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Income to Growth

Closed-end funds and OEICs
Vince
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Income to Growth

#393365

Postby Vince » March 7th, 2021, 3:51 pm

Over the past two years I've had the misfortune of being forced kicking and screaming into paying taxes on some of the income I received from Investments, it wasn't a lot but it was un-necessary, a lack of paying attention, then from a position of I just had other things to get on with.

Recently, I've sold off three investments, two were yielding around 5% each, the third was Smithson, which as well as drifting recently, was sold to release almost a full years ISA allowance which will fund 2021-2022 year.

The end result is a decent sum left over after I topped up Lloyds and CTY already in the ISA using proceeds from sales to fill up my 2020-2021 ISA allowance, I also intend to swap out one of the remaining income Investment Trusts in my trading account at the end of the 2021-2022 tax year to fund my ISA for 2022-2023 tax year, it will be either AAIF or DIG, both should release over the ISA allowance so are the correct candidates to sell off and either rebuy them in the ISA or replace them with similar yielding IT's.

After analysing where my portfolio has made money, stood still or actually failed, its clear to see that the growth funds have done considerably much much better over the 6 years it has been running, I still welcome the income and have enough of it coming in within the trading account and ISA, Lloyds are going to pay out again which after this years top up will provide around 20% of the income, most within the ISA, alongside CTY, AAIF, DIG, IPE and NCYF, the income required is accounted for.

I also hold SMT and Fundsmith which between them have increased the portfolio buy many multiples of the sum of everything else, I sold out of FGT around a 15 months ago which also helped, and I've now decided to replace the sold funds with Bankers IT, I wish I had the nerve to pick out an off the wall crazy volatile knock the lights out high risk fund that could possibly double every year, but I still want to tread carefully, so Bankers it is, unless someone wants to talk me out of it before 8am tomorrow, I've spent an hour researching it so I can't be accused of rushing into it.

Vince

bluedonkey
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Re: Income to Growth

#393387

Postby bluedonkey » March 7th, 2021, 4:51 pm

Personal view, but it seems like a lot of trading. Other tuppence worth: are growth stocks about to have a period out of the sun just as you switch into them?

77ss
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Re: Income to Growth

#393437

Postby 77ss » March 7th, 2021, 7:23 pm

Vince wrote:....I've now decided to replace the sold funds with Bankers IT, I wish I had the nerve to pick out an off the wall crazy volatile knock the lights out high risk fund that could possibly double every year, but I still want to tread carefully, so Bankers it is....
Vince


There are plenty of volatile things you could put your proceeds in. I have quite enough of these and don't need or want more.

FWIT I have recently bought a full holding (about 3%) of BNKR. Redeploying from PHNX and SOI. Switching from PHNX to an IT just continues my gradual move away from individual equities.

I have moved down the yield curve and up the 5 yr Total Return curve. Time will tell.

Parky
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Re: Income to Growth

#393505

Postby Parky » March 8th, 2021, 8:09 am

Vince wrote:Over the past two years I've had the misfortune of being forced kicking and screaming into paying taxes on some of the income I received from Investments, it wasn't a lot but it was un-necessary, a lack of paying attention, then from a position of I just had other things to get on with.


Vince


Don't rush to switch to growth. Capital gains may soon be taxed at the same rate as income. Watch out for "Tax Day" on March 23rd when government proposals on this and other tax issues are due to be published.

scrumpyjack
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Re: Income to Growth

#393508

Postby scrumpyjack » March 8th, 2021, 8:21 am

Parky wrote:
Vince wrote:Over the past two years I've had the misfortune of being forced kicking and screaming into paying taxes on some of the income I received from Investments, it wasn't a lot but it was un-necessary, a lack of paying attention, then from a position of I just had other things to get on with.


Vince


Don't rush to switch to growth. Capital gains may soon be taxed at the same rate as income. Watch out for "Tax Day" on March 23rd when government proposals on this and other tax issues are due to be published.


Any such change is not going to happen soon, if at all. The March 23rd tax day is just announcing consultations and nothing that affects this years tax finance act.

https://www.gov.uk/government/news/gove ... n-23-march
"None of the announcements will require legislation in the next Finance Bill or have an impact on the government’s finances."

Vince
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Re: Income to Growth

#393524

Postby Vince » March 8th, 2021, 9:11 am

bluedonkey wrote:Personal view, but it seems like a lot of trading. Other tuppence worth: are growth stocks about to have a period out of the sun just as you switch into them?


I have traded more in the last few weeks than I have for the entire time I've been investing, I've usually been a buy and hold type, the cost ratio of trades against value is minute, without doing an exact calculation, I would think its less than 0.25% so I prefer to see it as tax planning and portfolio re-alignment but I do understand your point.

I'm not really sure that on the whole, investors transfer between growth and income based on the what the worlds outlook is between the two, for me, its a personal choice based on needs rather than what the FED is doing or what China might do, I don't have the sophistication to understand the nuances between yield curves and the effect changes have on my own personal wealth, a number of holdings that provide growth, income and the requirement to pay as little tax as possible is a personal goal, the effort to achieve the goal is about as much as I would want to expend, we have a comfortable life on the proceeds, the simplicity of our personal portfolio (Thanks to Luniversals writings on Baskets many years ago) makes life easy.

Vince

ADrunkenMarcus
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Re: Income to Growth

#396026

Postby ADrunkenMarcus » March 16th, 2021, 9:48 am

Vince wrote:I've now decided to replace the sold funds with Bankers IT,


Bankers is on my watchlist.

According to 'AIC 15 March 2021 figures to 12/3/2021' it has raised its dividend annually for over half a century; returned 117% on a total return basis over five years; 244% over ten years; 508% over 20 years; and 17,394% over 40 years.

This is a better record than City of London; Alliance Trust; BMO Global Smaller Cos; F&C Investment Trust; Brunner; Scottish American; Witan and Scottish Investment Trust.

But then the past is not necessarily a guide to the future. I think we're seeing a slightly higher annual rate of return which really compounded over time. You can see the magic after 20 years.

You could do much worse!

Best wishes

Mark.

Vince
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Re: Income to Growth

#396048

Postby Vince » March 16th, 2021, 10:37 am

ADrunkenMarcus wrote:
Vince wrote:I've now decided to replace the sold funds with Bankers IT,


for over half a century; returned 117% on a total return basis over five years; 244% over ten years; 508% over 20 years; and 17,394% over 40 years.


Mark.


We haven't got 40 years left to wait for a gain of 17,394% :( , doubling every 6 or 7 years would be enough to exceed our expectations, a couple of cycles of that type of growth should see us through to the point of needing to be spoon fed and someone else worrying about finances :lol:

Vince

ADrunkenMarcus
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Re: Income to Growth

#396050

Postby ADrunkenMarcus » March 16th, 2021, 10:41 am

I think I'm a fair bit younger than most so have a longer time horizon! It's entirely possible I've got another 60+ years of investing ahead of me. It sounds like Bankers will do what you want, though I do wish some of its top holdings were a higher proportion of the folio...

Best wishes

Mark.

TUK020
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Re: Income to Growth

#396113

Postby TUK020 » March 16th, 2021, 12:01 pm

This table is from the IT Investor.
It dates from June last year which is not an optimum comparison point, but does give a longer term performance comparison
https://www.itinvestor.co.uk/2020/06/20 ... -compared/

swill453
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Re: Income to Growth

#396114

Postby swill453 » March 16th, 2021, 12:06 pm

Up until recently I was managing my SIPP on the basis of maximising income for my drawdown. So I sold my lowest yielding IT, Bankers, and redistributed into higher payers.

After a review I find I really have more than enough income for my current and medium-term needs, so perhaps I should invest spare cash for growth instead.

So, er, Bankers then? :oops:

Scott.

ADrunkenMarcus
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Re: Income to Growth

#396115

Postby ADrunkenMarcus » March 16th, 2021, 12:11 pm

TUK020 wrote:This table is from the IT Investor.
It dates from June last year which is not an optimum comparison point, but does give a longer term performance comparison
https://www.itinvestor.co.uk/2020/06/20 ... -compared/


Good stuff.

It has Bankers at 10.5%, whereas the 40 year data comes to an annualised 13.7%. I think there's a natural issue as we have nominal figures and there was much inflation in the 1970s and 1980s, so the 'real return' may actually be higher in recent years.

Best wishes

Mark

richfool
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Re: Income to Growth

#396117

Postby richfool » March 16th, 2021, 12:15 pm

But wouldn't you favour Mid Wynd (MWY) over Bankers, unless one is only looking at dividend yield? MWY has performed better in terms of capital appreciation:

https://citywire.co.uk/wealth_manager/i ... Period:60;


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