How to get £1,000pm from a lump sum

A_T

Aminatidi wrote: »

But it's impossible to get that level return with taking a level of risk.

I don't think I'd read this thread as anyone suggesting any fund is guaranteed to return a given amount but you can do backtesting independently of specific funds and take some inference from what a given portfolio might return going off as much evidence as you have available.

Yes there is no risk-free way of doing what the OP wants (if he wants to preserve the capital) but Lifestrategy-type stocks/bond approach is arguably the lowest risk. If it's not then someone ought to tell Vanguard (with $5 trillion AUM), pension funds, endowments, governments, etc. that they are all doing it all wrong.

bostonerimus

easterbunni wrote: »

I have 30K worth of ITs that generated ~£1750 in dividends last year. Times that by 8.3 (250K / 30K) is about ~£14500 divs a year?


It is a mix of fairly high yield ITs so future divs are not guaranteed etc

There's no free lunch. IT dividends are just managed distributions from a multi-asset investment portfolio. You can do the same using the total return from you own portfolio or something like a multi-asset fund such as VLSxx etc. eg. 250k invested in VLS60 at the beginning of 2019 would have returned over 25k. (about 3750 would have been dividends and the rest capital gains).

Jonathan_Kelvin

A_T wrote: »

A lifestrategy-type approach will have worked for what the OP wants for 50+ years. And there is nothing irresponsible in suggesting putting your money broadly into the investible world.

What is your suggestion?

My suggestion is that you stop giving such appalling advice. Do you have any response to the points that ai raised that explicitly set out why the future is different to the past in terms of interest rates and quantitative easing?

You are looking backwards from the height of one of the biggest exercises in planned asset inflation that has ever happened, yet claiming for no apparent reason that it will continue.

I’ve explained, politely, some of the factors that suggest that you are wrong, what is your reason for believing that you are right?

I think that your refusal to answer is very telling.

Jonathan_Kelvin

Thrugelmir wrote: »

The past performance disclaimer was introduced for good reason.

Indeed.

I’ll say something that I regret if I keep trying to argue with someone who believes that they can give financial advice without understanding this, so will step out of this conversation.

bostonerimus

Jonathan_Kelvin wrote: »

My suggestion is that you stop giving such appalling advice. Do you have any response to the points that ai raised that explicitly set out why the future is different to the past in terms of interest rates and quantitative easing?

We can make educated guesses about possible returns using current P/E ratios, 10 year treasury rates and the moments of historical data, but that's all they are because we can't know the future.

firestone

bostonerimus wrote: »

There's no free lunch. IT dividends are just managed distributions from a multi-asset investment portfolio. You can do the same using the total return from you own portfolio or something like a multi-asset fund such as VLSxx etc. eg. 250k invested in VLS60 at the beginning of 2019 would have returned over 25k. (about 3750 would have been dividends and the rest capital gains).

But to many people its psychological and i would guess more so with retirees in that they don't want to touch the lump sum or withdraw growth as they feel safer leaving the lump sum and taking div's as a substitute for savings interest and once invested does not require much in the way of decision making (but hopefully they understand the funds can drop)
You see the same thing when people point out the pro's & cons of P/Bonds with inflation etc but some people are still happy with them under those terms as they are not losing any of the original investment

Aminatidi

I would suggest go and search for Terry Smith's opinion on investing for income.

To paraphrase his view is don't.

Invest for capital appreciation and draw an income from the balance.

A_T

Jonathan_Kelvin wrote: »

My suggestion is that you stop giving such appalling advice. Do you have any response to the points that ai raised that explicitly set out why the future is different to the past in terms of interest rates and quantitative easing?

You are looking backwards from the height of one of the biggest exercises in planned asset inflation that has ever happened, yet claiming for no apparent reason that it will continue.

I’ve explained, politely, some of the factors that suggest that you are wrong, what is your reason for believing that you are right?

I think that your refusal to answer is very telling.

So basically you've ignored the OP's question and instead headed off into a discussion of your own about modern monetary policy and expect everyone else in the thread to join you. If you'd read the thread properly you will have seen I have said that the lifestrategy approach enables one to be broadly invested in the world's investible assets.

I've politely mentioned more than once the performance of the lifestrategy 20/40 type approach which has returned about 5% after inflation for at least 50 years (during high interest rates and inflation) - not just the last 10 - but you just keep repeating about QE without apparently having read the thread properly.

So there's 2 questions here. An answer to the OP's question and my question of why the approach outlined won't work from this point on (meaning that Vanguard, pension funds, endowments, etc. are doing it wrong).

I think that your refusal to answer both is very telling.

firestone

Aminatidi wrote: »

I would suggest go and search for Terry Smith's opinion on investing for income.

To paraphrase his view is don't.

Invest for capital appreciation and draw an income from the balance.

I would not argue with Terry Smith and like a lot of people i have done well with his fund and a lot of what he says about income funds and their benchmarks etc is true.But he is pushing a growth fund(and if i remember the story right he also talked about tax which many are getting around with ISA/pension) and to be fair not many are as clued up as him or even as some of the posters on this forum
Knowing when to take profit or even when to sell in falling markets requires making decisions that many are not comfortable with and they would prefer natural income with the hope of growing and even passing on the pot.You would think as a pension fund manager previously he would assume not everyone is as pro-active as he would like i.e annuity v drawdown

Aminatidi

firestone wrote: »

I would not argue with Terry Smith and like a lot of people i have done well with his fund and a lot of what he says about income funds and their benchmarks etc is true.But he is pushing a growth fund(and if i remember the story right he also talked about tax which many are getting around with ISA/pension) and to be fair not many are as clued up as him or even as some of the posters on this forum
Knowing when to take profit or even when to sell in falling markets requires making decisions that many are not comfortable with and they would prefer natural income with the hope of growing and even passing on the pot.You would think as a pension fund manager previously he would assume not everyone is as pro-active as he would like i.e annuity v drawdown

I think that's fair but I also believe from what I've read (in general not this thread) that in the UK there's apparently a bit of a "thing" around income where it's almost the done thing?

I lurk on a few forums and I've noticed on one in particular that tends to be dominated by older and retired people that there is a very definite focus on yield seemingly above almost anything else i.e. I'll buy a turd if it yields 6%.

All I'm suggesting to steamy (I feel especially bad for the turd reference now) is that they look at all the options and avenues available.

Also perhaps keep in mind with £250K their options aren't "all or nothing" so plenty of room for different types of investment.

I'll leave it at that as I wouldn't want to annoy Jonathan