Income vs Accumulation Funds

patch9495

Morning All,


I am after some advice re income vs accumulation funds ands which would be best for me.


I am 24 and currently hold some units in Vanguard Global all cap Acc fund. I am looking to invest for minimum of 5 years and am looking to grow the money over this period of time.


Can someone please advise the benefits of both the income and accumulation versions of this fund??


Thanks

george4064

You'd be much better off investing in the Accumulation version, easier to manage and you can literally buy & forget!

In the unlikely situation you need to take income from this fund (I wouldn't see why at your age), you can always just sell a fixed amount per month/quarter/whatever to satisfy your income requirement.

I assume this fund is held within an ISA?

patch9495

Hi,


Yes the fund is held within a S&S ISA

cloud_dog

patch9495 wrote: »

Morning All,


I am after some advice re income vs accumulation funds ands which would be best for me.


I am 24 and currently hold some units in Vanguard Global all cap Acc fund. I am looking to invest for minimum of 5 years and am looking to grow the money over this period of time.


Can someone please advise the benefits of both the income and accumulation versions of this fund??


Thanks

People would buy the 'inc' versions of the funds where they want to take (use/withdraw) the natural yield from the fund. This may be because it forms part/all of their income stream or perhaps they may use the income to diversify or re-balance elsewhere.

patch9495

And what does the acc version of the fund do please?

Lokolo

patch9495 wrote: »

And what does the acc version of the fund do please?

It reinvests the money into the fund, raising the unit price.

Just compare the fund Acc vs Inc. The Acc price goes up a lot more than the Inc version. In the inc version, payments are paid out of the fund, Acc they are kept within.

Imagine £100, and £10 income is available. You hold 10 units at £10 each (£100).
On an inc, you'd have 10 units with each unit worth £10 and £10 in cash. Total portfolio is £110.
On an acc, you'd have 10 units, with each unit worth £11. Total portfolio is £110.

Brian65

Dividends paid in $.
Changing them to £ incurs a fee, and reinvesting them incurs another.
Both can be avoided with the ACC version

bowlhead99

Brian65 wrote: »

Dividends paid in $.
Changing them to £ incurs a fee, and reinvesting them incurs another.
Both can be avoided with the ACC version

The fund about which he's talking in the OP is the FTSE Global All Cap Index Fund, which is priced in pounds and pays a couple of pounds (GBP) dividend per share per year?

Maybe you are confusing with some of their dollar funds or ETFs like VWRL?

Brian65

bowlhead99 wrote: »

The fund about which he's talking in the OP is the FTSE Global All Cap Index Fund, which is priced in pounds and pays a couple of pounds (GBP) dividend per share per year?

Maybe you are confusing with some of their dollar funds or ETFs like VWRL?

Fair Point Yes I was,