Bond investments

Discussion in 'OT (OFF Topic) Forums' started by Piff, Dec 5, 2018.

  1. Piff

    Piff Hardcore MB Enthusiast

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    I'm approaching retirement, could retire now or any time in the next 6 or 7 years. To fund the retirement I have a pot of money which I'm hoping to invest to provide an income. My initial thoughts were blocks of shares which pay good dividends and my sums could work with dividend returns around 4% to 5%.
    But, I've come across this lot who are paying considerably more.
    Does anyone have any 1st hand experience of them or knowledge of bonds in general?
    I suppose my greatest concern would be the security of the lump I choose to invest.
     
  2. renault12ts

    renault12ts MB Club Veteran

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    Get advice from an IFA. You can't buy it any other way. Read the bit at the bottom.
     
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  3. DSM10000

    DSM10000 MB Club Veteran

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    The best advice with schemes like this is to never invest without first talking to an independent financial advisor and to never invest more in one area than you can afford to lose.

    An investment portfolio with a wide spread will obviously minimise any risk.
     
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  4. C240Sport97

    C240Sport97 MB Club Veteran

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    Higher return ALWAYS carries higher risk
     
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  5. Yex

    Yex Active Member

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    Talk to an IFA as asset backed securities are much more volatile that Government Gilts. Remember the assets backing the bond may be giving a return of n.n% currently but this is vulnerable to any changes in the value or demand for the underlying asset. If I was retiring (I am planning to do so in next 7-8 years) I'd be looking at a pool of mainly Government Gilts to provide the income stream with some equities added in to give a little balance.

    Never invest your pension pot without taking serious professional advice as you have built it up over years and years and it can be very easily lost.
     
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  6. zipdip

    zipdip Hardcore MB Enthusiast

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    Do not touch those bonds,look what you need to do is decide if you know enough to invest your money yourself,if not get a good IFA and ask for references, I suspect you are dealing with a large sum of money you could go with a company like Hargreaves Lansdown they will give advice,there are shares out there that could be a core holding but you are looking at maximum of around 4% from dividends,when you see over 8% like those bonds they are too good to be true.
     
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  7. Chrishazle

    Chrishazle Hardcore MB Enthusiast

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    I've been doing precicely this for a few years now, using Hargreaves Lansdown. Tried to get an IFA interested, but he wanted money irrespective of his/my investment portfolio performance, was not in the slightest interested in a performance based agreement! HL research is good, so by using this carefully and monitoring your portfolio performance you will save yourself thousands in IFA fees. My portfolio was run for years by a major investment company (Rathbones), I've done at least as well as they did and saved about £3kpa in fees, and manage about 5%pa dividend income average along with some capital gains.

    Personal opinion - I would not touch Minerva, carefully read the bottom of the "About Us" page! The worst investment I had (bought by Rathbones) was a commercial property company, lost the entire £10k Rathbones put into it.
     
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  8. renault12ts

    renault12ts MB Club Veteran

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    You have done well.

    But, please do not suggest this as suitable for most people. In my experience most people couldn't decide between kiddy savings accounts let alone investment portfolios. You are a little cynical suggesting performance related fees for IFAs...when the market goes down they have no control.
     
  9. DrFeelgood

    DrFeelgood MB Club Veteran

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    Genuinely don't know but didn't RDR dictate how fees would be paid.
     
  10. renault12ts

    renault12ts MB Club Veteran

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    They did. Fees are agreed at outset and a man gets paid for the work he does.
     
  11. WOODYTHEWISE

    WOODYTHEWISE Hardcore MB Enthusiast

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    Liquid assets.
    I invested rather a lot of money in wine.
    Unfortunately, to be sure I was storing it correctly I took several to test. As it happens they were perfect. But then I wondered about the rest so tested some more. In fact, after several years of testing my storage methods prooved faultless.
    Should I at some time in the future have sufficient funds to purchase more wine I will know how to store it. :D:D
     
  12. DSM10000

    DSM10000 MB Club Veteran

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    The storage methods for the household investment in shoes etc has also proven it's worth ;)
     
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  13. Chrishazle

    Chrishazle Hardcore MB Enthusiast

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    I do not suggest this is suitable for most people! However, it's surprising what can be done by someone with little or no previous investment experience providing you do the research before commiting money, and as mentioned above you spread the risk over different investment areas - either by using some of the many funds available, by buying shares in individual companies or a mix of both. Also by deciding what your primary aim is - and in the OP's case (as with mine when I started) that can and will change. Before retirement primary aim may be capital gain, whereas at retirement primary aim changes to income while providing reasonable protection to capital value.

    The OP can decide whether he feels capable of building and monitoring an investment portfolio, only he knows his capabilities and limitations, but I would urge him not to be too critical of his limitations!
     
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  14. OP
    OP
    Piff

    Piff Hardcore MB Enthusiast

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    I've been running a mock portfolio based on 15 investment trusts and 10 individual companies since January, based on buying the investments through Hargreaves Lansdown using their buy price, then monitoring their sell price and dividends earned. I'm only going to use their year end dividend for comparison & so far only 7 of the 25 have reported so a bit early state whether they have hit my 4% to 5% target with growth & dividend.
    Not looking brilliant so far as last time I checked sell prices (September) only 8 of the 25 were ahead of my buy price.
     
  15. Greenmanslk

    Greenmanslk Hardcore MB Enthusiast

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    I was taught - if you dont understand it, dont buy it / invest in it.
     
  16. Chrishazle

    Chrishazle Hardcore MB Enthusiast

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    Some trusts (and companies) pay divis monthly, others 3 or 6 monthly, which is a factor in planning your income requirements/profile. With the 3-6 monthly ones you'll also find they have 1-3 smaller divis then a final that is rather more than the interims, so you need to look at a full year's dividend stream for each. Sounds as if, like me, you've made yourself an Excel workbook for tracking purposes!
     
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  17. DrFeelgood

    DrFeelgood MB Club Veteran

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    Ever had a mortgage?
     
  18. 190

    190 Hardcore MB Enthusiast

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    It'll be worse when you check now. The market has dropped over 10% since the start of the year. If you have fared better than the market you are not doing so bad. It's a long game. I've been at it for 30 years and tend to buy when the market is down like now. Usual logic says I shouldn't because I'm less than 2 years from retirement but I've got too much cash doing next to nothing which would be better in high dividend shares.
     
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  19. MikeInWimbledon

    MikeInWimbledon Hardcore MB Enthusiast

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    Don't take advice from internet bulletin boards. Talk to financially literate friends about the options open to you, and your tax planning issues.
    Bonds can easily return 2-4%, which sounds good but equities can easily return 6-9%, dividends reinvested when sheltered in an ISA.
    But you can't think rationally about these things without considering the whole portfolio, diversification of risk and the tax implications (income and capital)
    Headline numbers for FTSE etc are irrelevant if people don't take into account the typical 4% dividend flow and ISA / CGT sheltering.
     
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  20. Flyinspanner

    Flyinspanner Hardcore MB Enthusiast

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    Talk to an IFA. Discuss what your aims are.
    Steady capital growth?
    Income?
    How do you feel about risk?
    What kind of term length are you looking at?
    Shares ISAs can give good returns and are tax efficient.

    I got a free chat with a chap from St. James Place. - I know a few people who use them, inc family members (one of which is a financial director for large Co.) They all seem happy with their performance.

    Don’t put all your money in one ‘basket’, spread your risk across markets. That may mean you get slightly lower growth, but you may be shielded from particular segment falls.

    Your bank may offer a free initial chat - ok they won’t be Independant, but they will maybe make you think about the questions you want to ask other advisors.

    People have talked about HL above, similarly Fidelity have very good funds and you can save some management fees if you want to dabble a bit with self investment baskets.

    Good luck with it.
     
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