RVF Portfolio - Damaged goods.

[tjh290633]

I only make a note of my Year to Date valuation at the weekends, and the worst was on 20th March, down almost 32%. What is more important is the anticpated reduction in income because of deferrment or suspension of dividends. That is currently down about 13% from 2019-20 levels, assuming no further suspensions or cancellations. In 2009-10 it was down over 45% on the previous year.

Don't panic (yet).

TJH

[EssDeeAitch]

But I can perhaps yield around £800 to a £1000 per day for a couple of years.

Is that a typo?
If not, I cannot see a need for panic except of course, I dont know your circumstances.

[Dod101]

That is £40,000 a year by working one day a week. I would take that irrespective of the economic situation if I were you. Most families are living on less all in.

Dod

[TUK020]

But I can perhaps yield around £800 to a £1000 per day for a couple of years.

Is that a typo?
If not, I cannot see a need for panic except of course, I dont know your circumstances.

No, not a typo. To be clear though, one day per week-ish for perhaps forty days per year. Next couple of years only. My time is more valuable to me than the money. I did say I was lucky to have such a Plan C. Nobody is panicking. But by posting as this situation unfolds, I hope to help others in perhaps a similar situation to see a way forward.

Thanks for your interest and comments.

RVF

RVF,
does this level of income enable you to defer taking your DB, so that you can get an uplift in the amount when you do take it?
If so, a year or two extra work at this level shores up your retirement income - extra DB to offset portfolio dividends
tuk020

[seagles]

My oh my. What a day. My previous post was out of date as soon as Shell dropped their bombshell on income investors. I now only have two dividend payers in my concentrated, supposedly high quality income portfolio. And either of them could be a cutter pretty much anytime soon. That's Legal and General and Regional REIT. I now believe that in my upcoming imminent retirement, three months away, my Plan B of supplementing DB pensions from income reserve looks untenable. I fear my income investment portfolio has suffered permanent damage. Or damage beyond the two/three time frame of an income reserve pot that would allow a rebuild of income reserve over a longer period. I now seriously consider Plan C. Not a particularly desirable outcome but this plan involves a side job maybe one day a week and on occasion a bit more. It's not a desperate situation by any means. But I can perhaps yield around £800 to a £1000 per day for a couple of years. The strategy being to partly spend that income and to rebuild my damaged goods portfolio as best I can for the medium term. I guess I should consider myself fortunate that informal inquiries by myself to the market have been favourable to Plan C. I do not have a Plan D.

RVF

When I "first" retired 17 years back I had the opportuinty to still do some consultancy and conference presentations, decided I wanted out altogether. Now regret not just taking up a few of the opportunities, it wasn't the £700 plus expenses that I missed but the social side of it. Now on my 3rd attempt to fully retire and so far it has held. good luck with whatever you decide.

[TUK020]

My oh my. What a day. My previous post was out of date as soon as Shell dropped their bombshell on income investors. I now only have two dividend payers in my concentrated, supposedly high quality income portfolio. And either of them could be a cutter pretty much anytime soon. That's Legal and General and Regional REIT. I now believe that in my upcoming imminent retirement, three months away, my Plan B of supplementing DB pensions from income reserve looks untenable. I fear my income investment portfolio has suffered permanent damage. Or damage beyond the two/three time frame of an income reserve pot that would allow a rebuild of income reserve over a longer period. I now seriously consider Plan C. Not a particularly desirable outcome but this plan involves a side job maybe one day a week and on occasion a bit more. It's not a desperate situation by any means. But I can perhaps yield around £800 to a £1000 per day for a couple of years. The strategy being to partly spend that income and to rebuild my damaged goods portfolio as best I can for the medium term. I guess I should consider myself fortunate that informal inquiries by myself to the market have been favourable to Plan C. I do not have a Plan D.

RVF

When I "first" retired 17 years back I had the opportuinty to still do some consultancy and conference presentations, decided I wanted out altogether. Now regret not just taking up a few of the opportunities, it wasn't the £700 plus expenses that I missed but the social side of it. Now on my 3rd attempt to fully retire and so far it has held. good luck with whatever you decide.

Thanks. A great perspective. In fact, it will simply be a continuation of what I do now but for only 20% of the time. I lead (and have led) a very solitary life (presently in Australia). Even more so now with the lockdown. So spending time in the UK at home with my wife whilst working from home 1 day per week in fact will be a considerable uplift in lifestyle for me. Since the assets I work with are already thousands of kilometers away from me even when I am in the office, it makes little difference where I actually sit. I am very interested in others views who have trodden this path, for sure.

RVF.

As of Jan 2020 I moved to 4 days a week, with tentative plans of going to 2 days a week in Apr 2021.
I found having 3 days off a week made a huge difference in available time to do stuff that I wanted (50% extra) until lockdown.....
I enjoy my work, but 5 days a week was a bit intense, and the long commute was a major drag in winter. Now working from home for two months, and finding not enough to fill my time, I am thinking if I can work a couple of days a week, and one of those remotely, then I am not sure that I want to stop anytime soon. Even a day or two a week pushies out the need to touch my pensions, and makes a big difference to my margin of safety

[Hariseldon58]

@RVF Take a deep breath, it's all fine.

I took retirement age 49 in November 2007, no pensions, you know what came next... watch your spending, stay invested, opportunities may present themselves...( max drawdown was just shy of 50%, it came good over time, but it also presented some opportunities for significant gains in a short space of time)

If you can earn £40k pa for one day a week, for the next year or two....its hard to see a problem, especially with your DB pensions.

I used to favour income investments, but they really haven't done very well for the last 10 years or so, the total return approaches has benefits, you are not limiting the range of investments you select from, in my case the income that is produced is reinvested within the ISA's etc, hence it makes no real practical difference where the money you spend day to day comes form, dividends, realised capital gains or cash/bonds.


The income approach is very popular but its more a question of mental accounting than anything, keep a stonking great wodge of cash/NS&I/short government bonds, you have optionality if markets provide opportunities and you have money to maintain lifestyle for an extended period.This lives alongside your core equity investments.

I have 10+ years of spending in cash now, I will let it dip to 5 years if necessary , the interest is around 1%, I have bought some investments in dips and been rewarded with rises of circa 15% within a few days, I sold these and banked the gains, these investments I would have happily kept for years if they hadn't gone up, but they did and bought another years income. So whilst cash may not offer much income, the optionality is useful and can generate gains but either way you sleep well!!!

[bluedonkey]

When I was 61 years old, I moved from full time work to about two-thirds of full time. Financially this meant my income dropping from a level where I could make significant capital additions to my retirement fund, to one where my after tax income equals my expenditure. I didn't make any adjustments to my expenditure, it just carried on as before.

At first the free time sometimes ended up with me at a slight loss what to do, not enough leisure activities to fill the extra time. However gradually I found that my mental focus switched more and more to expanding my leisure activities. After a while leisure activities expanded so much that they started to impinge on my work time! An increasing sense of slight resentment at having to work manifested itself.

I now look forward in a few years to completely stopping work. I will stop, regardless of to what extent my portfolio has repaired itself from the present malaise. There are low cost ways of enjoying oneself if need be. There is only a certain amount of time left on this planet for any of us. I'm very clear that I do not want to spend it working but doing all the other stuff!

[bluedonkey]

Thanks bluedonkey, much appreciate the perspective. Having spent much of the last 30 years away from home on my own, I think even working one day per week will be a struggle to fit in. I have SO much to do. But, alas, as I have been open about and discussed at length, the recent set backs by Mr Market mean that to keep prudently on track, I need the one day per week work. If I don't need it in the end, I can knock it on the head. But I fear, if I stopped now it would be almost impossible to start again down the line after a year or two. In my specialty, we have a very short use by date in that respect.

RVF.

Yes. I'm self employed and whilst this does give me a lot of flexibility, it does mean that I never quite lose the feeling of responsibility for the business's clients. When I was an employee many, many years ago, I was able to switch off when I wasn't working. So further to your plan C, I may take on part-time employment initially, say at 20% of full-time, making myself available for seasonal peak workflows. I would only do this if dividends had not repaired themselves by the time of planned retirement.

[Itsallaguess]

The stinkers may recover in time..

Hi RVF,

No doubt like other interested observers, I've been following the travails of the Hurricane thread and have a great deal of sympathy with anyone involved in AIM oilers where the clearly high-risk stakes don't come off.

Anyone who's been investing for any length of time will have had similar episodes, and will no doubt go on to have others too, but the reason I've posted is just to note that we shouldn't underestimate the emotional and psychological benefits of simply allowing ourselves to 'let go' once we realise that we're holding onto a dog...

I've certainly held on in the past, and in the end I discovered that it was simply the very well discussed 'emotional attachment' that was making me do so. No good can come of that...

Certainly in the last few cases I had like this, it was clear that even a doubling or trebling of what was the share price at that time would make absolutely no material difference to my overall portfolio value, and once I allowed myself to realise that fact, and simply sold what was left of my meagre holdings and just 'let go', the emotional and psychological benefits were absolutely palpable for me straight away...

No longer were those 'stinkers' standing there like sore boils in my portfolio listing, staring at me with disdainful eyes every time I opened my brokers page.

No longer was the financial loss sitting there on my portfolio page, persistently reminding me of my folly into what I think too was an AIM share the last time I let one of my big stinkers go...

-98% I seem to remember my last very large loss on this type of situation was, and for me it was a really quite painful figure to have to be reminded of every time I opened my online portfolio page...

So when I learnt to 'let go' in these scenarios, it was never about recovering what was left - there was nothing left...

It was never about denying myself a chance of redemption if that 'stinker' came good - there really was no chance, and, even if it *did* 'come good', then 'coming good' from it's current position was going to make absolutely zero real difference to my overall portfolio value....any potential recovery would have simply been 'noise' in the overall view of things anyway....

So don't underestimate the real, concrete benefits of just 'letting go'. Sell, move on, and forget about it. Don't continue to torment yourself with something that would need an absolute miracle to deliver any meaningful benefits from the current position.

Hand on heart, I've never once regretted a single stinker-sale I've made since taking that first step of just 'allowing myself to let go'....

If any of the above rings any bells with you, then give it a go, even if it's just with the one stinkiest stinker for now...

See if it helps, because it certainly helped me....

All the best,

Itsallaguess

[Dod101]

I went through my experience similar to yours back in the tech boom of 2000/1 with Cable & Wireless which I have recalled several times on these Boards. In these days I had a value of £30,000 in C & W and then it started to first wobble and then drop alarmingly. I was sure it would recover as it was a fundamentally good share (wasn't it?) I eventually sold the remnants at about 10% of that.

That is why I wrote the way I did to dspp on the HUR Board. That was my lesson and why I now sell (in normal times) when a dividend is cut and watch the management very carefully. That to me is the most important issue of all. Culture, culture, culture. That kept me well away from Carillion for instance and in fact nearly all builders and contractors.

Comfort yourself with the fact that neither Lloyds nor Shell are stinkers in the same way that Hurricane is and the likelihood is that they will both recover in time.

LIke most portfolios your loss has no doubt been made worse by the ongoing Covid situation.

Good luck

Dod

[Hariseldon58]

@RVF Glad to hear your feeling more sanguine ! This recent business has been expensive for all of us, it tends to come right... I've seen losses narrow from 400k+ to just over 100k but I think if you have an overall strategy where these big losses are factored in ( it will happen again for sure) then you have a plan.

Perhaps being very active in your choices is not the best plan ? I sympathise with the previous comment that a heavy loss from an insignificant holding on the portfolio level, draws your attention, cut it loose! Move on !

There is much to be said for a core passive global portfolio, it does pretty well from my experience. I have moved from an Investment Portfolio with too many holdings, (at its peak over 50) to a core passive portfolio. I have some smaller holdings ( always six figures, so they represent a purposeful investment) to target a few areas that provide a distinctive alternative to the core equity index.

The aim has been of recent years to have a resilient portfolio that supports living our retired lives.( enough cash/government bonds to live 10+ years or so lowers the worry factor a lot..gives time for a portfolio to do its thing over a reasonably long period without the worry of the ups and downs along the way.)

[Alaric]

Though loss of dividend income for 2020 to 21/22 is going to hurt.

A possible approach would be to sell something, set aside the proceeds and use them to replace the lost dividend income. Ideally if you have them, shares where the dividend has been cancelled or postponed but the share price has recovered or didn't fall.

In the longer term the permanent loss of the sold assets may be a problem.

[PinkDalek]

[It's going to be very helpful if Regional REIT and L&G pay their full planned dividend in the coming days too. ...

Others on TLF have acknowledged receipt of their L&G dividend today.

Edit: As I now see you've already written about that receipt elsewhere on TLF!

[bluedonkey]

Oh boy, the LGEN dividend is big! My largest holding and my largest dividend amount. The amount is always a slight shock.

[Dod101]

The L & G yield is still over 7% I think which is why I have just turned its dividend back into a few more of its shares.

Dod

[bluedonkey]

I'm reluctant to buy more LGEN. In 2019 it was 9% of my dividend income.

[Dod101]

Good for you RVF. I wish you well.

I wish I knew the answer to the current market's gyrations. We worry when markets go down and we worry when they recover. I am making a few small adjustments to my portfolio, but mostly just looking to increasing the dividend payers. Currently I am only down about 10% compared to last year but by the end of this month I will have suffered shortfalls from Shell and Imperial Brands as well and so at the half year it will be rather more. Over the entire year? Well there are a lot of 'it depends' but I hope to limit the damage to about a 15% dividend shortfall. As SalvorHardin has said elsewhere the market is always ahead of the actuals at any given time, but apart from the minor changes I am implementing, I am just sitting tight.

I do not anticipate needing to use any capital for living expenses for the year and that pleases me.

Dod

[Alaric]

and replaced them with M&G (MNG).F

Arguably M&G has a better reputation than Aberdeen or Standard. Having been purchased by Prudential many years ago, the swallowed morsel is now dictating events in that it intends to dump the insurance business that bought it.

[Dod101]

As I have said before, I think HSBC should throw in its lot with China and move its domicile back to Hong Kong. It already has its HQ building there and a very large market. Hedge funds are different because they have very little infrastructure to worry about and could move very quickly. Whatever happens, HK is going to be simply another city in China, at the absolute latest by 2047 if not before but it is a matter of degree.

I sold some HSBC shares last week, about 15% of my holding, but that was more to do with having too much rather than the idea of getting out of them.

I will leave the rest most likely and just wait and see.

Dod