Income suggestions from 60K ISA

Linton

I do not think taking a monthly drawdown from selling assets is a completely satisfactory alternative to taking the natural income from a well diversified income focussed portfolio. The problem is that, at least with the platforms I know, you cannot do it automatically. It requires an explicit decision each month as to how much to drawdown and what to sell to release the money and also may well have the disadvantage of incuring transaction costs. By contrast payment of dividends to an external bank account is free and happens automatically with no need to even log in to the account.



If you are going to get some of your income from capital gains, which I agree you should do if you have a large portfolio, it is less effort to just release a single annual cash lump sum as part of routine rebalancing. I would question whether this makes sense with a small portfolio.

SonOf

I do not think taking a monthly drawdown from selling assets is a completely satisfactory alternative to taking the natural income from a well diversified income focussed portfolio. The problem is that, at least with the platforms I know, you cannot do it automatically. It requires an explicit decision each month as to how much to drawdown and what to sell to release the money and also may well have the disadvantage of incuring transaction costs. By contrast payment of dividends to an external bank account is free and happens automatically with no need to even log in to the account.

This may be a DIY vs IFA platform difference then. All the adviser platforms allow fixed regular withdrawals. And most of them allow it to be taken from the cash account within the wrapper.

So, a typical set up would be to use income units on the funds and pay the distributions to cash. You initially float the cash at around 12-18 months withdrawals to give you a buffer. If you want to draw no more than the yield equivalent then set the fixed figure to match the yield.

If you want to draw some of the growth (because the draw rate is higher than the yield or you are running a total return portfolio) then periodically, you are going to have to accept that sales of units are required. With a buffer amount in cash, you can at least control when you do that.

and also may well have the disadvantage of incuring transaction costs.

Certainly an issue if you use direct assets (e.g. ETF/IT) but not an issue if you are using OEIC/UTs.

<.....>it is less effort to just release a single annual cash lump sum as part of routine rebalancing. I would question whether this makes sense with a small portfolio.

That method works for many people. It may not be good for those that lack monetary control.

There are many ways to skin a cat....

fronty

I must admit I do like the idea of paying out a fixed amount each month, currently HL just pay out whatever has come in (minus fees), so the income for my Mum can be a bit lumpy. I don't want to sell units to pay her income but if I could smooth out the payments to her so that they stay fixed or only fluctuate by a small % that could help her with her budgeting.

It seems like the only way to do this with HL is to turn off the "automatically pay out" option, keep the cash in the account then I go in every month and make a manual withdrawal, leaving cash in there if it's been a good month to subsidise months where there's a shortfall. Any cash left at the end of the year can be paid out as a "bonus" or re-invested.

It means I'll have to log on once a month to kick off the withdrawal but tbh I'm logged into the platform most days anyway.

SonOf

Do HL not have an automatic regular withdrawal facility?

fronty

You can instruct them to pay out the income but can't specify the amount, so they'll pay out the whole lot, which is what they are doing at the moment.

xylophone

Would your mother benefit from this?

https://forums.moneysavingexpert.com/discussion/5580163/paying-2880-into-pension-when-retired

NedS

fronty wrote: »

Thanks for the suggestion, looks interesting, but would prefer something that pays out monthly, this one is quarterly.

I understand, but that does further limit your choices. As discussed in the last few posts, I would consider creating a small cash buffer and then consider a range of income funds. If you have a range of funds, and they pay out at different frequencies (some monthly, some quarterly), hopefully you should have income most months, and the cash buffer can smooth this out into regular fixed payments if that is the desire.

xylophone

A relative ran an income portfolio for his PoA donor - one of the higher yielding funds was Twenty Four Select Monthly Income.

ColdIron

SonOf wrote: »

Do HL not have an automatic regular withdrawal facility?

Not for its ISA or GIA

SonOf

ColdIron wrote: »

Not for its ISA or GIA

In which case, I would change platform.

If a provider/platform cannot meet the requirements then it should be filtered out. There is almost certainly a cheaper platform that does this available.