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How you eat yours?

Including Financial Independence and Retiring Early (FIRE)

How do you take income from your savings?

Natural income from HYP actively managed to maximise dividends.
5
15%
Range of funds that generate income.
17
50%
Managed portfolio soldl off to generate income.
3
9%
Selection of Managed funds sold off to generate income.
1
3%
Global Tracker and/or blended funds such as Vanguard or Dimensional, sold off to generate income.
8
24%
 
Total votes: 34

DrFfybes
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How you eat yours?

#430413

Postby DrFfybes » July 26th, 2021, 9:44 am

In a seasonally mistimed question, I thought I'd try and kick off the spirit of this sub board and see how people plan their retirement once they stop earning.

I'm quite aware there will be a huge range of strategies and reasons, age factors, saving pension pots to avoid IHT rather than for income, and someone in their 50s might have a higher risk approach to someone in their 90s. I've not differentiated between ISAs, SIPPs, or unwrapped investments, as that is another level of complexity and depends on how much is sheltered or not.

88V8
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Re: How you eat yours?

#430427

Postby 88V8 » July 26th, 2021, 10:20 am

I would tick HYP as it is the majority generator but I also have Fixed Interest and increasingly ITs, so I ticked.... range...

V8

sloth
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Re: How you eat yours?

#430433

Postby sloth » July 26th, 2021, 10:32 am

What about dividends + selling some units to top up to the required amount?

Dod101
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Re: How you eat yours?

#430442

Postby Dod101 » July 26th, 2021, 10:48 am

My answer to your poll is 'None of the above'. I have a fairly diversified portfolio, including some shares normally included in a HYP, with an overall tilt to income and live off the dividends. I never sell investments for living expenses.

Dod

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Re: How you eat yours?

#430449

Postby dealtn » July 26th, 2021, 11:02 am

None of the above

genou
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Re: How you eat yours?

#430457

Postby genou » July 26th, 2021, 11:52 am

I had a HYP for myself, but put the children's funds into global trackers. It soon became apparent that I was taking much more risk for no improvement in return. I still have some debris HYP holdings that are being run down, but the bulk is now in global trackers. It will require sales to realise cash on a steady basis .

Dod101 wrote: I never sell investments for living expenses.


What do you intend to happen to the capital in the long run?

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Re: How you eat yours?

#430497

Postby xxd09 » July 26th, 2021, 1:56 pm

global index trackers-three only -in Accumulation format
Sell required number of units once a year from SIPP to to up the cash fund( living expenses) -keeping Asset Allocation intact
That’s it
Simple cheap and easy to understand and do
18 years retired
xxd09

DrFfybes
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Re: How you eat yours?

#430521

Postby DrFfybes » July 26th, 2021, 3:50 pm

genou wrote:I had a HYP for myself, but put the children's funds into global trackers. It soon became apparent that I was taking much more risk for no improvement in return. I still have some debris HYP holdings that are being run down, but the bulk is now in global trackers. It will require sales to realise cash on a steady basis .

Dod101 wrote: I never sell investments for living expenses.


What do you intend to happen to the capital in the long run?


Probably the same as the rest of us - care home fees :(

Paul

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Re: How you eat yours?

#430532

Postby Dod101 » July 26th, 2021, 5:36 pm

genou wrote:I had a HYP for myself, but put the children's funds into global trackers. It soon became apparent that I was taking much more risk for no improvement in return. I still have some debris HYP holdings that are being run down, but the bulk is now in global trackers. It will require sales to realise cash on a steady basis .

Dod101 wrote: I never sell investments for living expenses.


What do you intend to happen to the capital in the long run?


Well I occasionally breach that rule for a major capital expense, but like everyone else who is prepared I have a Will which records my wishes. Part may of course need to be used for a care home which costs rather more than my day to day living expenses.

Dod

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Re: How you eat yours?

#430960

Postby Gengulphus » July 28th, 2021, 1:32 pm

I'm afraid I have to join the "None of the above" camp... My basic answer is "Natural income from HYP". I do have some other sources of income and my total income exceeds my needs without needing sales to supplement it (even after the pandemic year with its numerous dividend cuts), so "Range of funds that generate income" would be the pedantically correct answer, but as the HYP's dividends are more than 90% of that income and the other income is nothing like enough for my needs, it seems badly misleading about the information the poll seems aimed at obtaining.

But my answer is not "Natural income from HYP actively managed to maximise dividends"! I do actively manage my HYP, but the aim of my active management is to reduce risk to my capital and dividend income (and occasionally to reduce tedious admin such as tracking foreign dividend income separately, including its breakdown by the country from which it came), not to maximise dividend income. If I feel that a single holding has become too large a percentage of the capital value of the HYP or that its income has become too large a percentage of the HYP's income, it gets trimmed - and I invest the sale proceeds in what strikes me as the best addition to the HYP based on my judgement of which company offers the best combination of yield, dividend safety and diversification of the HYP. That sometimes means it's reinvested in a company with a lower yield than the holding I trimmed, and even when the reinvestment is in a company with a higher yield than the holding I trimmed, it's very common for it to have a lower yield than others I could have reinvested in... So my active management frequently actively avoids maximising dividends.

The basic lesson from this is that one should quite ruthlessly make poll answers as simple as possible by removing extra restrictive phrases, or if you're actually interested in those extra restrictive phrases, provide alternative answers. E.g. "Natural income from HYP actively managed to maximise dividends" has the restrictive phrase "to maximise dividends": either reduce the answer to "Natural income from an actively-managed HYP", or convert it into two answers "Natural income from HYP actively managed to maximise dividends" and "Natural income from HYP actively managed to do something other than maximise dividends".

But it doesn't stop there: what about HYPers who don't actively manage their HYPs? In "Natural income from an actively-managed HYP", "actively-managed" is a restriction: either reduce the answer to "Natural income from a HYP" or split it into "Natural income from an actively-managed HYP" and "Natural income from a HYP that isn't actively managed".

And it also doesn't stop there: what about those who live off the natural income from a portfolio of individual shares that isn't a HYP? In "Natural income from a HYP", "HYP" is a restriction: either reduce the answer to "Natural income from a portfolio of individual shares" or split it into "Natural income from a HYP" and "Natural income from a non-HYP portfolio of individual shares".

And always include an "Other" or "None of the above" answer to allow for the possibilities you haven't thought of!

Gengulphus

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Re: How you eat yours?

#430963

Postby Lootman » July 28th, 2021, 1:46 pm

DrFfybes wrote:
genou wrote:I had a HYP for myself, but put the children's funds into global trackers.It soon became apparent that I was taking much more risk for no improvement in return. I still have some debris HYP holdings that are being run down, but the bulk is now in global trackers. It will require sales to realise cash on a steady basis.
Dod101 wrote: I never sell investments for living expenses.

What do you intend to happen to the capital in the long run?

Probably the same as the rest of us - care home fees :(

Same as the rest of us? Certainly not in my case.

Only a relatively small percentage of people end up needing residential care in old age. Less than 20% even for people in their 80s.

So you should probably have a plan B for the capital!

Gengulphus wrote:And always include an "Other" or "None of the above" answer to allow for the possibilities you haven't thought of!

Indeed, and not least because the poll assumes that one needs "income" to draw. But that might not be true at all. One might have enough money sitting in a bank to have no need for income. Someone with enough to do that could invest entirely in securities that pay no income.

Which option covers "10% in cash and 90% in Berkshire Hathaway"? Which also has the benefit of meaning no tax is due!

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Re: How you eat yours?

#430967

Postby 1nvest » July 28th, 2021, 2:04 pm

Lootman wrote:Which option covers "10% in cash and 90% in Berkshire Hathaway"? Which also has the benefit of meaning no tax is due!

I opted to tick the "Managed Portfolio sold off to generate income" for something along those lines.

No fees. No US dividend withholding tax. No income taxation.

Nowhere near 10% cash either, just enough inflation adjusted regular income added to my spending account each month to cover the month. If more is needed then its just T+3 days away and more often credit cards can in-fill the time between. Free ii trade each month covers those withdrawals (login, sell enough shares in whatever is the most above target weighting to release the required income).

Nowhere near 90% BRK stock either, too much single stock concentration risk. A mixture of 'No Yielders' instead.

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Re: How you eat yours?

#430975

Postby TUK020 » July 28th, 2021, 2:33 pm

Lootman wrote:So you should probably have a plan B for the capital!


Worth investigating the famous Snorvey Plan B involving Hookers and Cocaine :D

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Re: How you eat yours?

#430978

Postby Lootman » July 28th, 2021, 2:41 pm

TUK020 wrote:
Lootman wrote:So you should probably have a plan B for the capital!

Worth investigating the famous Snorvey Plan B involving Hookers and Cocaine :D

Ah yes, the "ho and blow" option. Could be my plan A as then no doubt I would not make it to the point of needing care.

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Re: How you eat yours?

#430979

Postby TUK020 » July 28th, 2021, 2:43 pm

Lootman wrote:
TUK020 wrote:
Lootman wrote:So you should probably have a plan B for the capital!

Worth investigating the famous Snorvey Plan B involving Hookers and Cocaine :D

Ah yes, the "ho and blow" option. Could be my plan A as then no doubt I would not make it to the point of needing care.

Well, you could say it is a different form of care

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Re: How you eat yours?

#430984

Postby 1nvest » July 28th, 2021, 2:57 pm

Specialist care!

Typical regular care home cost is £10/hour. For one on one regular at-home care that rises to £25/hour minimum, can rise to be double or more than that. Perhaps no more, maybe less than what some specialists carers advertise on cards in phone booths ??

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Re: How you eat yours?

#430988

Postby 1nvest » July 28th, 2021, 3:03 pm

Snorvey wrote:I expect this to involve a 'carehome', somewhere in a warm region of Asia, where young ladies (I hope!) are happy to look after fat old westerners in their dotage, 24 hours a day.

Seriously ... you can get actual better health/personal care in Asia for a lot less than in the UK. Own villa in a 'village' with pleasant surroundings/decor etc. for instance with one-on-one carers, entertainment/activities, good/regular food etc. all for around £50K/year. And their carers are a lot more caring apparently. I suspect additional 'specialist care' might only be a stones throw away, at a supplementary cost.


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