Sunday, 29 April 2012

Who's Paying For Your Retirement? (UK)

Leading question, of course; but if you thought it might be the UK government, maybe think again.

And the sustainability of some private sector pensions has recently been weakened.

Wednesday, 25 April 2012

Portfolio Buy: Principality 7% PIBS

I've come over all Welsh - but am I chasing after Fool's Gold or have I really found a seam of gold.

We've talked about PIBS (Permanent Interest-Bearing Shares) several times before, highlighting both the high fixed returns and the risks. PIBS are typically issued by Building Societies (the US equivalent would be Savings & Loan banks) and many PIBS offer high yields.

The Principality 7% PIBS - issued by the Principality Building Society (in Wales) - is a case in point: depending on how you look at it, it may be a bargain or a poor investment.

Tuesday, 24 April 2012

Portfolio Sale: Halifax 11% 2014 (EH14)

Source
Sometimes selling a holding in the portfolio feels like harvesting a crop that has grown over a long time. But it just needs a few taps on the keyboard, rather than a skilled sweep of a razor-sharp scythe.

So, apart from having temporarily come over all bucolic, why would anyone sell a corporate bond that is yielding over 10% and which matures in a couple of years? Certainly not fear: Halifax was acquired by the Lloyds Banking Group and this security has become less and less risky as Lloyds has stabilised.

How Reliable Are Dividends? (UK)



Dividends form a major source of income for the DIY Income Investor portfolio - representing Level 6 of the Income Pyramid. But they are only part of the strategy: although they often provide high yields, they are not always reliable. Companies have total discretion over whether or not they pay dividends as well as the level of the dividend.

So how reliable are dividends?

Friday, 20 April 2012

Portfolio Buy: Aviva 8 3/4% Cum Irrd Pref (AV.A)


Another day, another trade. This time, nothing fancy - just a middle-of-the road fixed-income security with a yield of 7.7%: Aviva's 8 3/4% Cumulative Irredeemable Preference Share (AV.A).

Thursday, 19 April 2012

Portfolio Buy: Lloyds Banking Group 6.475% Non-Cum Pref Shares (LLPE)

Is it time to live a bit dangerously? That what the latest portfolio purchase would imply.

LLPE is one of the slightly jumbled (and confusing) collection of Lloyds Banking Group securities. This particular flavour is a non-cumulative preference share with a coupon of 6.475% (paid in two installments each year).  At the current price that translates to a yield of nearly 9%. That reflects the risk of buying into a bank that is currently propped up by the UK Taxpayer.

Tuesday, 17 April 2012

Another 10% Yield!

Most UK DIY Income Investors will be thinking about where to invest their new ISA contribution (of £11,280, if you can spare that much).

We're after high yield, consistent with a reasonable level of risk (so not too many eggs in the same basket). In particular, it would not be nice to lose our capital. If you have worked your way up the Income Pyramid (and therefore have a foundation of low-risk investments), you will be able to target some of the highest yields around - like this with a yield of around 10%.  There is some risk - but hopefully not too much.

Saturday, 14 April 2012

Robot Fund Managers

As the saying goes: If you want a job doing properly, Do It Yourself. That goes for your finances, too.

Alternatively you can hand over your money to a fund manager (for a price) - but your money might end up being managed by a robot!

Thursday, 12 April 2012

Bomb-Proof Dividends?

As we all know, these are difficult economic times. Over the past month, equities have fallen by a shockingly large margin, given the strong recovery since Autumn 2011. There is a new wave of uncertainty hitting the markets.

In this situation, is it possible to find 'safe' equities? More importantly, is it possible to find 'bomb-proof' income in the form of dividends?

Better One Handful With Tranquillity...

Source
Today's lesson is taken from Ecclesiastes 4:6:

Better one handful with tranquillity than two handfuls with toil and chasing after the wind.

Now, the great thing about these proverbs is that you can often interpret them any way you like. So my interpretation is: live more modestly, making it easier to achieve financial independence and retire from the rat-race.

Thursday, 5 April 2012

Ouch!

Every so often the stock market raps you on the knuckles and says: "Pay attention"!

After a couple of weeks of heady rises, which seductively suggest that all is well in the financial world again - and we prepare to invest our new ISA allocations - the market staggers then takes fright with a one-day fall of more than 2% in the FTSE.

How should the DIY Income Investor deal with this?