Wednesday, 30 May 2012

Doom and Gloom...and Bargains?

Share prices have been pushed remorselessly down during May, but as the UK Taxman has just given  me some money, I am a cautious buyer.

The generosity of the Taxman is due to an investment in a SIPP (Self-Invested Personal Pension) for my non-working spouse. Very kindly we are given £720 for saving £2880 in the SIPP - this represents an immediate 25% return! Not a bad start. But what to invest in, with Europe crashing around our ears?

Monday, 28 May 2012

Risk and Reward - Revisited

Risk and reward are the two sides of the investment decision - accompanied by the emotions of fear and greed. Broadly speaking, rewards - in terms of the rate of return that you can obtain - will increase with risk, as the individual investors will usually seek a risk premium.
So, as well as looking for good returns, you need to understand what risks you are taking with your money when investing. Only you know how much risk you are comfortable with - but if you are not fully aware of the risks you could be making the wrong investment decisions.

Friday, 18 May 2012

How Much Is Enough? - The Easterlin Paradox

What is the link between money and happiness? How rich do you have to be to feel happy? And are rich people consistently happier?

Research shows that having more money does not always make people happier; rather being 'comfortable' seems to have a greater influence on our overall level of happiness.

Thursday, 17 May 2012

Peter Lynch's 20 Golden Rules

We amateur DIY Income Investors can always learn something from the *good* professionals - those that have established a track record over several years (i.e. those who have not just succeeded by luck).

Peter Lynch was the manager of the Fidelity Magellan Fund for 13 year until he retired in 1990. During his tenure, Magellan was the top-ranked general equity mutual fund (similar to a unit trust, in the UK). So I'd listen to him.

Be clear that I'm not saying 'buy funds' or even to invest the way he did, but rather 'listen to what he has to say'.

Wednesday, 16 May 2012

Portfolio Review: SSE (LSE:SSE)

The portfolio review now turns (finally) to SSE plc - previously Scottish and Southern Energy, a  Scottish-based power utility operating mainly in the UK and Ireland - it is the second largest supplier of energy (electricity and gas) in the UK  and the largest UK generator of sustainable energy.

The current historic yield is approaching 6% - which is impressive for a company in a highly regulated industry. How do they do? And is this level of income sustainable?
As it happens, the 2011/12 Annual Report came out today...painting a mixed picture.

Monday, 14 May 2012

Portfolio Review: Chesnara (LSE:CSN)

As part of my continuing effort to stay up-to-date with my portfolio, let's review Chesnara. I like the name 'Chesnara' - it sounds a bit like perfume (that might smell of chestnuts?). This anodyne name actually hides what is unkindly called a zombie fund.

I own it because of the yield, which is rapidly approaching 10%!

So, what is the story behind this huge yield?

Tuesday, 8 May 2012

Sweat Your Cash!

Cash forms an important part of the DIY Income Investor Income Pyramid - including current and, 'easy access' accounts (Level 2) and fixed-period savings bonds (Level 3). Cash is a relatively safe way to hold your wealth, given a good rate of interest and government guarantees in case the bank goes bust (in the UK, up to £85k is guaranteed per banking chain). The main risk is then inflation.

However, you need to 'sweat' your cash, to make sure it is working as hard as possible.

Tuesday, 1 May 2012

Portfolio Performance vs. Professionals

The theme of this blog is Do-It-Yourself investment. Today, let's take a look at the professional competition: how has the DIY Income Investor portfolio performed against the funds?