How to get £1,000pm from a lump sum

A_T

Thrugelmir wrote: »

The past performance disclaimer was introduced for good reason.

yes it's a disclaimer to avoid accusations of mis-selling

Aminatidi

A_T wrote: »

yes it's a disclaimer to avoid accusations of mis-selling

I do find the idea fascinating that this forum is populated with people who have never looked at the past performance of either asset classes or specific investments to try to gain some understanding of how they may have performed historically to help them decide if they appear to be suitable for their goals.

A_T

Aminatidi wrote: »

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%.

this guy explains it well

https://www.youtube.com/watch?v=vvVc6-TnwSg

Linton

A_T wrote: »

.......
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 suggest you look at the asset allocations of a range of low equity pension funds. I think you will find that safe developed world government bonds are now forming a decreasing % of investments compared with the alternatives such as corporate bonds, EM government bonds, property etc



See this article in the FT:https://www.ft.com/content/e27c430f-30bc-3cf6-9917-962ca2eee807
Also: https://www.pensionsage.com/pa/Pension-fiduciaries-warned-against-bond-investment.php

A_T

Aminatidi wrote: »

I do find the idea fascinating that this forum is populated with people who have never looked at the past performance of either asset classes or specific investments to try to gain some understanding of how they may have performed historically to help them decide if they appear to be suitable for their goals.

Yes. And thinking that a strategy that has always worked in investing history (because economies grow and governments make necessary adjustments to monetary policy) will no longer work. Presumably becuase they believe economies will no longer grow and governments won't make necessary adjustments?

Aminatidi

A_T wrote: »

this guy explains it well

https://www.youtube.com/watch?v=vvVc6-TnwSg

As a new investor I've always thought that if you want to see dividends in action go buy a share on XD date and watch what happens to the share price.

It's always felt like quite a basic and simple to understand example of where your "income" comes from as the capital you literally just gave them will have decreased by the amount they're now "giving" you.

Linton

Aminatidi wrote: »

I do find the idea fascinating that this forum is populated with people who have never looked at the past performance of either asset classes or specific investments to try to gain some understanding of how they may have performed historically to help them decide if they appear to be suitable for their goals.

History is a valuable source of insight into how investments work but when you look at history you need to do so with knowledge of the then current environment. Just taking individual statistics in isolation is very dangerous.

A_T

Linton wrote: »

I suggest you look at the asset allocations of a range of low equity pension funds. I think you will find that safe developed world government bonds are now forming a decreasing % of investments compared with the alternatives such as corporate bonds, EM government bonds, property etc

See this article in the FT:https://www.ft.com/content/e27c430f-30bc-3cf6-9917-962ca2eee807
Also: https://www.pensionsage.com/pa/Pension-fiduciaries-warned-against-bond-investment.php

Where did I suggest the OP only invest in government bonds? I said Lifestrategy which on both sides of the atlantic uses a bond allocation which is at least 50% non-government.

People need to answer points that have actually been made rather than answer points they wish had been made. In short too many strawmen.

Aminatidi

Linton wrote: »

History is a valuable source of insight into how investments work but when you look at history you need to do so with knowledge of the then current environment. Just taking individual statistics in isolation is very dangerous.

Absolutely, but I don't think you can completely ignore it either?

If I said I was looking for a low risk investment product with minimum volatility I don't think many people would be suggesting Scottish Mortgage Trust would they?

Equally if I said I was looking to grow my money over a long period of time and I had a high appetite for volatility and could sustain heavy losses in the hopes of growing my money over the long term I'd expect something like Scottish Mortgage Trust would come up.

There's a reason for that and I'd suggest some of that reason would involve looking at the historical behaviour.

Fully understand and appreciate that if someone says "go and buy shares in Scottish Mortgage Trust as they can only go up" that's a bit too specific but I don't think anyone has suggested that about anything have they?

Linton

Aminatidi wrote: »

As a new investor I've always thought that if you want to see dividends in action go buy a share on XD date and watch what happens to the share price.

It's always felt like quite a basic and simple to understand example of where your "income" comes from as the capital you literally just gave them will have decreased by the amount they're now "giving" you.

I think you miss the key points...


Companies that pay decent dividends are in general different to those that produce high growth. They tend to be in mature industries that are cash generative but with little opportunity for growth related investment. Typical examples being sectors such as the utilities and infrastructure, oil, household goods, insurance etc. If such companies do not give their excess cash to the shareholders they are liable to waste it, perhaps in mergers and acquisitions or in speculative investment outside their area of expertise, both of which are likely to destroy shareholder value.



If you need a reliable income it is essential to get that income from as many sources as possible. In particular one should diversify taking both dividends from safe and steady companies and capital growth from those companies that can provide it. If you dont actually need the income then your strategy may well be different, though history has shown that income producers can fare much better than high growth companies during major downturns.