Posts tagged as:

income investing

If you don’t buy high-yield blue chips now, you’ll likely regret it later

by The Investor on April 19, 2008

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Back in September 2007, I concluded a series on how to roll your own income generating high-yield portfolio (HYP) of leading UK shares with an article that put together an example portfolio.

I’ve not tracked that portfolio’s performance, but I’m sure its value has fallen; we’ve been in a bear market, and high-yield dividend payers have suffered at least as much as any other shares. (The paid-for equivalent, the equity income funds, have certainly slumped.)

I’m not too bothered by that September HYP’s decline, however, for five reasons:

  • Short timescale: Six months is a ridiculously short-term in which to judge a share portfolio’s performance - come back in five years, or better ten.
  • Volatility in inevitable: There are no guarantees in stock market investing - shares can, famously, go up and down. This happen however and whenever you invest. If you’re risk averse but want market exposure, consider drip-feeding in your money, which will likely reduce your overall returns but will at least avoid you putting money in at exactly the wrong time.
  • HYPs are all about income: So far as I know, none of the 20 shares I put into my example portfolio have cut their dividends.
  • I don’t give advice: Please read my disclaimer.
  • Many blue chips are now cheap: It looks a great time to top-up the HYP.

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The one number to beat if you want to retire early

by The Investor on February 15, 2008

You’ll need to save heavily to replace your income

Most of us get into investing because we want freedom, whether from office bores, traffic jams or the drudgery of a mortgage. We want to be free from having to work for a living.

Why then are most money-motivated books called things like The Millionaire Next Door or Secrets of the Millionaire Mind? A million isn’t what it used to be, but it’s still more than most of us need for financial freedom.

What we’re really looking for is a replacement for our salary. The number on your pay check is the number you need to beat to retire early. If your monthly wage turned up in your bank account no matter what you did, wouldn’t you feel pretty financially free? You could quit work the next day if you wanted, although there’s no reason to take to the golf course – you could get a fun job, work for charity, or do all sorts of other exciting things instead.

Why you should consider targeting income instead of capital

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