We'd like to remind Forumites to please avoid political debate on the Forum... Read More »
We're aware that some users are experiencing technical issues which the team are working to resolve. See the Community Noticeboard for more info. Thank you for your patience.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
Ideas for your Income Portfolio
Options
Comments
-
JohnWinder said:ColdIron said:JohnWinder said:Linton said:
To pick up on another point - a portfolio which focuses on income can be just as diversified as one that focuses on long term return, if not more so. Income can be gained from a very wide range of world wide investments, often in areas which would not appear if one's objective was Total Return.Let's cross out high yield fixed interest, since I nominated bonds, and those are bonds by the sound of it.Now I'll choose a portfolio for total return which, well diversified, holds stocks, bonds, infrastructure, property and commodities and private equity. And if you think I've changed the goal posts, my original bonds are clearly income type assets compared with four you suggested, yet they belong in a total return portfolio.I think you have switched the goal posts, you were talking about a global stock and bond tracker. A bespoke portfolio can contain anything you choose
4 -
JohnWinder said:NedS said:That's certainly the case for me, where I need to front load income for a 10 year period between early retirement and DB/state pensions, after which essential spending is covered and I can revert to drawing a more sustainable long-term income to support discretionary spending. At that point, a switch to a growth strategy may make more sense to me for years 65 - 95.
One could reduce the risk by holding a cash buffer. However this cash buffer is part of your overall portfolio effectively behaving as a zero return bond alongside the near to zero return bonds you would in any case be holding under a total market approach.
So one may ask the question of whether holding a large % of close to zero return assets is an optimal allocation strategy.
The other factor is ongoing management time and effort. Is continually making the active decision of which assets to sell and then running your platforms process to extract the cash the best use of your time? Would it not be better if the cash just turned up regularly and automatically in your bank account?
6 -
Linton said:JohnWinder said:NedS said:That's certainly the case for me, where I need to front load income for a 10 year period between early retirement and DB/state pensions, after which essential spending is covered and I can revert to drawing a more sustainable long-term income to support discretionary spending. At that point, a switch to a growth strategy may make more sense to me for years 65 - 95.
One could reduce the risk by holding a cash buffer. However this cash buffer is part of your overall portfolio effectively behaving as a zero return bond alongside the near to zero return bonds you would in any case be holding under a total market approach.
So one may ask the question of whether holding a large % of close to zero return assets is an optimal allocation strategy.
The other factor is ongoing management time and effort. Is continually making the active decision of which assets to sell and then running your platforms process to extract the cash the best use of your time? Would it not be better if the cash just turned up regularly and automatically in your bank account?“So we beat on, boats against the current, borne back ceaselessly into the past.”1 -
bostonerimus said:Linton said:JohnWinder said:NedS said:That's certainly the case for me, where I need to front load income for a 10 year period between early retirement and DB/state pensions, after which essential spending is covered and I can revert to drawing a more sustainable long-term income to support discretionary spending. At that point, a switch to a growth strategy may make more sense to me for years 65 - 95.
One could reduce the risk by holding a cash buffer. However this cash buffer is part of your overall portfolio effectively behaving as a zero return bond alongside the near to zero return bonds you would in any case be holding under a total market approach.
So one may ask the question of whether holding a large % of close to zero return assets is an optimal allocation strategy.
The other factor is ongoing management time and effort. Is continually making the active decision of which assets to sell and then running your platforms process to extract the cash the best use of your time? Would it not be better if the cash just turned up regularly and automatically in your bank account?0 -
Thrugelmir said:bostonerimus said:Linton said:JohnWinder said:NedS said:That's certainly the case for me, where I need to front load income for a 10 year period between early retirement and DB/state pensions, after which essential spending is covered and I can revert to drawing a more sustainable long-term income to support discretionary spending. At that point, a switch to a growth strategy may make more sense to me for years 65 - 95.
One could reduce the risk by holding a cash buffer. However this cash buffer is part of your overall portfolio effectively behaving as a zero return bond alongside the near to zero return bonds you would in any case be holding under a total market approach.
So one may ask the question of whether holding a large % of close to zero return assets is an optimal allocation strategy.
The other factor is ongoing management time and effort. Is continually making the active decision of which assets to sell and then running your platforms process to extract the cash the best use of your time? Would it not be better if the cash just turned up regularly and automatically in your bank account?1 -
Linton said:
The problem with going for a total market approach in retirement is short or medium term volatility. When the overall market crashes do you carry on drawing down the income you need for day to day living regardless, selling excess fund units and then worry whether you will outlive your investments?
The other factor is ongoing management time and effort. Is continually making the active decision of which assets to sell and then running your platforms process to extract the cash the best use of your time? Would it not be better if the cash just turned up regularly and automatically in your bank account?Yes, I like the comfort in having less volatility. But I'd be concerned I was putting my head in the sand by drawing the same income during medium or even short term volatility. If an 'income' portfolio, or the half that is, won't in the long run provide better returns than a total return portfolio, it would seem to me wrong to ignore the volatility we are talking about. Unless of course, the portfolio is big enough to be comfortably sustainable however it's constructed.As to agonising over which assets to sell if dividends/coupons aren't enough, one approach is to use that to keep your portfolio at the highest risk level you're comfortable with: if the equity fraction has gone too high, sell them; if they've dropped below your '60%' level, sell some bonds. It's a challenge, whatever way, to make a pot of uncertain returns last you for a lifetime of uncertain length, but there we are.0 -
ColdIron said:
I wonder if you can give an example, as this seems counter-intuitive. If one chose a global stock and bond tracker for total return, what portfolio focused on income might be more diversified than that?
I think it should remain. As noted above, high yield fixed interest isn't a sizeable or even typical component of an equity and bond tracker, especially one geared towards total return. It will likely contain investment grade bonds. Not all fixed income or bonds are the same
Infrastructure, property, commodities, private equity, perhaps high yield fixed interest?Let's cross out high yield fixed interest, since I nominated bonds, and those are bonds by the sound of it.
0 -
Prism said:Thrugelmir said:bostonerimus said:Linton said:JohnWinder said:NedS said:That's certainly the case for me, where I need to front load income for a 10 year period between early retirement and DB/state pensions, after which essential spending is covered and I can revert to drawing a more sustainable long-term income to support discretionary spending. At that point, a switch to a growth strategy may make more sense to me for years 65 - 95.
One could reduce the risk by holding a cash buffer. However this cash buffer is part of your overall portfolio effectively behaving as a zero return bond alongside the near to zero return bonds you would in any case be holding under a total market approach.
So one may ask the question of whether holding a large % of close to zero return assets is an optimal allocation strategy.
The other factor is ongoing management time and effort. Is continually making the active decision of which assets to sell and then running your platforms process to extract the cash the best use of your time? Would it not be better if the cash just turned up regularly and automatically in your bank account?
I have let my equity percentage increase in retirement so that I'm now at 80/20 for a few reasons; bonds aren't attractive right now; there have been some studies that show that a rising equity allocation through retirement will support higher withdrawals and give larger ending balances with the same success rate as more conservative portfolios; even if that isn't true, I can afford to take the risk.
Here is a Wade Pfau study of several withdrawal strategies, obviously using US numbers, but it might be instructive.
Making Sense Out of Variable Spending Strategies for Retirees
“So we beat on, boats against the current, borne back ceaselessly into the past.”1 -
I thought I'd post an update...The plan was to build a diversified income portfolio within my SIPP of around £200k which would produce sufficient income to utilise my tax free allowance (£12570). Over the past 6 months I've built a portfolio with book price of £199997.61 giving a yield to book price of 6.5% and a predicted income of £13008 for next year (2022). The portfolio as it stands:British American Tobacco (BATS) 7.53%Bluefield Solar Income Fund (BSIF) 3.19%City of London IT (CTY) 31.97%Civitas Socail Housing REIT (CSH) 9.04%ContourGlobal (GLO) 4.59%Direct Line (DLG) 2.66%Foresight Solar Fund (FSFL) 3.42%GCP Asset Backed Income Fund (GABI) 2.86%Gore Street Energy Fund (GSF) 3.39%Greencoat UK Wind (UKW) 4.17%Henderson Far Eastern Income (HFEL) 10.09%JLEN Environmental Assets Group (JLEN) 4.05%CQS New City High Yield Fund (NCYF) 4.01%NextEnergy Solar Fund (NESF) 3.87%Target Healthcare REIT (THRL) 5.16%I have a watch list of things I'd like to add at the right price, and will be reinvesting dividends for the next couple of years until I'm ready to start drawing the income. I built my core position in CTY during the covid crash and have built what I feel is a good position in renewables during the last few months on price weakness. I missed out on starting positions in LGEN and NG that I would have liked to have had in the portfolio but both (especially NG) are too pricey now for me, but they remain on the watch list. CSH is overweight having taken advantage of a high discount to NAV and I plan to trim the position on any price recovery (or keep accepting the 6% yield). As I redeploy dividend income, I'm thinking of adding some more growth orientated holdings which also pay income such as JAGI, JCGI and EAT. Fixed income / debt just doesn't look that attractive to me at the moment with the prospects of rising interest rates.4
-
Many of my portfolio are growth oriented. I hardly ever invest for Income/dividend. So, to me dividend is just a bonus.
But having said that I invest in this stock Vale S.A. (VALE) which has a good Fundamental with reasonable growth year after year, but it also pays a fat dividend of 17.33%. This is one of the long holding in my DIY Portfolio, do not intend to trade it.
https://uk.finance.yahoo.com/quote/VALE?p=VALE&.tsrc=fin-srch
0
Confirm your email address to Create Threads and Reply

Categories
- All Categories
- 350.9K Banking & Borrowing
- 253.1K Reduce Debt & Boost Income
- 453.5K Spending & Discounts
- 243.9K Work, Benefits & Business
- 598.8K Mortgages, Homes & Bills
- 176.9K Life & Family
- 257.2K Travel & Transport
- 1.5M Hobbies & Leisure
- 16.1K Discuss & Feedback
- 37.6K Read-Only Boards