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Passive / Active investments for income.
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AsifM068
Posts: 193 Forumite

Afternoon forum,
Any thoughts on Vanguards FTSE UK Equity Income Index Fund within an ISA as a long term hold (10 years plus) for a passive source of income when I retire at 60 about 7 years away, and are there any suitable alternative passive funds for income that I should consider?
I'm currently reading about Investment Trusts for income as well yet it appears to me that high yield Trusts, say 4% plus, tend to sacrifice growth to an extent - any pointers would be very much appreciated.
Many thanks
Any thoughts on Vanguards FTSE UK Equity Income Index Fund within an ISA as a long term hold (10 years plus) for a passive source of income when I retire at 60 about 7 years away, and are there any suitable alternative passive funds for income that I should consider?
I'm currently reading about Investment Trusts for income as well yet it appears to me that high yield Trusts, say 4% plus, tend to sacrifice growth to an extent - any pointers would be very much appreciated.
Many thanks
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Comments
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AsifM068 said:Afternoon forum,
Any thoughts on Vanguards FTSE UK Equity Income Index Fund within an ISA as a long term hold (10 years plus) for a passive source of income when I retire at 60 about 7 years away, and are there any suitable alternative passive funds for income that I should consider?I wouldn't put all my eggs in one UK basket, you might look at something like Vanguard's FTSE All World High Dividend Yield UCITS ETF (VHYL) for diversification in a single packageIf you don't need the income for 7 years why not wait and prioritise growth for now and start with a bigger pot?I'm currently reading about Investment Trusts for income as well yet it appears to me that high yield Trusts, say 4% plus, tend to sacrifice growth to an extent - any pointers would be very much appreciated.ITs can be good for income but you can't have your cake and eat it.
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Any thoughts on Vanguards FTSE UK Equity Income Index Fund within an ISA as a long term hold (10 years plus) for a passive source of income when I retire at 60 about 7 years away, and are there any suitable alternative passive funds for income that I should consider?A UK equity income fund would fill your UK allocation but it would leave you missing about 8 or 9 funds for all the other areas.
it is also quite an interesting active decision as you would be using an investment style that is typically only good for around half the economic cycle.I'm currently reading about Investment Trusts for income as well yet it appears to me that high yield Trusts, say 4% plus, tend to sacrifice growth to an extent - any pointers would be very much appreciated.That is pretty much the case with all high yield strategies.
This is why the more popular method nowadays is total return.
I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.2 -
I wouldn't touch a passive income fund with a barge pole as you risk just sucking up a load of poor quality high yield companies.
There are investment trusts that get a good balance of yield and capital growth while still investing in good quality companies if you are willing to spend the time on selecting and monitoring them. The costs are a bit higher but that is generally covered by the enhanced return they achieve by using a conservative amount of gearing.5 -
Alexland said:I wouldn't touch a passive income fund with a barge pole as you risk just sucking up a load of poor quality high yield companies.
There are investment trusts that get a good balance of yield and capital growth while still investing in good quality companies if you are willing to spend the time on selecting and monitoring them. The costs are a bit higher but that is generally covered by the enhanced return they achieve by using a conservative amount of gearing.0 -
Prism said:
I'll take the standard dividends from a fund but no more.2 -
As an aside and slightly off tangent are pension annuities really that bad in terms of value? At 60, my DB pension will kick in but will need another 10K p/a to supplement my pension. I should have around 200K to invest within my ISA to invest at 60 purely as a source of income. Any thoughts?0
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As an aside and slightly off tangent are pension annuities really that bad in terms of value?
At the moment, yes. Although they will come back into play in the future.
I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.2 -
Prism said:Alexland said:I wouldn't touch a passive income fund with a barge pole as you risk just sucking up a load of poor quality high yield companies.
There are investment trusts that get a good balance of yield and capital growth while still investing in good quality companies if you are willing to spend the time on selecting and monitoring them. The costs are a bit higher but that is generally covered by the enhanced return they achieve by using a conservative amount of gearing.
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Alexland said:Prism said:
I'll take the standard dividends from a fund but no more.0 -
AsifM068 said:As an aside and slightly off tangent are pension annuities really that bad in terms of value? At 60, my DB pension will kick in but will need another 10K p/a to supplement my pension. I should have around 200K to invest within my ISA to invest at 60 purely as a source of income. Any thoughts?3
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