5 Ways to Minimise Your Tax Footprint (UK)

Here at the DIY Income Investor we don't believe in paying more tax than we have to - it can make the difference between keeping up with inflation or not. We have talked about minimising the amount of tax liability before - but as it is nearing the end of the tax year (in the UK, at least), it is worth revisiting this topic and minimising your tax footprint.

6 Steps to Maximise Your Wealth Potential

The DIY Income Investor is about generating wealth by maximising income from your savings and investments. 

The Wealth Potential is the surplus cash you have to save or invest. So the greater this is, the faster your wealth can grow. The faster your Income Snowball will roll.

Buying an Exchange Traded Fund (UK)

Buying an Exchange Traded Fund or ETF is Level 4 of the Income Pyramid in the DIY Income Investor approach, and should be done only after paying off debts and building up a safety buffer of cash in 'easy access' bank accounts and in fixed rate savings bonds.

An ETF is a low-cost collective investment that is spread over a diversified selection of similar types of individual investment, so it minimises your risk of catastrophic loss. This is why we recommend ETFs as the entry point to stock market investing. 

10 Things You Need to Become a DIY Income Investor

To implement the DIY Income Investor approach you will need the following 10 tools.

If you're reading this, you have a computer, so the rest is pretty low cost.

Get an Online High Yield Savings Account

One of the core tools of the DIY Income Investor is an online savings account (or accounts - you may have more than one, with different maturities). The savings account acts as a kind of financial bridge between your online current account (used for everyday expenses) and your online brokerage account (used for your longer-term investment strategy).

7 Things Not to Invest In

To help clarify the DIY Income Investor approach I thought it would be useful to summarise what I recommend you don't invest in.

ETFs for Income (US, UK)

Although generally the DIY Income Investor approach is based on avoiding paying someone to do what you could do yourself, one exception is Exchange Traded Funds or ETFs. There are now many attractive income-oriented ETFs - both bond and dividend-oriented - on both sides of the Atlantic.

Mr Bearbull's Income Portfolio (UK)

As this blog is based on investing for income, it is interesting to look at other examples of successful long-term income investing. Mr Bearbull (from Investor's Chronicle) has recently reported on the success of his income portfolio. 

Focus on Income

The DIY Income Investor approach is - pretty obviously - mainly about income, although safeguarding and growing your capital faster than inflation is also a core consideration. You might need to adjust your mindset to focus on income. How much income do you have now and how much would you need in the future?

Protect Against Inflation

As a DIY Income Investor, it is obviously important that income should keep pace with inflation (and then some - to increase your overall real wealth). Different asset classes have different inflation-resistance characteristics.

Keep Your Financial Data Safe

The DIY Income Investor approach is based on being online - steering your wealth creation from a computer. The last thing you want is for your computer to fry up all your financial information.

Safety first - and back-up your files regularly - for example to a memory stick! If you haven't backed up recently, do it now!

Gilts - Government Bonds (UK)

Fixed income government securities, such as UK 'gilts' form part of the DIY Income Investor strategy (as part of Level 5 of the Income Pyramid - for more sophisticated DIY investors). However investing in gilts (within a UK ISA) may seem confusing for many new investors. 

The Power of Dividend Investing - Transcript

This is a review of a transcript of an interview with Todd Wenning, the Motley Fool's resident dividend investing guru (I have highlighted his 'Dividend Report Cards' in another post). This transcript is a useful summary of the advantages of dividend investing, which - as you will probably now be aware - is recommended as part of the approach for the DIY Income Investor (at Level 3 of the Income Pyramid - see separate posts for details).