Investment advice needed due to sudden disability

Confused_Dog

As someone who is now disabled, I would echo the comments about Personal Independence Payment.  Being disabled costs.  If you need adaptations done  for your home to help your mobility or a wheelchair expect to dip into the savings you have.

The other thing I'd urge you to do is think ahead.  You say you are in a flatshare.  Are you renting?   As someone with a Section 21 no fault eviction hanging over them I'd say make a priority long term living arrangements and security of tenure.  There is no point investing  if the cash can ensure your long-term housing.

Luckily I am in a position I can still work as my job is admin and IT based.  If we did not have the tech we have now I would be stuffed.  It may be worth looking at jobs you can do with your disability for income.  Being disabled should not count against you in an an application/interview process and an employer would be required to make reasonable adjustments both for recruitment and a job if you were successful.

Eyeful

TheGigglingBlowfish said:

Eyeful said:

4. Have you considered as part of your portfolio mix including an ETF that pay higher dividends.
Popular Examples: 
iShares UK Dividend ETF (LSE: IUKD)
Vanguard FTSE All-World High Dividend Yield UCITS ETF (LSE: VHYL)
SPDR® S&P Global Dividend Aristocrats ETF (LSE: GLDV)

3. As you are thinking of making your own share/cash portfolio, I was wondering why you have not considered including some of the cuurrent best 5 year fixed savings accounts, for some interest rate stability?

4. Have you considered as part of your portfolio mix including an ETF that pay higher dividends.
Popular Examples: 
iShares UK Dividend ETF (LSE: IUKD)
Vanguard FTSE All-World High Dividend Yield UCITS ETF (LSE: VHYL)
SPDR® S&P Global Dividend Aristocrats ETF (LSE: GLDV)

I've come across higher dividend ETFs, but I'm not sure I understand their purpose.
Generally they seem to have less potential for value appreciation and to make up for this they pay dividends. If you reinvest the dividends, wouldn't it result in roughly the same outcome in the end? Is the advantage that the gain is more immediate?

The fixed savings account to protect against interest rate fluctuation is an interesting idea, thanks!

You are correct, the purpose of ETFs that pay higher dividends, is for those who need them now. .
Your original post stated you had no experience in investing. I mentioned them so that you would know they exist and could consider
them for your needs.

masonic

TheGigglingBlowfish said:
Generally they seem to have less potential for value appreciation and to make up for this they pay dividends. If you reinvest the dividends, wouldn't it result in roughly the same outcome in the end? Is the advantage that the gain is more immediate?

Typically they are suited for those with enough capital that they could live off the income without selling any of their shares/units. It means they would not be a forced seller during a crash, although there is a risk that the dividends could be cut. Investment Trusts can be particularly good for this as they do not have to distribute all of the income from the shares in which they invest, so can build a safety net and maintain their own dividend payouts even when less is flowing into the pot. There are a number of "dividend hero" Investment Trusts that have maintained or grown their dividends consistently throughout decades of market turmoil.

Generally, companies have three things they can do with profits. They can (1) reinvest back into the business to drive growth, (2) distribute as dividends, (3) buy back their shares from investors. Option 1 gives the highest potential for investors in a successful growing business; the decision between (2) and (3) is driven by tax regime. In the USA, share buybacks are more tax efficient, so are generally favoured (this drives up the share price and is similar in principle to an investor reinvesting dividends). High dividend yield is often associated with lower growth sectors and, loosely, "value" investing. This approach will not generally give the best total return, but can be convenient to those taking an income from their investments, and can be (but is not always) slightly lower risk.

In your case, with the amounts you are considering investing in equities (even at the uplifted 30-40%), income is going to generate only a small portion of your monthly needs, so you will be selling investments come what may, and a total return focus would seem to make more sense.