Guess Who Can Open Two Cash ISAs in One Year!

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Here's a new twist that I hadn't heard of, so I'm passing it on - there may be someone in your family who can legally open two Cash ISAs in the same tax year, investing a total of around £9,000.

Now, the DIY Income Investor approach is based on shielding your savings income from tax wherever possible but this sounds too good to be true, doesn't it?

Two bites out of the Taxman's apple? Find out more...

It's Getting Harder to Plan for Retirement

Maybe it's just me but there seems to be a lot of chatter on the internet about retirement, and how to prepare for it. So here is a quick recap on how you can use the DIY Income Investor approach to plan for that wonderful day when you can stay in bed every Monday morning.

Preparing for retirement should be the main long-term goal for the DIY Income Investor - preferably with the goal of being able to retire early and enjoy the fruits of your financial acumen!

Portfolio Buy: 13% Redemption Yield!

My latest portfolio buy must rank as the riskiest yet - riskier even than my recent Santander bond purchase. This security, with a redemption yield of almost 13% offers the tantalising possibility of an over-70% return by 2018.

If you do not already have a well diversified portfolio (along the lines of the DIY Income Investor Income Pyramid) do not read any further!

Portfolio Buy: Sainsbury's (LSE:SBRY)

I continue to be on the lookout for good new dividend-paying shares for my High Yield Portfolio as well as opportunities to diversify the market sectors I hold. These high-yield shares form Level 6 on the DIY Income Investor Income Pyramid).

My latest share shopping trip has brought me to Sainsbury's. Why, you may ask?

Portfolio Review: BAE Systems (LSE:BA.)

High-yield dividend shares form part of Level 6 of the DIY Income Investor Income Pyramid. As the fortunes of these companies change, so does their eligibility for my portfolio. So it is worth reviewing the portfolio selection, at least annually.

So how is BAE Systems doing?

Portfolio Buy: Santander 10 3/8% Preference Share (SAN)

I have recently purchased a holding of Santander UK's 10 3/8% preference shares, which on purchase were yielding over 10%.

This is clearly a risky investment with this level of return. Essentially this is a bit of a gamble on the stability of the Spanish and Eurozone financial system.

So beware...

Portfolio Watch List: Abbey National Perpetual Bond 7.037% (EA26)

Abbey National, the former UK building society is now part of the giant Spanish Santander bank. Part of the legacy of the Abbey is this perpetual corporate bond with a coupon of just over 7%. Over the last year (to January 2012) the mid-point price (the average of the buy and sell prices) of this bond has drifted down from around 90p to around 70p, with a current wide spread of around 20p.  However, the fall in price means that the income yield is now nearly 10% - an enormous yield, and one which should inspire caution.

Is this a good buy or a trap for the greedy?

Portfolio Sell: UK Government Consols 4% (CN4)

I have now sold my only government bonds, known as 'gilts' in the UK. The derivation of the term 'gilts' was because the certificates were originally edged with gold printing or gilt-edged, highlighting their quality of safety, being guaranteed by the government. (The certificates are much more prosaic today - if you ever get to see one, that is.)

Gilts form the Level 5 tranche of investment on the DIY Income Investor Income Pyramid, which reflects the fact that this is a safe but relatively low-yield asset class.

So why has the golden shine worn off gilts for me?  

We Are Not Programmed to Invest Successfully

Being human means that we have inbuilt behaviour patterns that make us poor investors. So, if you do 'what comes naturally' the results will be disappointing. 

While we like to think of ourselves as rational in our decision making, the truth is we are subject to many biases. Being aware of them will give you a better chance of making fewer investment mistakes.

10 Resolutions for 2012

The start of a new year gives a reason to review your lifestyle and expenditure, to see whether there is anything that is no longer essential. It is also a good time to review and fine-tune your strategy for saving and investment.

Naturally, I would encourage you to explore DIY Income Investing (if you are not already a convert). Having said that, here are my 10 financial resolutions for 2012 with links to the relevant level of the DIY Income Investor Income Pyramid.

Portfolio Performance in 2011

The end of the year - calendar or financial - is always a good time to take stock, review performance and to check whether the strategy needs revision.

 My results were a bit like the game of 'snakes and ladders' (I think in the US it's called 'chutes and ladders') - up and down.