Itsallaguess wrote:Because doing so with a single, long-term income-strategy during both phases gives good visibility of the income-stream over a much longer, confidence-building period for some investors.
That confidence can be gained by looking at the size of the long-term income stream, as well as it's long-term growth and growth-trends, and also it's reliability over the long-term, often passing through a number of market drops.
That confidence might be difficult to achieve if using a separate growth strategy initially, and then changing tack later on when wanting to move into an income-strategy phase, and that confidence might be a highly important aspect of this type of investment for some people...
I accept that there's lots of investors who might be quite happy to just 'be' confident that such income-reliability and visibility might just 'occur' once such a second 'income-strategy' phase might be started, but I think it would also be very useful for people to also understand that there's some investors who would be quite happy and willing to accept *some* level of lower overall 'round trip performance' if they were able to stick with the single 'income-strategy', re-investing during what would be your 'growth phase', and then simply flicking the dividend-delivery 'switch' from re-investment to 'income-delivery' at some point where required.
It's a simple, single-strategy approach that delivers benefits that some people might be happy to accept, even in the face of lower overall 'total returns'....
The question you're asking is a valid one dealtn.
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Cheers,
Itsallaguess
Yes, yes, yes. That's the journey I've been on. Back in 2011, coming to direct-investing in mid-life, I fooled around with 'trading', index ETFs, value investing, 'dogs of the FT100', etc. I recall buying and selling a FTSE100 ETF like I was a City trader
Did the same with a gold ETF next. Never made much; plus too much 'stress' monitoring stocks closely during the work day.
Then I found HYP and it just made sense. In its basic approach it was straightforward. Decisions and actions were played out over weeks/months, not hours/minutes. I've YET to actively sell a stock (after a decade!) other than Verizon shares from Vodafone, and I can't now recall what South32 did out of BHP Billiton. Some may argue we SHOULD have sold one or two, seeing the current state of the HYP. Yes, I'd look at the portfolio value, and hope to see it increase, but didn't overly sweat stock price drops (and often saw as a chance to 'top-up' more, cheaper). But rather I focused on the increasing income stream from dividends (being reinvested).
I'm in the IAAG mould - reinvesting dividends during the current accumulation phase, but effectively testing for myself if HYP works for me (I was chastised once or twice over on HYP-P for phrasing it that way in annual HYP reviews I'd post!
). It was possible HYP simply didn't work; or worked for others by not for me (skill/temperament/risk appetite).
Are there faster/other ways to accumulate? Probably. Indeed, the bulk of our investments are in employer pensions schemes or property doing just that (hopefully!). BUT I'm now confident to take some of those pension funds on retirement and boost the HYP (with a bit more active management!) into an income phase as an alternative to an annuity. I don't think I could say that truthfully if I'd not been exploring/practicing over the last decade.
Meanwhile, over in a very small SIPP, I saw a 90% drop on a 'clever' Biotech play I bought. Fortunately, not a 'farm' bet. Less than a year's dividend income in HYP terms.