Bree's HYPish Portfolio - Christmas Review 2016

[Itsallaguess]

That said, if I were living entirely off my dividends (I'm not, and am still building), then I might devote more time to HYP management. Possibly.

MDW1954

I'm building my HYP whilst still in employment, and think the opposite way.

If I were currently living off my dividends, presumably not in HYP-build-mode, then there would actually be little I could do with most of the investigative work I might carry out on my HYP processes at that stage.

But whilst I'm still working and building my HYP, I can plan appropriately based on past-records and long-term trends in both income and capital. I don't think I'd have any sensible retirement-planning process without the ability to do this.

So I'm the other way around. I'll track my income and capital quite methodically now, with a view to using that information to best plan my future.

Given that once I actually decide to finish work and live off my HYP, I'll have all those records from many previous years, I don't actually think there'd be any good reason to carry on micro-managing my income and capital records at the level I do now, as I think the 'trigger' will only be pulled once I'm content that the HYP is likely to continue doing what I want it to do anyway.

Each to their own, of course, and I wouldn't want anyone thinking I spend any great amount of time recording my HYP progress. Any actual work was done in setting up the process itself, and all it needs now is a regular yearly update that really only takes minutes. I just don't think I'd personally have any sort of viable 'plan' for finishing work if I didn't have my HYP income and capital records to actually base the plan on, is my thinking....

Cheers,

Itsallaguess

[MDW1954]

So I'm the other way around. I'll track my income and capital quite methodically now, with a view to using that information to best plan my future.

Don't get me wrong: my end-of-year spreadsheet (which has several tabs) is quite detailed. It records new money added, money invested, income earned, end-of-year capital values, several yield calculations, dividends received by year and by company, a sectoral breakdown, income estimates for the future, every transaction, and a cost calculation (although that is still something of a work-in-progress). Its basic format is unchanged since 2005.

But it doesn't do unitisation.

Cheers,

MDW1954

[funduffer]

I (income) unitise my HYP and my IT equity income portfolio.

My intention is to switch my HYP into IT's when I am no longer capable or willing to spend time maintaining my HYP.

Unitisation will give me confidence (or not) that this is a viable income strategy, as I both withdraw and re-invest dividends on an ad hoc basis.

So far, after just 3 years, the 2 portfolios are roughly neck and neck in terms of unit price and income growth, although the HYP has a higher yield (HYP about 5% v IT's about 4%)

FD

[kempiejon]

So far, after just 3 years, the 2 portfolios are roughly neck and neck in terms of unit price and income growth, although the HYP has a higher yield (HYP about 5% v IT's about 4%)
FD

Even if just a short term snapshot this is an interesting conclusion. I'd have thought the HYP could beat the ITs for income growth and start at a higher level. I've wondered if this backup plan for HYP would leave me much poorer and you have found that to be true. I have a couple of HYPish ITs and use ITs and ETFs for industry/ region specific investing. I'm not sure I'd switch my HYP over to an IT portfolio.

[Gengulphus]

My feeling is that this is a good balance between effort and accuracy. I doubt there is any benefit in going further for a mature HYP. Yes, I can see that looking up the number of units for each dividend and accumulating the result would not be a tremendous effort, but in the past two or three years, I've been trying to reduce efffort, so I'm not inclined to increase it unless proved worthwhile, however slight the increase might be. From what you've said before about your own efforts, I'm sure you appreciate that too.

Yes, indeed - but it doesn't need to be any extra effort once the spreadsheet has been set up appropriately. Basically, one row per transaction, with the date and type (Buy, Sell, Dividend, Split, etc) of the transaction plus type-dependent information (e.g. share price and trading costs for a buy or sell, dividend-per-share for a dividend) about the transaction. Each row takes the number of units from the previous row and updates it appropriately (in many cases, by nothing at all), so the number of units at the time of the dividend payment doesn't require 'looking up' in any significant sense - it's just sitting there on the row in question and is taken into account automatically by the formulae that accumulate the income-per-unit figures.

Shifting to a spreadsheet that works on that basis from one that works differently might of course be some effort, and I'm not advocating that anyone undertakes that effort if their current spreadsheet serves their purpose adequately. But that effort is not due to any inherent difficulty about doing it that way - just to the fact that it is a change, and quite possibly a fairly extensive one.

Gengulphus

[Arborbridge]

I've wondered if this backup plan for HYP would leave me much poorer and you have found that to be true.

Kempiejon,

I'd beware of drawing such a definite conclusion from one comparison over a relatively short period of time.

Your results may be different, and even worse, results are likely to be different during different periods of time. It's not that easy to draw a useful general conclusion, and even so, you would have to assume your own investing style could reproduce it.

It often seems that in investment, by the time you've found the answer, it is already too late to apply it.

Arb.

[Arborbridge]

Gen.
OK, I'll think about it and take a look at the mechanics of my spreadsheet. Not convinced quite yet!

[Dod1010]

If I may say so, there is an awful lot of hot air in this thread. I have beenliving off my investment income for the last 22 years now, and most of that has been from dividends. (In the early years I was a bit cavalier with capital drawdown) I have no doubt that the original concept of buying a portfolio of high yielding shares and more or less leaving them alone is sound. I do not believe though that never selling anything (per pyad's users
manual) is a good idea; in fact it is bonkers. Why, for instance would anyone hold RBS today?

So fret not, yea who are still in the building phase; you are working along the right lines.

Dod

[Arborbridge]

Gen:

Interesting. I did as you suggested for 2016, which took quite a while since there 19 changes of unit number to chase down and slot into the relevant date row. The result is: "normal" method, income pa = 6.19p per unit. "Gen" method = 6.58p

Now, whilst this wasn't too bad as an exercise, and it'll be easier going forward, it gives me the problem of previous years if I want to use it for comparison. Ugh!
And that also, rationally, should affect what I do about the IT basket income, quite apart from widening the spreadsheet for each year by six columns.

I rather wish you hadn't made me think about this

[idpickering]

If I may say so, there is an awful lot of hot air in this thread. I have beenliving off my investment income for the last 22 years now, and most of that has been from dividends. (In the early years I was a bit cavalier with capital drawdown) I have no doubt that the original concept of buying a portfolio of high yielding shares and more or less leaving them alone is sound. I do not believe though that never selling anything (per pyad's users
manual) is a good idea; in fact it is bonkers. Why, for instance would anyone hold RBS today?

So fret not, yea who are still in the building phase; you are working along the right lines.

Dod

Well said Dod, on both points. I think there has to come a time to bite the bullet and ditch an under performer. I have done so on a number of occasions in the past, but am currently happy with my holdings and am very much 'hands off'. That was my bold on your later comment above, as I'm right with you on that.

Regards,

Ian.

[OZYU]

Gen:

Interesting. I did as you suggested for 2016, which took quite a while since there 19 changes of unit number to chase down and slot into the relevant date row. The result is: "normal" method, income pa = 6.19p per unit. "Gen" method = 6.58p

Now, whilst this wasn't too bad as an exercise, and it'll be easier going forward, it gives me the problem of previous years if I want to use it for comparison. Ugh!
And that also, rationally, should affect what I do about the IT basket income, quite apart from widening the spreadsheet for each year by six columns.

I rather wish you hadn't made me think about this

I suppose I should apologise to you, as it was me you brought the concept to the thread, not Gen, who put the detailed flesh on the bone on that method in his usual way.

I think that there is a big difference between what I would encourage a newish investor to change or implement in his nascent record keeping, rather than a stalwart like yourself where it might mean hassle on an established system.

I would certainly encourage younger investors to unitise their portfolios, because it is too easy to kid oneself inadvertently about key aspects of portfolio performance without, as new funds can mask much of bad performance if not careful. The only problem is that younger investors often don't know enough about market mechanics around corporate actions to implement a good system.

I switched to cumulating the divis per income unit 'accurately' many years ago, I have looked it up, it was 17 years ago, as part of a re design which implemented all what I really wanted to measure once and for all, that took me about two weeks to think of the design before I got near the spreadsheet itself, it then probably a couple of solid days work. One of the aspects was to find an 'in-year' portfolio yield which one can get from these accurately cumulated divis per unit, which falls between starting and trailing yield and to my mind reflects better the portfolio yield, not that it matters much, as Dod would say. Some years later I made the whole thing much slicker still so that there is no repeat data entry of any sort by using tables, pivots and slicers, I saw a description of exactly what I do on tmf once, can't remember the name of the poster, might have been tr1933. With pivots one can assemble this accurate data in all sorts of flexible ways, for example it is easier that way to build a monthly rolling summary automatically.

I think it was in 1982 that our investment club got introduced to unitisation by a visiting speaker, and it solved a problem for us as members were joining and leaving frequently in those days, I then got lumbered with implementing it of course, I introduced it later to my PEPs and have carried on.

Anyway sorry to have brought it up. This stuff is a bit like marmite, yuck from me but my wife loves it, we are the reverse for spreadsheets as I keep all her investing records!

OZYU

[tjh290633]

I switched to cumulating the divis per income unit 'accurately' many years ago, I have looked it up, it was 17 years ago, as part of a re design which implemented all what I really wanted to measure once and for all, that took me about two weeks to think of the design before I got near the spreadsheet itself, it then probably a couple of solid days work. One of the aspects was to find an 'in-year' portfolio yield which one can get from these accurately cumulated divis per unit, which falls between starting and trailing yield and to my mind reflects better the portfolio yield, not that it matters much, as Dod would say. Some years later I made the whole thing much slicker still so that there is no repeat data entry of any sort by using tables, pivots and slicers, I saw a description of exactly what I do on tmf once, can't remember the name of the poster, might have been <b>tr1933</b>. With pivots one can assemble this accurate data in all sorts of flexible ways, for example it is easier that way to build a monthly rolling summary automatically.

I think it was in 1982 that our investment club got introduced to unitisation by a visiting speaker, and it solved a problem for us as members were joining and leaving frequently in those days, I then got lumbered with implementing it of course, I introduced it later to my PEPs and have carried on.

Anyway sorry to have brought it up. This stuff is a bit like marmite, yuck from me but my wife loves it, we are the reverse for spreadsheets as I keep all her investing records!

OZYU

Sounds like that might have been me. I have put the page on Wayback, see https://web.archive.org/save/_embed/htt ... 62371.aspx

I recall talk about pivot tables, etc., but never did one successfully.

TJH

[pendas]

Am I one of the few who use MS Money?

Not only does this commercial program keep track of our HYP portfolio in various accounts, but our entire household income and expenditure. Being a ready made program, there are compromises to be made, but it does have the advantage that someone else could get their head round it when necessary with not too much difficulty.

[Breelander]

Am I one of the few who use MS Money?

Probably, but those few who have used MS Money do seem to be passionate devotees. So much so that after MS discontinued Money in 2008 they took the unprecedented step of issuing the Sunset edition in 2010, removing the required online activation.

Supported Operating System
Windows 7, Windows Vista, Windows XP

https://www.microsoft.com/en-GB/downloa ... x?id=20738

With Windows 10 there are some hoops you need to jump through to get it to run though, apparently different ones for each edition. It's not clear how much longer it will be possible to run it.

[Arborbridge]

I suppose I should apologise to you, as it was me you brought the concept to the thread

OZYU, not at all - I just wished I'd known about it (and unitisation) ten years ago when I started this adventure! This latest glitch is concerning the income per unit "method" specifically: I've been unitising since 2010.

The word "accurately" you advisedly put in quotes, because even with your method, it begs the question about units which have been purchased but which are not yet providing an income. That's why I started keeping a separate set of income per unit numbers in which I used the number of units in circulation three months prior to the month for which the income is being calculated. This being a sort of compromise in which many of the new units would be contributing.

Comparing the two methods, the difference is seldom more than 2%, and plotted as a chart of trailing twelve month moving averages, it's enough to show me the "flavour" of HYP income steadily increasing. As I look at it now with my engineer's hat on, I'd say near enough is good enough. But.. I dare say it might nag at me to keep another set of figures for the next year, just to see!

[midgesgalore]

Sounds like that might have been me. I have put the page on Wayback, see https://web.archive.org/save/_embed/htt ... 62371.aspx

I recall talk about pivot tables, etc., but never did one successfully.

TJH

Ooops I cannot reach this site, don't know <yet> if the address is wrong or my broadband provider has blocked the site for me.
I haven't been on the web.archive.org site yet so don't know.

midgesgalore

[tjh290633]

I have just gone to it, through that link, and the URL has changed to https://web.archive.org/web/20170103173 ... 62371.aspx

TJH

[Breelander]

I have just gone to it, through that link, and the URL has changed...

Your first link was the one you get that says the page has been saved as you requested, the second was for just the page itself. Both worked for me.

Ooops I cannot reach this site, don't know <yet> if the address is wrong or my broadband provider has blocked the site for me. I haven't been on the web.archive.org site yet so don't know.

Can't think of any reason for an ISP to block the Wayback machine. Try the base address for the Web Archive, it is https://archive.org/

[midgesgalore]

I have just gone to it, through that link, and the URL has changed to https://web.archive.org/web/20170103173 ... 62371.aspx

TJH

Thanks Terry, that updated link worked

midgesgalore