Help with a decision

[JohnW]

Preference shares.

Thanks. Always learning.

[ursaminortaur]

Love to know what sort of stock pay a fixed interest. If ‘bonds’ is meant, write ‘bonds’ or I’ll get confused.

Government stocks, i.e. Gilts.

TJH

Strictly speaking Gilts are government bonds though there seems to be some mixing of terminology.

https://www.forbes.com/uk/advisor/investing/what-are-gilts-and-how-to-invest-in-them/

When a government wants to raise money to pay for its spending programme, one tactic is to issue bonds. In the UK, government bonds are called ‘gilts’.

Strictly speaking Stocks are equity

https://www.investopedia.com/terms/s/stock.asp

What Are Stocks?
A stock, also known as equity, is a security that represents the ownership of a fraction of the issuing corporation. Units of stock are called "shares" which entitles the owner to a proportion of the corporation's assets and profits equal to how much stock they own.

https://www.investopedia.com/ask/answers/062215/what-are-differences-between-preference-shares-and-debentures.asp

Preference Shares
Preference shares are shares of a company's stock issued to preferential shareholders or stakeholders. Like common stock, preference shares represent ownership in a company. Unlike common stock, preference shares usually do not carry any voting power but give the holder of the preference shares claim on a specific quarterly dividend amount and precedence over common stock in the event of a company liquidation.

[tjh290633]

Government stocks, i.e. Gilts.

TJH

Strictly speaking Gilts are government bonds though there seems to be some mixing of terminology.

https://www.forbes.com/uk/advisor/investing/what-are-gilts-and-how-to-invest-in-them/

From that source:

For example, a gilt might be called ‘3% Treasury stock 2030’. The 3% refers to the coupon: how much interest an investor would receive each year. This is usually paid in half-year instalments.

The title of gilts often include the word "Stock". My case rests.

Of course War Loan did not.

TJH

[ursaminortaur]

Strictly speaking Gilts are government bonds though there seems to be some mixing of terminology.

https://www.forbes.com/uk/advisor/investing/what-are-gilts-and-how-to-invest-in-them/

From that source:

For example, a gilt might be called ‘3% Treasury stock 2030’. The 3% refers to the coupon: how much interest an investor would receive each year. This is usually paid in half-year instalments.

The title of gilts often include the word "Stock". My case rests.

Of course War Loan did not.

TJH

As I said there is some mixing of terminology but strictly speaking gilts aren't equity and thus aren't stocks.

[hiriskpaul]

A year ago I got rid of my financial advisor
Since then I've spent a lot of time balancing my portfolio into a robust structure -

- 70% Shares, 30% Bonds
- 50% US, 25% Europe, 25% Asia
- 33% Cyclical, 33% Sensitive, 33% Defensive

The top 10 holdings are -

1. Vanguard LifeStrategy 60% Equity A Inc
2. Vanguard LifeStrategy 40% Equity A Inc
3. Fidelity Select 50 Balanced PI Acc
4. JPM US Select C Net Acc
5. Fidelity Index World P Acc
6. Fundsmith Equity I Acc
7. Rathbone Global Opportunities S Acc
8. Stewart Inv APAC Ldrs Sstby B GBP Acc

I'm at the stage where I need to start taking money out to fund my retirement as I'm 70 years old now
I'd just assumed I would sell off 4% pa and growth would take care of everything else
However my 'wealth manager' suggested (not advised) I should make the funds 'income' and use that instead
The aim being to live off the income and avoid selling assets
I get that but moving everything into high income funds (to gaurantee 4%) upsets my carefully balanced portfolio
I also have a pension fund with enough tax free cash for the next 3 years if I wanted to postphone this decision
This would go against the advice of my previous FI who told me the spend order should be - Cash, Non-ISA, ISA, Pension
Any thoughts/suggestions ?
Many thanks in advance
Binlid

Other than differences due to timing and perhaps trading costs it makes no difference whether you draw from income paying units or from accumulation units. Even if you did convert to income units it is unlikely that your portfolio income would satisfy your target income, so disposals would still be needed on top of your payments from income units.

If you are happy with your portfolio stick with it. Don't start loading up on high yielding investments just to increase your 'natural' yield. That whole investment concept is bogus when it comes to shares as every dividend payment on a share is accompanied by an equivalent drop in share price when the share goes ex-dividend. Taking dividends is completely equivalent to taking capital, other than in taxation, so don't be concerned about selling shares for income.

[Binlid]

A year ago I got rid of my financial advisor
Since then I've spent a lot of time balancing my portfolio into a robust structure -

- 70% Shares, 30% Bonds
- 50% US, 25% Europe, 25% Asia
- 33% Cyclical, 33% Sensitive, 33% Defensive

The top 10 holdings are -

1. Vanguard LifeStrategy 60% Equity A Inc
2. Vanguard LifeStrategy 40% Equity A Inc
3. Fidelity Select 50 Balanced PI Acc
4. JPM US Select C Net Acc
5. Fidelity Index World P Acc
6. Fundsmith Equity I Acc
7. Rathbone Global Opportunities S Acc
8. Stewart Inv APAC Ldrs Sstby B GBP Acc

I'm at the stage where I need to start taking money out to fund my retirement as I'm 70 years old now
I'd just assumed I would sell off 4% pa and growth would take care of everything else
However my 'wealth manager' suggested (not advised) I should make the funds 'income' and use that instead
The aim being to live off the income and avoid selling assets
I get that but moving everything into high income funds (to gaurantee 4%) upsets my carefully balanced portfolio
I also have a pension fund with enough tax free cash for the next 3 years if I wanted to postphone this decision
This would go against the advice of my previous FI who told me the spend order should be - Cash, Non-ISA, ISA, Pension
Any thoughts/suggestions ?
Many thanks in advance
Binlid

Other than differences due to timing and perhaps trading costs it makes no difference whether you draw from income paying units or from accumulation units. Even if you did convert to income units it is unlikely that your portfolio income would satisfy your target income, so disposals would still be needed on top of your payments from income units.

If you are happy with your portfolio stick with it. Don't start loading up on high yielding investments just to increase your 'natural' yield. That whole investment concept is bogus when it comes to shares as every dividend payment on a share is accompanied by an equivalent drop in share price when the share goes ex-dividend. Taking dividends is completely equivalent to taking capital, other than in taxation, so don't be concerned about selling shares for income.

Thanks hiriskpaul,
That's the conclusion I've arrived at but thanks for the re-assurance
Cheers
Binlid

[Greylocks]

Some providers have a regular withdrawal facility, eg, Fidelity for OEICs, Vanguard for their own products (OEICs and ETFs) and similarly for Fundsmith.
If you are invested directly with them you can create whatever monthly or quarterly dividend you want.
It makes it more objective rather than making a decision to sell down when you need extra money.
ATB.