Halifax Corporate Bond Fund

Ranger8

Hello everybody, back for some of your wise advice as to what to do with these bonds in which I invested £140k in 2005. (my only investment)
I was getting a quarterly dividend of £1565 which is now down to £836
I"m 65 in poor health with a small monthly Local Govt pension but no State pension yet
Grateful for any help as to what to do, ie sell them or hope the dividend goes back up ?

dunstonh

Hello everybody, back for some of your wise advice as to what to do with these bonds in which I invested £140k in 2005. (my only investment)

Ouch.  £140k in one area was not great investing. Although not atypical of a bank in that period.

Grateful for any help as to what to do, ie sell them or hope the dividend goes back up ?

Firstly, it's not dividends.   Corporate bonds pay interest.  So, you are not making use of your tax free dividend allowance with this fund.

Clearly you couldn't put £140k in an ISA.   So, did you bed & ISA each year?  (i.e. move from the collective investment account into the ISA each year to use the annual ISA allowance)  -  ideally using your pension contribution allowance would have been good for some of that period too.

You have mentioned that the distributions have fallen but what is the fund value now?

Modern investing tends to look at the total return rather than just one segment of it (income in your case).  You can draw a fixed monthly withdrawal based on a reasonable expectation of the long term total return and keep a cash float in the investments to cover short term volatility.

However, I am wary that your knowledge in these things is likely to be very low and I don't want to confuse you and I suspect you haven't had anyone advising you as the investments you have are not very good.   So, lets take it in small steps.   

Basically bottom line is that what you have is not very good and needs an overhaul.  

Ranger8

Thanks for your help and quick reply and yes you guessed right my "knowledge" is very limited.
I've been using the dividend to live on so no ISAs

jimjames

Do you know what your investment is worth now? Looking online it seems that the price may have increased from around 20p to 24p per unit over the time you've held them so the £140k may have increased even if the income payments have dropped.

Ranger8

Just found out my investment has been transferred to Scottish Widows 

Malthusian

Ranger8 said:

Hello everybody, back for some of your wise advice as to what to do with these bonds in which I invested £140k in 2005. (my only investment)
I was getting a quarterly dividend of £1565 which is now down to £836
I"m 65 in poor health with a small monthly Local Govt pension but no State pension yet
Grateful for any help as to what to do, ie sell them or hope the dividend goes back up ?

If the government pension plus around £6,260pa was sufficient for your needs, the State Pension may do likewise in around a year, unless you are drastically short of a full National Insurance record. What is your State Pension forecast to be? https://www.gov.uk/check-state-pension

With that in mind, have you considered spending the money and enjoying yourself?

dunstonh

Ranger8 said:

Just found out my investment has been transferred to Scottish Widows 

Scottish Widows is owned by Lloyds Bank.  They rebranded all their legacy brands from Halifax, Lloyds, Black Horse and Clerical Medical under the SW brand.   So, it hasn't been transferred.  Its just got a different logo.

Ranger8

dunstonh said:

Ranger8 said:

Just found out my investment has been transferred to Scottish Widows 

Scottish Widows is owned by Lloyds Bank.  They rebranded all their legacy brands from Halifax, Lloyds, Black Horse and Clerical Medical under the SW brand.   So, it hasn't been transferred.  Its just got a different logo.

Its just I can't access any details from my Halifax account

Ranger8

Malthusian said:

If the government pension plus around £6,260pa was sufficient for your needs, the State Pension may do likewise in around a year, unless you are drastically short of a full National Insurance record. What is your State Pension forecast to be? https://www.gov.uk/check-state-pension

With that in mind, have you considered spending the money and enjoying yourself?

Luckily the wife's still working, she a nurse, loves the job and not retiring anytime soon so my income was just enough to get by.
Waiting for my State pension looks like the option I'll be taking because although I'd love to spend we have 4 kids and 10 grandkids to leave it to.

Thrugelmir

Ranger8 said:

Hello everybody, back for some of your wise advice as to what to do with these bonds in which I invested £140k in 2005. (my only investment)
I was getting a quarterly dividend of £1565 which is now down to £836

Yields on fixed interest stocks have been falling for many years. Following the downward trend of UK base rate. As bonds mature. New issues to replace them will have far lower interest rates. Unfortunately there's no inflation protection either. The downside of holding such instruments in recent years. 

Malthusian

Ranger8 said:

Luckily the wife's still working, she a nurse, loves the job and not retiring anytime soon so my income was just enough to get by.
Waiting for my State pension looks like the option I'll be taking because although I'd love to spend we have 4 kids and 10 grandkids to leave it to.

Who if they've inherited your capacity for thrift and self-sacrifice will do nothing with the money except leave it to their 100+ grandchildren, until the money is so dissipated nobody notices it.

You can have a lot of fun with £140k (plus capital growth since 2005) and still leave a sizable inheritance.