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The Living is Yield-y model portfolio: one year update [Members]
![The natural yield model portfolio wheels are turning [Members]](https://i0.wp.com/monevator.com/wp-content/uploads/2026/03/IT-vs-market-moves-chancery-lane.jpg?resize=150%2C150&ssl=1 "The natural yield model portfolio wheels are turning [Members]")
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Love the concept of this portfolio and looking forward to seeing how it develops over the next few years.
Back in 2015 I was much taken with Greybeards thoughts on using IT’s natural yield to generate a retirement income, so much so that I experimented with it until 2019. It was and is a good idea, especially now with the change to pension treatment under IHT. I moved away from it because I was still in accumulation and the performance was falling behind my benchmark at that time, even with dividend reinvestment. This article has tickled my fancy. Thanks
Thanks for the update @TI.
Dividends are a (smaller) leg of my retirement pots – Total return in SIPP; Dividends in ISA; and State and DB Pensions from 67. Oh, and a small 7 year Linker Ladder to boost guaranteed, inflation proof income from 67.
Slightly different sources of risk.
I don’t suppose you’d consider doing high yield individual securities (e.g. Western Union) or IT’s (e.g. Impax Asset Management) with an option collar*?
Strangely (or not) bankruptcy and irrecoverable crash risk increase as you go to 7% and 8% dividend yielders (as expected) but actually start of fall a bit (counterintuitively) above 10% (paradoxically more yield for somewhat reducing risk).
* [Buy a put option below the current price, which acts as an insurance floor. Sell a call option above the current price, which caps your upside. Chose strikes such that the premium you collect from selling the call pays for the put you buy. When the two premiums match, the insurance costs you nothing].
Thanks for the thoughts guys. I’m as excited to watch this one to play out as anyone – like I say I’d probably go in this direction in retirement.
@DH — Cheers for the idea but not for this portfolio, no. Over-complication for a strategy designed to be as near to set-and-forget as you can get while still clearly actively investing. And as we’ve discussed before (and indeed I mention in the article) I’m pretty genetically skeptical of backtested cute ideas. Not to say hedge funds and the like shouldn’t pursue such strategies (with their fingers held over the ’emergency eject’ button 😉 ) but apparent free lunches are not my bag…