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  1. #1

    Alternative ways to achieve a reasonable retirement income

    I am retired and, apart from my state pension,am very dependant on whatever income I can make from a small portfolio of ISA's (53000) invested in 8 equity income and 2 strategic bonds which yield about 4.5% .

    From my fairly basic understanding of investing in funds,it occurred to me that I might be better off by investing in more racy growth funds (accepting obviously the extra volatility) and, hopefully, if I get it right , take some profit from these funds,on say a twice-yearly basis.

    I appreciate that by doing this I am continuously reducing my capital base, but hopefully, if I pick the right funds, this would be made up relatively quickly.

    I would be interested to know whether anyone uses this method to obtain an income.

  2. #2
    It is very difficult for an individual to invest into the right funds and then to moniter to optimise return and minimise risk.
    Suggest you look at funds like Invesco Petutual High Income to seeif that fits your risk profile

  3. #3
    As others have rightly pointed out what you are proposing is rather a high risk strategy given your reliance on the funds to provide a source of additional income. Obviously higher risk should map to high returns - but this is looking at it over the long term. You could end up with reduced income over a very long time.

    Rather than going all out you might consider boosting you funds by allocating a proportion to a higher risk assets on the basis of identifying what funds you need to generate your minimum income requirement + margin of satety. Would suggest that unless the excess turns out to be 5% or more of the total value there is little point to going down this route.

    Alternatively (or in addition to the above) given you seem to suggest the income doesn't need to be particularly regular, you use it to buy additional income units when the market is depressed (generally counter to most peoples natural instinct). Essentially given the income stream and capital value have a relatively low correlated (and with the caveat that at some point income will suffer) you essentially buy additional income on the cheap and take it when it becomes expensive.

    Based on the statistics I've seen its the dividends and the magic of compounding that has driven the performance of stocks over time and not pure growth.

  4. #4
    The Motley Fool discussion boards have really good advice on ways to generate income. One is by using a basket of investment trusts. They've done extensive analysis to show what the performance has been since 2000 using such a strategy. Here is a link -

  5. #5
    Digital Look has an interesting video from the editor of Money Week on the four toxic threats to investors: FTSE, Bonds, Euro and Property.
    Okay, they want to sell subscription but a lot of what yer man says is interesting, particularly the reasoning behind gold prices - where it's going and advice on avoiding the impending/current meltdown in Europe.
    But Gandalf 9 - Remember the golden rule......only risk what you can afford to be without.
    I'm in a similar position to yourself and am considering gold investment, just wondering how best to buy it.


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