Where to invest monthly income going forward

itwasntme001

Hello,

I have a couple of questions relating to the increase in post tax income I will be getting due to a pay rise and the fact that I do not want to invest in a pure equity or bond fund (or combination) going forward for the excess.

I contribute to pensions etc but after that and normal spending, I will have around £3k a month I do not want to be sat in cash nor do I want to risk it in buying equity funds (and certainly no bond funds either).

So am looking at some sort of all weather fund or multi-asset fund which aims at preserving real wealth and so want active management who have a decent track record and reputation.

I know of Capital Gearing Trust and Personal Assets Trust - are these the only ones that would fit my criteria?  Does anyone have any negative opinions on these two funds?

On a separate but related question, I am coming up to £700k with my broker interactive investor, do you think its wise to start investing further proceeds into another platform so as to not rely on a single platform?  I prefer to stick to II given the fee but should I be paranoid about II failing?

Thanks

tacpot12

I don't think you should be paranoid about II failing, but you should would be wary of it. The impact of a failure is much greater if you rely on income from your investments as any sort of hiccup with the platform provider could mean that your income fails to arrive on time.  If I had £700K+ invested and was dependent on the income I would definitely split it across two platforms. If you are not dependent on the income arriving reliably, you could leave it all with II and be ok, but I think I would split it, or at least stop investing with II and start with someone else when you can get an account setup. 

Linton

Another fund like CGT and PNC is Troy Trojan, an OEIC.  That's about it really.  In the same area are RIT (Ruffer) and RCP but my experience has been  they dont really deliver the goods so I sold all my holdings in the past couple of years.  RIT long term returns have been very low and RCP is high in non transparent private equity and is relatively volatile.

As to splitting it - with £700K I think I would.  Is there a natural way of splitting, eg a SIPP with one platform and an ISA with another?  Or if your £700K pot includes both his and hers accounts you could split that way.  What you want to avoid, I think, is splitting within an account type.  The point being that it is difficult to transfer money between ISAs and SIPPs and between different people's accounts so they have to be managed separately anyway.  However if you split within one type you have extra hassle if you want to sell an investment held on one platform to buy another one which is normally held elsewhere.  If you dont watch out  bits of every investment are held everywhere.

itwasntme001

Linton said:

Another fund like CGT and PNC is Troy Trojan, an OEIC.  That's about it really.  In the same area are RIT (Ruffer) and RCP but my experience has been  they dont really deliver the goods so I sold all my holdings in the past couple of years.  RIT long term returns have been very low and RCP is high in non transparent private equity and is relatively volatile.

As to splitting it - with £700K I think I would.  Is there a natural way of splitting, eg a SIPP with one platform and an ISA with another?  Or if your £700K pot includes both his and hers accounts you could split that way.  What you want to avoid, I think, is splitting within an account type.  The point being that it is difficult to transfer money between ISAs and SIPPs and between different people's accounts so they have to be managed separately anyway.  However if you split within one type you have extra hassle if you want to sell an investment held on one platform to buy another one which is normally held elsewhere.  If you dont watch out  bits of every investment are held everywhere.

What's PNC?  Do you mean PNL?

Alexland

I will give your thread a bump, and have a go at the main question.

itwasntme001 said:

So am looking at some sort of all weather fund or multi-asset fund which aims at preserving real wealth and so want active management who have a decent track record and reputation.

With a good chunk already invested and more being added regularly it might be worth reflecting on how important the market value of these investments really are to your plans? We have a similar scale of investments and it occurs to me that the dividends we reinvest (mostly locked away inside pension wrappers) are now enough to support a modest lifestyle despite having another one or two decades of accumulation ahead. So in terms of managing risk it might be better to simply keep up a high contribution rate (aiming for natural yield income) rather than reducing likely long term return by derisking further into lower return assets which are sensitive to the same economic pressures.

As such if you can accumulate enough that you never need to sell capital then buying into diversified income streams becomes more important than the value that could be realised upon selling those streams. Having accessible income streams is also useful in supporting financial security in advance of retirement so we decided to switch our main S&S ISAs into investment trusts which are still offering smoothed 5% yields likely to at least rise with inflation over the long term. Knowing the mortgage repayments are nearly covered by IT income is reassuring.

The covid crash has been a good reminder that I don't really care about market prices going down. I am actually a bit happier when they are lower as it means the contributions and dividend reinvestment should deliver better future growth.

Sorcerer2018

If you are going to live off dividends it's important to have cash reserves in case you have issues. I am looking at a dividend reserve of 1 years worth of spending. As well as having an emergency fund of cash for things TV, Fridge, Car breaking down etc. I am planning on retiring in the next 3-4 years with at least £30,000 in cash for these emergencies. Just waiting to build that up and then i will hopefully retire before I am 50. Fingers crossed.

Alexland

Sorcerer2018 said:

If you are going to live off dividends it's important to have cash reserves in case you have issues.

Yes I'd still be tempted to hold around 10% maybe 3 years of spending as cash.

itwasntme001

Alexland said:

I will give your thread a bump, and have a go at the main question.

itwasntme001 said:

So am looking at some sort of all weather fund or multi-asset fund which aims at preserving real wealth and so want active management who have a decent track record and reputation.

With a good chunk already invested and more being added regularly it might be worth reflecting on how important the market value of these investments really are to your plans? We have a similar scale of investments and it occurs to me that the dividends we reinvest (mostly locked away inside pension wrappers) are now enough to support a modest lifestyle despite having another one or two decades of accumulation ahead. So in terms of managing risk it might be better to simply keep up a high contribution rate (aiming for natural yield income) rather than reducing likely long term return by derisking further into lower return assets which are sensitive to the same economic pressures.

As such if you can accumulate enough that you never need to sell capital then buying into diversified income streams becomes more important than the value that could be realised upon selling those streams. Having accessible income streams is also useful in supporting financial security in advance of retirement so we decided to switch our main S&S ISAs into investment trusts which are still offering smoothed 5% yields likely to at least rise with inflation over the long term. Knowing the mortgage repayments are nearly covered by IT income is reassuring.

The covid crash has been a good reminder that I don't really care about market prices going down. I am actually a bit happier when they are lower as it means the contributions and dividend reinvestment should deliver better future growth.

Yeh I understand about natural yield but for me, I am about 50% in equities and so adding more, especially at today's valuations I just do not feel comfortable with.  I do also have a BTL which provides for a lot of my normal spending.  So to me buying into wealth preservation funds makes a lot of sense, I can then reallocate to equities whenever there is a significant drop.

Even though I am only in my 30s, 50% equities feels about right.