISAs and unwrapped UT/OEICs would be better in most cases. They too can support fixed regular withdrawals using the same method under their own tax wrapper rules.

lesta1980

dunstonh wrote: »

Capital gains tax does not apply to investment bonds.



Lookup onshore investment bonds (there are offshore versions too). However, you really unlikely you would use them now as S&S ISAs and unwrapped UT/OEICs would be better in most cases. They too can support fixed regular withdrawals using the same method under their own tax wrapper rules.

ok if CGT doesn't apply it wasn't an investment bond and could well of been the latter you referred to (the person mentioning CGT knows his onions and where it would apply). just searching now for unit trust with fixed income so you've pointed me in the right direction i think