Get a grip woman!

enthusiasticsaver

I think it is fairly common for the few years just before retirement for the pension to be moved into less volatile investments like cash or bonds so I am not sure Scottish Widows had any special insight into future stock market performance. Good they did it though.

Karmacat

Thanks for the update, SL, good to know your thinking.

Suffolk_lass

Thanks enthusiasticsaver, some useful insights. I wonder if you would be willing to share how you determined which income funds to go for? Did you receive advice from an IFA? BTW I was not assuming any particular expertise within Scottish Widows, they are well known for being very cautious, but it is reassuring to know that these companies are (probably all) providing cautious advice as we get closer to retirement, and for most of us, our risk profile and indeed risk appetite changes.

With regard to DH, he will retire at the end of August (so he gets paid for the summer holidays) and will get his teachers' pension from 1st September. There will be a moderate lump sum that will go to pay down the mortgage again (we might elect to clear it at that point, or reduce the overpayments back to interest only to minimise draw against our reduced income, and rely on greater return on our capital to outpace the interest we are paying). Our plans for his DC pension were to begin to draw down after the start of the following tax year - so April or May in 2020, 2021, 2022 and 2023, possibly in 25% of what is there across the four years. As his teachers' pension is below the PA tax threshold at least about £4k of this will be tax free each year, depending on the rent from the house our Son shares with two friends (for which they pay rent). After the tax year 2023-4 we must consider that DH is due to take his State Pension, so the tax position will change for him, assuming no uber-generous Chancellor increases the PA by several thousand. When he starts to receive his State Pension we might get rid of our share of DS's house, in his favour or by selling it. He might not want to live in the middle of town by then.

Suffolk_lass

If I were to be looking at dividend income from shares (as explained, this is not my choice, but this might help others who are younger! and do have an appetite for shares in their portfolios) - over the last ten years, the following are the top shares for dividend growth (according to a Times article I saved last Autumn)

1. Halma
2. Scottish Mortgage (an investment trust)
3. Johnson Matthey
4. Spirax Sarco Engineering
5. Bunzl
6. DCC
7. Sage Group (this might be changing - well worth checking out the changing profile on this one as someone has downgraded it in the last month and they have sold on part of the group)
8. Imperial Brands Group
9. British American Tobacco
10. Vodafone

Suffolk_lass

The top ten Investment Trusts for year-on-year dividend over the last ten years (in Dec 18) are:

1. City of London
2. Bankers
3. Alliance Trust
4. Caledonian Investments
5. BMO Smaller Companies
6. F&C
7. Brunner
8. JP Morgan Claverhouse
9. Murray Income
10. Witan

And for Unit Trusts (a different article in the financial press):

1. Rathbone Income
2. Premier Income
3. Aviva UK Equity Income
4. Premier Monthly Income
5. Schroder Income
6. Franklin UK Equity Income
7. BMO Responsible UK Income
8. Jupiter Income
9. RBS Equity Income
10. Threadneedle UK Equity Income

Finally (sorry) I have looked at a combination of capital and dividend growth over the last ten years and I think that 2 from the top 4 overall will be my initial choice (bit more research to do first):

Unicorn UK Income
Chelverton UK Equity Income
Schroder Income Maximiser
JO Hambro UK Equity Income
Montanaro UK Income
Schroder UK Alpha Income
Royal London UK Equity Income

The top 4 overall are:

1. Chelverton UK Equity Income
2. Unicorn UK Income
3. Montanaro UK Income
4. Royal London UK Equity Income

The first three of these concentrate on smaller companies that have done well over the last ten years. All four have experienced teams and take a long-term view with the article authors (2 articles supporting the same position) concluding that experience and patience perform. For me, I like the idea that the funds have experienced managers and analysts that will provide continuity of approach.

I also don't want everything I am investing in to be UK based (there is a suggestion that UK is undervalued, hence these recommendations) so I will look at some global funds in the first two groups too. As I say, a bit more research to do before I commit.

Starmummy

Thanks for this SuffolK!
I really should understand more about the workings of the stock market given my education ( alas I understand how share values and dividends and company valuations work, but not how to actually trade them)
I have investments in Alliance and a couple of others. I had read about British American Tobacco being a good punt from a number of sources but for ethical reasons I can't bring myself to invest. I really do need to look into this more and diversify my portfolio.

enthusiasticsaver

Suffolk_lass wrote: »

Thanks enthusiasticsaver, some useful insights. I wonder if you would be willing to share how you determined which income funds to go for? Did you receive advice from an IFA? BTW I was not assuming any particular expertise within Scottish Widows, they are well known for being very cautious, but it is reassuring to know that these companies are (probably all) providing cautious advice as we get closer to retirement, and for most of us, our risk profile and indeed risk appetite changes.

It sounds like you have a good handle on this and I did lots of research at the time of investing as you are doing. We did see an IFA but did not use him as he made a glaring mistake on his calculations and I could not trust him after that.

The funds I chose were multi asset as I am of the view, rightly or wrongly that they are less volatile, they consistently outperformed the benchmark for 20-60% mixed investment, the charges were not extortionate and they did not ignore capital growth in favour of income exclusively. They also pay out monthly which not all of them do which helps with our budgeting.

enthusiasticsaver

I would most definitely say do not go for solely UK. I deliberately went global in view of the fact the UK may have a rocky ride economically over the next few years. I think Premier is 26% UK based and Artemis even less than that (around 15%).

Suffolk_lass

You are right enthusiasticsaver, I need to check out global or emerging markets (the latter tend to be more risky than the former, which are often mostly USA). I definitely have more work to do before I buy.

Suffolk_lass

£122,852.54 - This was my total debt when I started this diary

DEBTS
Total [STRIKE]£122,852.54[/STRIKE] £38,140.89 (all mortgage, everything else is done and gone) - that is £84,711.65 or 68.95% paid off so far.


SAVINGS
£12,663.57 Emergency pot
£12,438.63 S&S ISA with Fidelity International
£9,388.93 DH's S&S ISA (with Charles Stanley Direct]
£11,727.25 - 7 year bond with Skipton BS - matures Oct 20

[STRIKE]£38,630.43[/STRIKE] £46,217.48 Total actual cashable savings and 19.64% better than when I started (our priority is to clear debts)

SURPLUS £8,076.59 (against debts)

I hate paying interest and so we will continue to pay down as fast as we can, while living our lives. Our daily interest rate is back to just under £2 a day now - all on the mortgage

I received my last pay last week, and my TFLS for my pension arrived on Tuesday, enabling me to transfer £20k to pay down the mortgage, and around £19k to instant savings, and on to the other CA so that DH can take advantage of his full ISA allowance (£20k) by topping up his CSD account. That money (and the residue) is sitting in CA so invisible on this update at the moment

Other things for 2019 -

MFiT(T5) - I have signed up to completely clear our mortgage within the next three years.
MFW in 2019 - I have set a revised £40k target and will post updates here
Grocery Challenge - I have set a £3000 annual target for the year to include all my stores, all toiletries, groceries and cleaning products. Some but not all cat food and litter - it splits down to 11 months at £200, some for stores and the rest for December, including all the Christmas food and drinks. Alcohol is also included but it seems to breed round here - we have loads lurking Spend is at £247.98 or 8.27% so far
Save £12k in 2019 - I have set a target of £7k. As I am finishing work it will be lower
Weight I would like to have lost a stone from Christmas by Easter. I was going to log my food here but have already failed to do this and I keep having things like a bit of (Christmas) Stollen bite with a cup of tea in the afternoon. I must brave the cold and get outside more, that will stop this
Garden - what a mess. Still. Signed up on the All new growing your own in 2019 thread in Green-Fingered. I have bought seed potatoes, onion sets and ordered seeds so far. Need to do serious digging cutting and weeding. Half term week allows both of us to do lots
Leisure - Booked parts of a trip to Italy - more to confirm
Friends and Family - My Mum is increasingly disappointed that she is not so fit these days, and it gets her down. Telling her she is nearly 90 does not help. DS has been invited to join one of his favourite bands and is re-enthused and full of improved self-esteem. Who cares if they don't make any money!
Health and Wellbeing - I definitely have some tendonitis in my right shoulder/arm/elbow. Regular walk with the neighbour's dog is my first step towards improved fitness