A simple approach to successful personal investing with the goal of generating a growing income from a portfolio including cash savings, shares, corporate bonds and government-backed investments, using online savings and brokerage accounts and shielding your investments from tax wherever possible.
Making money since 2011
The last five years have been quite traumatic for investors. In the case of the DIY Income Investor high-yield portfolio, an over-reliance on high-yield dividend shares led to a horrible decline in portfolio value in 2007/8. Since then I have upped the fixed-income share of the portfolio to around 50%.
Some new analysis by Deutsche Bank Research seems to show that this was perhaps a good (or at least, lucky) decision.
With the inexorable rise in property prices in the UK, Inheritance Tax (IHT) will hit more and more families in the future. At the same time, life is looking harder for the post-baby-boomers: a recent study concluded that, for the first time, our children may be poorer in retirement than us.
OK, families hit by IHT are relatively affluent and it is fair that there should be some taxation of any transfer of wealth from one generation to the next. However, most families didn't save money by accident - it was often down to hard slog. So it is natural that they would look for legal (i.e. sanctioned by Parliament) tax-effective ways of passing on as much of their accrued wealth as possible.
I read Robert Pirsig's famous 'Zen and the Art of Motorcycle Maintenance' a long time ago - and I'm not sure what brought it to mind. I would be hard pressed to tell you what it was about, except that it involved a lot of taking-motorcycle-engines-apart.
Well, I don't have a motorcycle - but I do have a DIY Income Investor portfolio. Perhaps there's a parallel?
Exchange Traded Funds (ETFs) come in all shapes and sizes - like elfs (or is it elves?).
For a DIY Income Investor, the right choice of ETFs can be a big help. They can provide cost-effective diversification (and thus a measure of safety), simplify the running of your portfolio plus give easy access to dividend shares from around the world, in various currencies.
It's illogical perhaps, but I do think of myself as quite lucky. I find money on the street and bargains in the supermarket (yesterday:12 yellow roses for 49p). My DIY Income Investor portfolio isn't doing too badly either.
However, a more rational explanation is that certain behaviours might make you more 'lucky'. A sound bit of biblical advice (Matthew 7:7) is: "Ask, and it will be given to you; seek, and you will find; knock, and it will be opened to you". Conversely, do none of the above and moan about how 'unlucky' you are.
Well, I've benefited from another bit of luck - but I'm not so sure I'm going to be much better off.
That's a big number. If you lined up all those Pound coins, it would stretch...well quite a long way.
The number is the total amount of British personal debt, according to the Centre for Social Justice (reported in the Independent) - an astonishing 'average' of £54,000 per household. And of course, that 'average' includes a lot of households (like mine) that have no debt (or no mortgage), so the 'average' of households in debt will be higher.