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  • FIRST POST
    • JohnRo
    • By JohnRo 20th Jun 13, 1:38 PM
    • 2,608Posts
    • 2,421Thanks
    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 19
    • takesyourchances
    • By takesyourchances 14th Apr 18, 1:43 PM
    • 626 Posts
    • 397 Thanks
    takesyourchances
    Excellent updates John, enjoy these a lot and well done with it all. I am working more on my IT's and adding in some REIT as well at the moment. Great job look forward to the next one.
    • JohnRo
    • By JohnRo 16th Apr 18, 4:15 PM
    • 2,608 Posts
    • 2,421 Thanks
    JohnRo
    Total Return
    Calculating the total return of a holding over time.

    I understand the total stock return is the appreciation in the price plus any dividends paid, divided by the original price of the stock.

    Using SOI as my example I have purchased, received dividends, sold at profit, repurchased, received more dividends and currently hold.

    How would you calculate SOI total return from this data?



    It's fairly obvious the net gain divided by the tax cost on each line gives the TR for that entry.
    I just then had a doubt whether the sale profit can be carried through to the subsequent repurchase soon after in this way and treated as one contiguous transaction chain, is the gain being properly accounted for in the TR figure or do I need to do some sort of rebasing calculation with the old cost and new cost?
    'We don't need to be smarter than the rest; we need to be more disciplined than the rest.' - WB
    • JohnRo
    • By JohnRo 23rd Apr 18, 2:38 PM
    • 2,608 Posts
    • 2,421 Thanks
    JohnRo
    I've cobbled a chart that plots the calculated total returns, this includes capital gain (also shown), dividends and any (not so) timely purchases and sales.

    It raises more questions than it answers imo..



    The most obvious thing this demonstrates is the dreaded diworsification process in action. I realise there will always be a winner and a loser where more than two investments are held, it does beg the question whether PGIT in this case is adding any value whatsoever though.

    The aggregate plot is quite close to the portfolio as a whole so these two examples are the bigger picture in a nutshell. I'm looking to gleen some sort of understanding from what this chart is showing, other than the obvious, that laggards are a drag on winners, which is always the case regardless.

    I suppose the conundrum now and going forward is whether the losers will keep being losers longer term and the winners remain on top.

    PGIT is pushing close to an 8% yield currently while MRC yields close to a quarter of that. I can't see how that matters much though when the TR is the proof of the investment pudding.

    Then again the income stream is increasingly feeding the rebalance schedule alongside new money in, so that has a part to play.

    I'll chalk it up as the cost of diversification and hope the next crash mixes things up a little, if not I might have to start reconsidering holdings like PGIT.

    Any thoughts?
    Last edited by JohnRo; 23-04-2018 at 2:43 PM.
    'We don't need to be smarter than the rest; we need to be more disciplined than the rest.' - WB
    • fairleads
    • By fairleads 23rd Apr 18, 10:23 PM
    • 588 Posts
    • 158 Thanks
    fairleads
    Calculating the total return of a holding over time.
    How would you calculate SOI total return from this data?



    It's fairly obvious the net gain divided by the tax cost on each line gives the TR for that entry.
    I just then had a doubt whether the sale profit can be carried through to the subsequent repurchase soon after in this way and treated as one contiguous transaction chain, is the gain being properly accounted for in the TR figure or do I need to do some sort of rebasing calculation with the old cost and new cost?
    Originally posted by JohnRo
    JR maybe you need to factor in the cost and amount of units purchased against cost and amount of units sold + annual divi
    i.e. (weighted average cost of units disposed minus weighted average base cost of the units ) + div
    • capital0ne
    • By capital0ne 23rd Apr 18, 11:27 PM
    • 483 Posts
    • 239 Thanks
    capital0ne
    This thread reminds me of the good old Derek and Clive dialogues!
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