Investing during Brexit

economic

Why do you want so much income focused investments at age 28? Shouldn't you focus more on growth or at least have it balanced between growth and income?

Audaxer

sixpence. wrote: »

I would be interested in seeing how, when fees are taken into consideration, you are generating 6% income.

Generally speaking the funds that generate 6% income do so at the expense of capital growth. That is fine if the income portfolio you are setting up is concentrating on getting the best income available. I prefer funds that aim to provide income and capital growth, with a focus on dividend growth as well, but you would probably average about 4% income for a diversified portfolio of these funds. Although I like passive funds it's very difficult to get a diversified portfolio of passive funds that would give you a decent level of growing income of around 4% as well as some capital growth.

You appear to be overly concerned about charges of actively managed funds affecting your income, but yield figures, and published total return figures, are after charges are deducted, so I don't think you should discount active funds just on that basis.

sixpence.

economic wrote: »

Why do you want so much income focused investments at age 28? Shouldn't you focus more on growth or at least have it balanced between growth and income?

I have my reasons, prefer not to go into it tho, if that's okay. I know it's unusual.

Audaxer - a 4% income sounds about what I am looking for. What was your process of researching these funds? I don't own any managed funds in my growth portfolio yetm and am still reading/learning about how to find a choose them.

Linton

sixpence. wrote: »

...
I will consider your points, in the mean time do you want to share your income portfolio? I would be interested in seeing how, when fees are taken into consideration, you are generating 6% income.

%allocation Investment
Shares
1.3 Go Ahead
1.4 Scot & Southern Energy
1.4 National Grid
1.5 Stobart
1.5 Galliford
1.6 New River Retail
1.6 United utilities
1.8 Kier Group PLC
1.9 Marstons
2.0 Phoenix
2.0 Vodaphone
2.4 Glaxo
2.8 Chesnara
2.9 Shell
3.0 HSBC
3.1 Beazley

Funds/ITs
3.5 Threadneedle Emerging Bonds I Inc
6.6 L&G Emerging Gov Bond Idx (US$)
8.2 Princess Private Equity
10.8 L&G High Income Trust X Gross Inc
11.4 Schroder Asian Inc Max Z
12.5 European Assets Trust
14.9 Schroder High Yield Opportunities Z Inc

As has been said several times fees dont change the data. What is reported is what you get.

My portfolio is larger than most, so unless you have >£100K available holding that number of investments probably isnt worth the effort.

EDIT: I just looked into the L&G fund you suggested. Do you mean this one? http://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/l/legal-and-general-mixed-investment-20-60-class-i-accumulation

If so it has a disappointing yield and a high cost to boot...

Slightly wrong fund, my link was to the income version. However Trustnet shows a Yield of 3.6% which disagrees with HLs 1.something. In any case that was chosen as an example and is a fairly new fund.

Another example: http://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/m/mi-miton-cautious-monthly-income-b-income. Again trustnet disagrees with HL about the yield, HL 3.26%, Trustnet 3.85%. Looking at the actual dividends paid in the past year and the current unit price Trustnet seems correct.

Both these funds invest in a wide range of shares and bonds. You can find others from Trustnet by looking in the mixed investment sectors and sorting by Yield.

A final point. You seem set on FT100 investing (FTSE AllShare is 80% FTSE100) on the mistaken belief that this will protect you against currency fluctuations. It wont as the FTSE largest companies are globally priced against other similar global companies quoted in the USA, Europe, Far East etc. If the value of the £ rises against other currencies the price of the largest UK quoted shares will fall to keep the £ price compatible with the $ price of similar companies.

You can get around this problem, if it is a problem, by investing in UK mid Range and Small Companies but to get best results from these you probably need to go Active.

Linton

sixpence. wrote: »

You are still essentially owning a slice of British equity overall, which is quite diverse in itself... I get what you're saying though.

But its not nearly diverse enough. Where are the vehicle manufacturers, electronics giants, world class software companies etc etc?

JohnRo

It's also about how much of what, not just what.

14 companies account for more than half the UK100 index.
25 companies account for two thirds of it.
Concentrated in Banking, Oil & Gas, Mining & Pharma.

Playing with numbers to highlight the point,
a market cap fall of 1% by the largest UK100 company, RDS, would require a market cap gain of 52% by the smallest UK100 company just to overcome the negative impact on the index valuation.

Reaper

Just thought I'd chip in to say Europe doesn't get many suggestions but I am thinking of investing more there. World markets have been spooked by the thought of governments cutting back on QE and raising interest rates.

However I think Europe is unlikely to do either in the near future not least because unemployment is around 8%

Not something I've researched properly yet, but it's high on my To Do list

economic

Reaper wrote: »

Just thought I'd chip in to say Europe doesn't get many suggestions but I am thinking of investing more there. World markets have been spooked by the thought of governments cutting back on QE and raising interest rates.

However I think Europe is unlikely to do either in the near future not least because unemployment is around 8%

Not something I've researched properly yet, but it's high on my To Do list

you'll probably be wasting your time researching "if European stocks will be better due to QE".

dividendhero

JohnRo wrote: »

It's also about how much of what, not just what.

14 companies account for more than half the UK100 index.
25 companies account for two thirds of it.
Concentrated in Banking, Oil & Gas, Mining & Pharma.

Playing with numbers to highlight the point,
a market cap fall of 1% by the largest UK100 company, RDS, would require a market cap gain of 52% by the smallest UK100 company just to overcome the negative impact on the index valuation.

It is a concern that the FTSE 100 is so concentrated - but Xtrackers may have the answer:j

They do an "equal weight FTSE 100" tracker, it does what it says on the tin - ie every FTSE100 company is held as a 1% stake.

The code is XFEW

sixpence.

Right.

I've reflected on this and I think that the problem is that after researching how to set up my growth portfolio, I tried to apply similar rules to an income portfolio (only using index funds) which was a bit naive. I now have 3 questions:

1. Is there diverse, lost cost, single fund (such as the VLS) which I can stick a five figure number into and gain income from? 3-4% yield.

2. Are there any good books/resources for researching funds for income? I have read stuff focussed on growth. Maybe I should look into more retirement based info (as it's income based) although I do want partial growth as well.

3. I really don't want to do 10, 20, 30, 100 hours of research on this. I'm not mathematically minded and it doesn't interested me that much. Is talking to an IFA a good idea? Or will they be somewhat biased. I am with Hargreaves so could use their service...

Would massively appreciate any input here, and thanks so much to everyone who has contributed already