Investing for Income

Bostonerimus1

Linton said:

Bostonerimus1 said:

High yielding bond funds come with risk...you don't get anything for nothing and such funds might hold bonds with less than stellar credit ratings. Also look at the term on the bonds, they might be holding a lot of long term bonds which might be good if rates start to fall, but down the road when rates rise they could become a liability...moderation is a good strategy. So I would not put all your eggs in a bond basket, I would hold a mix of equities and bonds and use interest, dividends and capital growth to generate your income. A multi-asset fun like VLS60 etc will do that, or you might break up the assets into equity and bond index funds so you can decide which to sell and also have a cash allocation for times when you don't want to sell.

Yes but corporate bonds are inherently less risky than shares in the same companies since in the event of the company going bust bond-holders must be paid off before share-holders. Also bond interest in £ terms  is much more stable than share price.

i agree that you need to hold a broad range of asset classes, but each is best suited to a particular job.

Yes the OP needs to think about risk and asset allocation. I was trying to say that there is a risk spectrum within bond funds and that just going for one on the basis of return can get you into trouble with poor credit risk bonds or, right now, short term bond funds are returning 5%, but they won't be forever and so they would not be right for the OP looking to generate consistent income.