Drawdown time and going forward

Aged

DT2001 said:

I think SVaz’s question is quite important, would the income from the funds cover your requirements?

I assist my BIL and we have his portfolio split between investment trusts (10/12) which produce about 5% (all had good record of increasing dividends), a global ETF for longer term growth and a short term bond fund to cover gap to SPA. He is just a few years away from SP in a manual job and unsure of when he wants to retire but with this set up he knows he’ll have a good base of income and some potential for growth.

That's very interesting, thanks DT2001. I have no investment trusts at the moment, but I now understand the need for them when one nears/enters the drawdown stage.

Bostonerimus1

When considering a dividend strategy remember that they do not come "free of charge". A dividend is a distribution of profits and results in a decrease in stock value, so definitely factor that in when planning for things like inflation.

LHW99

Bostonerimus1 said:

When considering a dividend strategy remember that they do not come "free of charge". A dividend is a distribution of profits and results in a decrease in stock value, so definitely factor that in when planning for things like inflation.

Although superimposed on that decrease are the general market ups and downs, so you won't necessarily see a fall equivalent to the dividend payout at the time it's made. Total return is the important metric, but how you choose to harvest that (dividends or drawing off capital growth) depends on preference and which investments / approach will meet your requirements

Aged

LHW99 said:

Bostonerimus1 said:

When considering a dividend strategy remember that they do not come "free of charge". A dividend is a distribution of profits and results in a decrease in stock value, so definitely factor that in when planning for things like inflation.

Although superimposed on that decrease are the general market ups and downs, so you won't necessarily see a fall equivalent to the dividend payout at the time it's made. Total return is the important metric, but how you choose to harvest that (dividends or drawing off capital growth) depends on preference and which investments / approach will meet your requirements

Thanks for your input chaps (and others too who have commented). I am coming back round to my initial belief that I don't necessarily have to start doing anything drastic re the types of funds that I hold in my portfolio. My main problem is that I have far too much sitting in cash, so I'm going to invest some of that in funds that will give me a reasonable overall return without involving more risk than I'm comfortable with, and I'll continue to take my monthly withdrawals from the uninvested cash until such time as there is a good reason to do otherwise. I'll keep monitoring the portfolio regularly and rebalance when appropriate. Surely I can't go too far wrong with this strategy?

Albermarle

Aged said:

LHW99 said:

Bostonerimus1 said:

When considering a dividend strategy remember that they do not come "free of charge". A dividend is a distribution of profits and results in a decrease in stock value, so definitely factor that in when planning for things like inflation.

Although superimposed on that decrease are the general market ups and downs, so you won't necessarily see a fall equivalent to the dividend payout at the time it's made. Total return is the important metric, but how you choose to harvest that (dividends or drawing off capital growth) depends on preference and which investments / approach will meet your requirements

Thanks for your input chaps (and others too who have commented). I am coming back round to my initial belief that I don't necessarily have to start doing anything drastic re the types of funds that I hold in my portfolio. My main problem is that I have far too much sitting in cash, so I'm going to invest some of that in funds that will give me a reasonable overall return without involving more risk than I'm comfortable with, and I'll continue to take my monthly withdrawals from the uninvested cash until such time as there is a good reason to do otherwise. I'll keep monitoring the portfolio regularly and rebalance when appropriate. Surely I can't go too far wrong with this strategy?

In my view gradual adjustments are better than drastic moves .
If you are cash rich, then using this cash as your income source, rather than diving headlong into the market with is a sensible low risk strategy. ( other opinions may vary)

Aged

Albermarle said:

In my view gradual adjustments are better than drastic moves .
If you are cash rich, then using this cash as your income source, rather than diving headlong into the market with is a sensible low risk strategy. ( other opinions may vary)

Makes total sense to me!