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  • FIRST POST
    • JohnRo
    • By JohnRo 20th Jun 13, 1:38 PM
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    JohnRo
    Monthly income
    • #1
    • 20th Jun 13, 1:38 PM
    Monthly income 20th Jun 13 at 1:38 PM
    Looking for some direction, how best to set up a solid portfolio for maximising reliable monthly income? I've looked at model portfolios and "best" lists until my head spins...

    I want to avoid individual shares due to transaction costs and their perceived higher risk but willing to listen to views on that. Many of the collective UK income funds I've looked at do seem remarkably similar. Is there any real advantage to be gained by selecting any more than one good fund, perhaps overcomplicating something that only really requires picking one and just getting on with it?

    At the moment I'm leaning towards picking just the one fund and ploughing the monthly income back in initially, to boost the pot, but with a view to then taking a regular income in a year or two. The only goal at this stage is to provide a strong but sustainable income for incomes sake for ever.

    I have a - relatively - large LTBH growth portfolio elsewhere. I am looking at this in complete isolation and purely as an alternative to cash savings (save for the emergency fund)

    The fund I've considered perhaps most suitable is the IP Distribution Z fund but I have to admit I'm a little uneasy about the level of bond exposure there. Also the yield seems a little low compared to some but I do wonder about the sustainability and capital preservation of funds claiming yields of 7% or more.

    Any suggestions or ideas folks?
    'We don't need to be smarter than the rest; we need to be more disciplined than the rest.' - WB
Page 18
    • JohnRo
    • By JohnRo 13th Jan 18, 8:02 PM
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    JohnRo
    DAY 1663 - (08/01) update for those interested.

    tl;dr - Scheduled additions, £500pcm, more of the same.

    Trailing average Monthly Income managed to hit the £500 mark ahead of expectation thanks to a liquidation payment from LSLI that I wasn't expecting. It wound up and paid out last April. I've classed the payment as a special dividend for recording purposes.





    Purchases made since the last update in August..

    2017-09-29 383 JPMORGAN ASIAN IT 3.47
    2017-10-17 320 TWENTYFOUR INC 1.21
    2017-11-07 750 STD LF INV PRP INC 0.91
    2017-11-27 77 VANGUARD INTL EQUI GLBL EX US REAL ESTATE IDX (SIPP)
    2017-12-27 180 INT BIOTECH 6.15
    2018-01-08 290 JPMORGAN ASIAN IT 3.77

    Two more scheduled purchases before the new allowance lands in April. I front loaded this/last years contribution but plan to make this next year's allowance far more evenly distributed throughout the FY, since there's a chance markets might drop significantly at some point and I don't want to be left staring at good rebalance opportunities later on with no dry powder left, that's if there's the sort of volatility seen in previous years.



    JAI has done reasonably well since adding it, rather than replacing AAIF with it, once the purchase hit is accounted for. I hadn't planned on another JAI purchase so soon but the spreadsheet allocation priority demanded it and the effect is always cost neutral overall within the one monthly purchase schedule anyway, so no harm done.




    Costs continue to reduce in percentage terms as hoped/expected, due to the rising capital valuation. I'm still in the process of consolidating this portfolio, currently spread accross several accounts. This is why I've been syphoning the dividends in some accounts and will eventually plough them back into the main account via contributions at some point in the furure.
    It will introduce some additional transaction costs short term but needs to be done for my sanity and might help to claw costs back later. The pace at which that's happening won't inflict any noticable damage.



    RDL is still struggling but I'm a lot more comfortable holding that in the debt category than UKML which is going to be ditched in favour of another 2% slot in the specialist category at some point, when I decide what replaces it. I want the higher risk which RDL offers, without a catastrophic failure obviously. I'm expecting it to do well eventually whereas UKML by contrast seems to be heading nowhere.

    Added VNQI (SIPP) and IBT, high hopes for IBT longer term, time will tell, as always.



    Projections are still looking healthy thanks to current equity trend.





    I also intended posting a discrete annual performance chart but still working on that as I'm not happy with the current methodology in the spreadsheet. 2017 calendar year shows approx. +17% net total.

    That's all folks, hope those interested found it so, next update around April (with annual performance chart)

    Over and out.
    'We don't need to be smarter than the rest; we need to be more disciplined than the rest.' - WB
    • ColdIron
    • By ColdIron 13th Jan 18, 8:38 PM
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    ColdIron
    Trailing average Monthly Income managed to hit the £500 mark ahead of expectation thanks to a liquidation payment from LSLI that I wasn't expecting. It wound up and paid out last April. I've classed the payment as a special dividend for recording purposes.
    I received this and wasn't expecting it either, any plans on how to report it to HMRC? I received a notice telling me it was a second Liquidation Payment (though no sign of the first, I allowed it to be converted to Consistent Practical) though my statement refers to it as a Return of Capital. Is it a Capital Gain or something else?
    • JohnRo
    • By JohnRo 13th Jan 18, 8:47 PM
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    JohnRo
    I received this and wasn't expecting it either, any plans on how to report it to HMRC? I received a notice telling me it was a second Liquidation Payment (though no sign of the first, I allowed it to be converted to Consistent Practical) though my statement refers to it as a Return of Capital. Is it a Capital Gain or something else?
    Originally posted by ColdIron
    I really don't know the answer, I'd assume since the company is gone this has to be a capital payment since it can't pay dividends if it doesn't exist?

    My classifying it as dividend payment is purely for spreadsheet purposes, also I held LSLI in my ISA at the time so it's a problem I don't have to solve thankfully.
    'We don't need to be smarter than the rest; we need to be more disciplined than the rest.' - WB
    • JohnRo
    • By JohnRo 5th Feb 18, 4:16 PM
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    JohnRo
    In light of what's hopefully the start of a significant correction, any suggestions for trusts I might consider that fit the specialist sector?

    I've had BBOX suggested in the past but I've decided there's enough direct and indirect property exposure for now.

    I'm looking to ditch UKML at some point this year, so far I'm all set to add a 2% weighting to PCFT as a direct replacement, to shrink the debt allocation to ~8% in the portfolio and up the various specialist holdings to ~ 14%.

    PCFT's somewhat global scope is no bad thing imo and although the dividend yield is fairly low that hopefully gets offset by some decent capital growth.

    It predominantly covers the banking and insurance sector quite neatly which makes it a good fit in the specialist slot I think.
    'We don't need to be smarter than the rest; we need to be more disciplined than the rest.' - WB
    • george4064
    • By george4064 13th Mar 18, 7:39 PM
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    george4064
    JohnRo, any thoughts on the EAT 10:1 stock split?
    "If you arenít willing to own a stock for ten years, donít even think about owning it for ten minutesĒ Warren Buffett

    Save £12k in 2016 - #045 £10,358.81/£12,000 (86%)
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    • capital0ne
    • By capital0ne 13th Mar 18, 11:18 PM
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    capital0ne
    This portfolio will be ISA wrapped, approx. 50K value. Aiming for upwards of £150 plus a month income and keeping up with inflation.
    Originally posted by JohnRo
    Simple calc gives you an interest rate of 3.6% to get £150/month from £50k - no growth with that.
    So to keep up with inflation you neede another 3% or so, so you need a total return of 6.6%.
    Very hard to do, butdoable and I'm sure you could do some research on Morningstar to figure it out yourself or pay an IFA to do it - £50k is a bit small for an IFA but I'm sure if you bunged the a couple of grand they'd be happy to advise.

    Good luck
    • TCA
    • By TCA 13th Mar 18, 11:27 PM
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    TCA
    Very hard to do, but doable and I'm sure you could do some research on Morningstar to figure it out yourself or pay an IFA to do it - £50k is a bit small for an IFA but I'm sure if you bunged the a couple of grand they'd be happy to advise.
    Originally posted by capital0ne
    You've replied to a post that's nearly 5 years old and seem to have skipped a subsequent 17 pages of the thread. It's moved on a bit.
    • JohnRo
    • By JohnRo 14th Mar 18, 1:02 AM
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    JohnRo
    JohnRo, any thoughts on the EAT 10:1 stock split?
    Originally posted by george4064
    Sorry I missed this earlier for some reason.

    I don't really know what to think yet, it shouldn't make much if any material difference to the existing holding, just more shares valued at less each. I can only assume at ~£13 each they've decided SP is a little on the high side.

    In truth I haven't read enough about it yet, given it's only a possibility at this stage?

    I may make a decision if something other than the share split / price changes, but I'm happy with the investment to date so will probably just carry on regardless with it.

    Planning to post an update and some charts in April but the spreadsheet for next years ISA allowance isn't pointing to an EAT purchase, at this stage, until some time in 2019.
    'We don't need to be smarter than the rest; we need to be more disciplined than the rest.' - WB
    • fiisch
    • By fiisch 14th Mar 18, 9:43 AM
    • 284 Posts
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    fiisch
    You've replied to a post that's nearly 5 years old and seem to have skipped a subsequent 17 pages of the thread. It's moved on a bit.
    Originally posted by TCA


    This thread will never work, OP's desired returns are unrealistic.
    Save £6k in 2018: £1651.19 / £6000
    • JohnRo
    • By JohnRo 14th Mar 18, 11:06 AM
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    JohnRo
    This thread will never work, OP's desired returns are unrealistic.
    Originally posted by fiisch
    Not sure what this means, if it means anything, the thread seems to still be working or you wouldn't have been able to enlighten everyone. MSE may of course have other ideas at some point.

    Sustainable income forever is desired, from a globally oriented, equity based portfolio of investment trusts.

    In what way is that unrealistic? I'm keen to acquire this knowledge.
    'We don't need to be smarter than the rest; we need to be more disciplined than the rest.' - WB
    • JohnRo
    • By JohnRo 11th Apr 18, 4:28 PM
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    JohnRo
    DAY 1754 - (09/04/18) update for those interested.

    tl;dr - Bad start to the year, new addition, more of the same.

    Since last update in early January the story is obviously negative, the on off Trump China trade war, recent Western sanctions on Russia(ns) and more sabre rattling over Syria, replacing NK for now. Then to cap it all Eric Bristow checked out..

    MDD

    Unit

    I'll just continue to hold and rebalance regardless, expecting common sense to prevail on all sides at some point. Populists certainly seem to crave division and conflict.

    A rising annual trailing average return has started to head down for the first time since mid 2015, if nothing else it bodes well for this years allowance and rebalancing opportunities assuming the trend continues.

    Percentages

    Trailing annual income currently sits at an equivalent average of £521.29 pcm. My next monthly income target of £600 is predicted some time this tax year, as things currently stand, around the end of March 2019.

    Monthly overview

    Monthly Detail

    Purchases made since the last update in January..

    2018-02-06 502 POL CAP GBL FIN TR 1.43

    I decided to take a small position in PCGT, as much as I loath the way banks are allowed to operate they and their many subsidiaries are a key component of global markets so hopefully at least some of the vast profits and bonuses they syphon off will filter down to their SP. Yield is a little light but hoping this proves to be more of a blended growth and income specialist sector holding, as some of the others are. Not expecting miracles but feel it's worthy of a specialist slot.

    2018-03-07 221 PRER GLOB 1.34

    A small purchase in March to mop up the remains of last years allowance. Premier Global Infrastructure (PGIT), formally Premier Energy and Water (PEW) has tumbled this year, not for the first time since I've held it. That's made it the worst performing holding in my portfolio in capital terms and also overall when measured over more than one year.

    Capital Growth

    It does provide a strong yield though and I'm happy with it overall, barring a catastrophe. Looking forward to a chunky rebalance some time towards the back end of this year or early next, hopefully the SP remains subdued until then.

    2018-04-09 441 JPMORGAN ASIAN IT 3.52

    Kicked off FY2018 with yet another JAI purchase in April, this time a much larger chunk with the new allowance kicking in, which now sets it up for the foreseeable. Not expecting to have to revisit this one for a year or two.

    JAI looks to be broadly in line with the other Asia focused IT holdings, on the surface that seems to imply it's pointless holding it as well as the others but the reasons have been explained and still hopeful there might be some divergence and catching up at some point between all four different managers.

    Capital Growth

    Cost percentages have risen of late due to the portfolio valuation falling, the longer term annual average costs metric has hardly been affected though. I'm hoping to see this number get below 0.20% this year and continue to fall away towards a trivial percentage value and an insignifacant drag on performance.



    These are the rebalancing plans for the next year, some of the purchase dates will roll into following quarters as the one trade per month schedule unfolds. I show them like this just to provide a road map ahead although priorities may change as the year rolls on.




    The Projection has been pulled back to within what I consider a more normal range after the falls this year.



    Here's the discrete annual performance chart, I'm still planning to add discrete annual XIRR values but haven't got round to including those yet.



    That's all folks, apologies for the image overload but hope those interested enjoy, next update towards the end of the year.

    Over and out.
    Last edited by JohnRo; 11-04-2018 at 5:21 PM. Reason: added unit value chart
    'We don't need to be smarter than the rest; we need to be more disciplined than the rest.' - WB
    • cloud_dog
    • By cloud_dog 11th Apr 18, 5:12 PM
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    cloud_dog
    I just think you like working in spreadsheets

    Fabulous reporting btw.
    Personal Responsibility - Sad but True

    Sometimes.... I am like a dog with a bone
    • george4064
    • By george4064 12th Apr 18, 7:37 PM
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    george4064
    Another interesting update JohnRo, keep up the good work!

    Question for you. I also hold an investment trust that falls within the 'specialist' category; BlackRock Commodities Income IT, which has done very well for me since I purchased it in February 2016 at around 52p a share.

    I have been thinking about either adding another specialist IT or replacing BRCI with a REIT that specializes in warehouse properties/logistics to try capitalize on the boom in internet shopping and therefore the sustainable demand in warehouses... The most obvious contender is Tritax Big Box REIT PLC which does look very interesting, another one (which is relatively new to the market) is Warehouse REIT PLC.

    Just wondering if you have considered these types of REITs as a potential investment and would welcome your thoughts on them?

    Thanks in advance.
    "If you arenít willing to own a stock for ten years, donít even think about owning it for ten minutesĒ Warren Buffett

    Save £12k in 2016 - #045 £10,358.81/£12,000 (86%)
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    • fiisch
    • By fiisch 13th Apr 18, 12:53 AM
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    fiisch
    Not sure what this means, if it means anything, the thread seems to still be working or you wouldn't have been able to enlighten everyone. MSE may of course have other ideas at some point.

    Sustainable income forever is desired, from a globally oriented, equity based portfolio of investment trusts.

    In what way is that unrealistic? I'm keen to acquire this knowledge.
    Originally posted by JohnRo

    A poor attempt at humour... I was mocking an earlier reply saying achieving £150/month would be "very hard to do".


    Great thread - keep up the good work.
    Save £6k in 2018: £1651.19 / £6000
    • JohnRo
    • By JohnRo 13th Apr 18, 1:04 PM
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    JohnRo
    A poor attempt at humour...
    Originally posted by fiisch
    Completely misread the context not to mention the humour, apologies for the curt reply.

    Just wondering if you have considered these types of REITs as a potential investment and would welcome your thoughts on them?
    by george4064
    Short answer is yes, I have.

    I did intend adding BRCI for a long time and dithered before deciding to leave it since I felt there was enough exposure to energy and commodity stocks already in the other holdings.

    It's been a similar story with BBOX, Bowlhead suggested it a while ago and I did really give it some thought before rightly or wrongly thinking I probably have enough exposure to the property and retail sectors already.. but it's got to be said the property aspect of BBOX and other similar vehicles is only half the story.

    The driver for these warehousing rental vehicles is obviously the quantum shift taking place in online retailing, demand for distribution facilities, centralised logistical operation and expertise and how that's only going to grow in the future.

    The question for me about holding BBOX or similar, long term, is does it capture something new about that phenomenon that also provides an additional boost and that can't be captured by simply investing in the retailer's operations themselves.

    I think it probably does although how that boost could be quantified is beyond me, it isn't coming cheap to the warehousing companies themselves either, with debts piling up to acquire the required real estate. I will in all likelyhood add BBOX or something similar at some point, I'm just not convinced it's going to add much to the growth or the income bottom line that's not already being provided.

    It falls into the category of 'trying to resist'. To avoid temptation and the desire to just keep buying anything and everything that looks different and interesting, then end up with a huge list of holdings which, although individual and distinct, aren't really improving the bottom line, which I think is all that really matters.

    That said this whole retail distribution hub rental malarkey does look really interesting, it clearly has a solid future although just how profitable that future proves to be is yet to be really well established in the UK imo.

    What I would find compelling if it existed would be something like BBOX global.
    Last edited by JohnRo; 13-04-2018 at 3:36 PM.
    'We don't need to be smarter than the rest; we need to be more disciplined than the rest.' - WB
    • grey gym sock
    • By grey gym sock 14th Apr 18, 1:56 AM
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    grey gym sock
    the need for big warehouses (to deliver internet shopping) is a real theme, but i do wonder whether, by the time the theme is being packaged up in a handy ticker (BBOX), that's a sign that it's a bit late to join the party. perhaps the big gains have already been made.

    also, the mandate of buying big box warehouses and nothing else feels a bit inflexible to me. the property managers are going to be paid a lot whatever the mandate, so why not give them a bit more discretion to decide what looks like good value in property? perhaps they can make a few decent calls and justify (some of) their fees.

    BBOX itself seems to be on a 3% premium to NAV, and a yield of 4.4%, which doesn't exactly scream "value".

    i did hold londonmetric property (LMP), which is partly in big box warehouses. they have sold a few recently, though - perhaps they think there is less value there now. they also have some smaller, urban warehouses - useful for the "last mile" of delivery, so also related to the growth of internet retail. i prefer their more flexible approach to BBOX.

    i still like LMP, but sold mainly because it was on an excessive premium to NAV of c. 15% (NAV will probably increase, but still ...).

    i replaced that with regional REIT (RGL), which at c. 8% yield perhaps looks too good to be true. and perhaps it is, but the dividend is covered by earnings, it's on a small discount to NAV, and occupancy is only about 85% so has room for improvement. so i fancy my chances. all the property is outside london; the majority is offices.

    all this is as usual just food for thought, not recommendations, of course
    • Thrugelmir
    • By Thrugelmir 14th Apr 18, 11:34 AM
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    Thrugelmir
    the need for big warehouses (to deliver internet shopping) is a real theme, but i do wonder whether, by the time the theme is being packaged up in a handy ticker (BBOX), that's a sign that it's a bit late to join the party. perhaps the big gains have already been made.
    Originally posted by grey gym sock
    Automated warehouses are the next generation. Shop Direct's announcement this week (Littlewoods and Very) is an indication of how far this has to run. Not necessarily just linked to online retailing either. As these types warehouses are built to service all sorts of industries. Holding stock costs business money.
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
    • JohnRo
    • By JohnRo 14th Apr 18, 12:14 PM
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    JohnRo
    It really doesn't bode well for the future of shop workers.

    Of the 3 million plus employed in the retail industry I do wonder how many are going to be at risk and eventually replaced by automation in the coming years and what impact that will have on the wider economy and how the communities those workers live in will be affected.

    It's not difficult to imagine the upheaval caused by the robotics revolution creating dystopia for displaced workers, where's the upside for manual labour roles lost to machines and automated processes?
    'We don't need to be smarter than the rest; we need to be more disciplined than the rest.' - WB
    • Bravepants
    • By Bravepants 14th Apr 18, 12:28 PM
    • 402 Posts
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    Bravepants
    Automation is the second industrial revolution...

    http://www.bbc.com/future/story/20170522-how-automation-will-affect-you-the-experts-view
    • stoozie1
    • By stoozie1 14th Apr 18, 12:58 PM
    • 554 Posts
    • 496 Thanks
    stoozie1
    I don't think I'll ever be able to do what you have achieved, but I enjoy the updates immensely, and the charting.
    Save 12 k in 2018 challenge member #79
    Target 2018: 24k Jan 2018- £560 April £2670
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