Preparing to retire - income generating trusts/funds

[myprivate]

Hope to retire soon with income producing fund/trusts that I can buy and forget for 20 years. Need around 4.5% yield. Can buy through my UK stockbroker account.

Fortunately I had most of my savings in a Gold ETF and cash before the recent crash because I was waiting for this type of correction. This could be my last chance to buy cheap before I retire. Problem now is I'm a bit concerned that corporate bonds are cheap because they could default, and government bond yields are too low. It's pushing me to equity funds, but they are a bit too volatile for retirement. The traditional ratio at retirement is around 80% bonds because they are 'safer', but are they really that safe anymore?

Any ideas for funds/trusts? I've researched the hell out of it, but I've come across some smart guys on TV in the past.

Edited March 27, 2020 by myprivate

[timendres]

You are correct that default risk going forward on corporate bonds is rising. You should also note that high dividend yields will also run the risk of being reduced. Be sure to employ diversification, deploy slowly to take advantage of price averaging, and consult with trusted professionals for advice and ideas.

 

Bond "safety" depends primarily on your ability to avoid the need to liquidate them at inopportune times, as well as the threat of inflation.

 

With central banks reducing interest rates to zero world wide, these are very difficult times for savers and retirees.

Edited March 27, 2020 by timendres

[cmarshall]

Oops.  Just noticed OP is a Brit, so don't know if the US funds mentioned will be accessible or not.

Edited March 28, 2020 by cmarshall

[mike787]

create multiple streams of income, ie, rental homes, buy gold, bonds, look at vanguard for options.

[mngmn]

Some of these might suit https://www.janushenderson.com/en-gb/investor/product/?assetClasses=Multi-Asset

[bkk6060]

53 minutes ago, cmarshall said:

Oops.  Just noticed OP is a Brit, so don't know if the US funds mentioned will be accessible or not.

Of course, anyone can invest in US markets.

Unfortunately, British stock markets have not even been close in performance to superior US markets over the past 10 years+.

Most the major tech companies and most successful companies in the world for investments are where?

 

I would set up an international account accessing US stocks and invest in a quality mutual fund.

Mine has averaged over 8% for a very long time.  Some down years, many up.

I think 80% bonds is way too high.  I would say 80% equity is better.

And yes, now could be one of the great buying opportunities ever.

 

 

Edited March 28, 2020 by bkk6060

[Nyezhov]

The best and safest US Mutual Fund is Vanguard/Fidelity. Lots of  "old money"  ends up there because of their conservative and professional management.

 

 

 

[William Osborne]

You're in a good position to be holding cash now.

 

If tied to UK markets have a look at some ETFs ..VUKE, IUKD or some high div stocks such as RIO, BHP, BP, RDS....most insurance companies pay a good div as well......I hold all of these solely for the dividend so still get the same yearly payments even with the price fluctuations (as long as they dont cut the dividend)

 

Your better off getting exposure to US markets as there is way more choice of stocks/funds and easier to research....if you dont like individual stocks, Vanguard/SPDR/Blackrock have huge choice of etfs linked to indexes/sectors 

 

I'm invested in a mixed bag of fixed income/options CEFs paying average 8% in monthly payments so give a nice income stream.

 

 

[Oxx]

2 hours ago, bkk6060 said:

Of course, anyone can invest in US markets.

But they get clobbered with a high level of withholding tax on income.  Best avoided.

[Oxx]

19 hours ago, myprivate said:

The traditional ratio at retirement is around 80% bonds

 

I don't think so.  A 60/40 portfolio is what has traditionally been recommended.  Bonds don't allow for capital growth, so 60% equities covers that, as well as providing a (hopefully) growing income.

 

 

 

 

[rumak]

19 hours ago, myprivate said:

Any ideas for funds/trusts? I've researched the hell out of it, but I've come across some smart guys on TV in the past.

Ahhh yes,   the good old days !   Nothing like that now i'm afraid

[Mavideol]

9 minutes ago, Oxx said:

But they get clobbered with a high level of withholding tax on income.  Best avoided.

any type and/or amount of income in the US is taxable, regardless if resident/non resident/citizen.... even the poor retirees who have worked there, paid taxes there, not residing there but collecting their retirement from them is taxed on it

[rumak]

19 hours ago, timendres said:

With central banks reducing interest rates to zero world wide, these are very difficult times for savers and retirees.

Yep !   

[Mavideol]

19 hours ago, timendres said:

With central banks reducing interest rates to zero world wide, these are very difficult times for savers and retirees.

we may have to pay the bank to hold our money

[jaideecm]

I have been investing in small internet business companies for the past 20 years with great success. I chose companies that want to grow and have no debt. They all are 100% owned with little or no overhead as they worked from their home. A few didn't make it but around 90% are still doing great.

[john69]

I'm no expert but I'd also consider possible wild currency changes in the coming months/years. Assuming you're retiring in Thailand, you may want to put some money in Thai (baht) assets.

[justin case]

4 hours ago, Nyezhov said:

The best and safest US Mutual Fund is Vanguard/Fidelity. Lots of  "old money"  ends up there because of their conservative and professional management.

 

 

 

for US citizen only

[NightSky]

Vanguards VUKE index tracker etc with 5% dividend 

 

I also buy shares in a high dividend etfs comprising of all the highest paying safe large cap companies like utilities etc that are unlikely to goto zero. It’s been pretty stable for years and there’s capital growth too. These safer high div funds are a good alternative to bonds and they pay more in divi than bonds. For example iShares Select Dividend ETF (DVY)

 

It’s maybe a good idea to hold 5% gold/silver as insurance in the event hell breaks loose.

 

Edited March 28, 2020 by NightSky

[Lannathaijohn]

No such thing as invest and forget about it for 20 years unfortunately.

Best advice is to go through a financial advisor that is registered with the financial authorities. They will assess your situation with you and point you in the right direction.

 

Personally I invest through tracker funds and income generating investment trusts. These are spread to cover the UK, Europe, US , Japan and Far East. Yes equity risk but generating 3+% per annum year in - year out. Funds specializing in debt , such as government and company bonds are also available with lower risk profiles.

Websites such as Morningstar , Hargreaves Lansdowne and AJ Bell are all useful sources of information.

[Lazy Sod]

Lots of posters prefer US stocks over UK,  which i understand, I was thinking about Blackrock North American Income Trust. Looks pretty good to me and can buy through UK stockbroker account. 

https://www.hl.co.uk/shares/shares-search-results/b/blackrock-north-american-income-trust-ord

Edited March 28, 2020 by Lazy Sod

[AAArdvark]

Invest in companies that manufacture face masks, ventilators and body bags.

[Lacessit]

There is no such thing as set and forget, you have to manage your money. If you trust someone with it, chances are they will either screw it up, or do a runner with it.

Cash is king right now. However, there are good buying opportunities in blue-chip stocks all over the world, discounted due to coronavirus. Look for shares with good earnings and a record of paying dividends to investors. Or go for a mutual fund in your country of origin, from memory you can buy shares in Vanguard on almost any stock exchange.

The other income stream - yes, it does need research and supervision - is the peer-to-peer lending market. Ratesetter in the UK has a very good reputation.

[jojothai]

As i think you are looking for income, then if you are based here in thailand also consider some allocation to thai stocks.

There are some very good yields on thai stocks such as DIF, JASIF, telecom and electrical companies. Be careful banks and property companies are high yield but may have to reduce payout. Look at what the yields were during and after the last downturn in 2009.

Also dont rush to buy now. History indicates that we may be in for more of a fall within the next six months or a year.

Do your research, then be ready when you consider the time is appropriate.

Take into consideration that if there is no vaccine for a year as is possible, or effective treatment then we are looking potentially at the virus being with us through the next winter.

Its possible this may be a problem for much longer than trump wants.

[rwill]

You take a stock like MMM.  It has paid out dividends for a long time and has increased them over time too.  At the current share price the dividend yields 4.32%, close to what you want.  If you buy now while the price is down you will get that yield percentage no matter how the share price fluctuates.  Actually since they increase the dividend pretty regularly your yield will go up over time.  Look up dividend aristocrats to get some ideas.  There are some dividend investing channels on youtube you can look at too.  A couple I like are Let's talk money! with Joseph Hogue and ppcian.  Also learn to invest, the channel on youtube.

Edited March 28, 2020 by rwill

[natway09]

I would just hang low for at least a couple of months.

Even these "gilt edged investments" may find a never used outclause in small print 

in regard to the virus

[peterb17]

Think you should hang fire on your plans - perhaps gold / cash.  
 

if you honestly think you can put all your hard earned cash - earn 4.5% income - the world has changed - thanks to 30000 base pairs of RNA 

[RubbaJohnny]

7 hours ago, jaideecm said:

I have been investing in small internet business companies for the past 20 years with great success. I chose companies that want to grow and have no debt. They all are 100% owned with little or no overhead as they worked from their home. A few didn't make it but around 90% are still doing great.

.I chose companies that want to grow

A useful and valid point, what criteria tools do you use to evalute these?

PM if youhave preferrred stocpicket.

I realize level of research and data analysis will depend on degree of risk one can bear and how long you can tie up funds.

[Paul DS]

Personally, as a retired senior Financial Adviser I would say that even Bonds and trusts are highly volatile in the current climate, in past weeks even they have dropped in value by 15%+ and may even default and as for Equities many days teyt have dropped in value well over 5% daily and a few times 10% and likewise may default.   I would suggest you remain in diversified cash and similar ie zero loss assetts for say at least 6 months, then slowly build up a portfolio of medium to low investments according to your fear attutude!

 

Of course many may scoff my response, but I would point out Equities in general are worth less now than say 2008 ie 30-40% drop in value. 

 

Best wishes!

Edited March 28, 2020 by Paul DS

[NightSky]

43 minutes ago, Paul DS said:

Personally, as a retired senior Financial Adviser I would say that...

 

..there is a seat reserved for you at the bar next to the ex SAS guys..

 

????

 

 

 

 

Edited March 28, 2020 by NightSky

[rickudon]

Invest in any company specialising in video conferencing. Every company needs it these days.