Finishing in Style!

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The Santa Rally is in full flow, helping to carry the DIY Income Investor portfolio to new heights.

So what do one year's results mean anyway?

Fixed Interest (Portfolio Buy)

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December (2016) is shaping up to be a lot more jolly than November - the portfolio is up a couple of percent in the first half of the month. I'm also looking forward to the usual Santa rally in the markets. (In fact, you could probably make a case for just investing in December and cashing out afterwards!)

After a bit of profit-taking the DIY Income Investor portfolio has cash to invest. It's a mixed blessing, as it's all too easy to make silly investments at this time of year (well, any time of the year, really).

Gone in November (Portfolio Sale)

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November 2016 turned out to be a bad month for the DIY Income Investor portfolio with a fall in value of around 3%. December is more full of cheer, bringing the running total return for 2016 to around 28%, which is very satisfying.

Despite my best efforts to resist profit-taking I did make a large sale - and immediately regretted it as the price continued to rise.

The Dangers of Super-High Yield Investing

That's what I call good yield
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Apparently the DIY Income Investor approach is an example of Super-High Yield Investing, which John Kingham ('The Dividend Hunter') defines in a recent article as "buying shares where the dividend yield is close to or above twice the market yield."

But is this really the 'dark side' of income investing?

Investors Chronicle High Yield System

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Investor Chronicle's writer James Norrington has been trialling a new High Yield System - with mixed results.

It's interesting to have a look at how this system differs from the DIY Income Investor approach and how well the two strategies have worked.

De-Risked? (Portfolio Buy)

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If you are a UK-based investor you may - or may not - be enjoying yourself over the last month or so. The recent currency fluctuations have revealed something interesting about the DIY Income Investor portfolio, which will help to guide future investments.

Talking of which, I've been putting some more available cash to work with something a bit counter-intuitive.

Buying And Selling

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The rapid devaluation of the Pound, following the Brexit vote, boosted the value (in Pounds) of the DIY Income Investor portfolio. That seemed like a market over-reaction to me: and it seems like the currency market is now reappraising Sterling following statements by the Bank of England.

The Pound goes back up and the London Stock Exchange goes back down.Do these fluctuations in currency value offer an opportunity to take quick profits?

Bond dilemma? (Portfolio Buy)

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Profit-taking - by selling some of my largest holding APF - means the opportunity to buy something new.

It's trite to say but the 'buy' decision is what makes you money - coupled, of course, with selling at the 'right' time. Which is to say, it's difficult.

Investing = Gambling?

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Sometimes the Stock Market is compared to a casino. I don't think that is a fair comparison. Although there is an undoubted random factor in daily events - which affects prices - I believe that there is a lot of skill involved in successful investing.

At least that's what I like to think. However, many observers point to the possibility that seemingly successful investors might just be lucky.

Taking Profits (Portfolio Sale)

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The London Stock Market is on a roll - and with it the DIY Income Investor portfolio, which is showing a total return of 32% in 2016 so far.

There comes a point when you need to take profits; but this is always difficult (if not impossible) to time correctly - selling is much harder than buying.

Lucky Timing (Portfolio Buys)

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Usually it is a mug's game to try to time your purchases or sales. The market is such a seething mass of information, opinion, fear and greed that it is almost impossible to know where it is going.

Sometimes, however, you get lucky and buy at the right time...

Performance Of UK Income Fund Managers

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When you are investing, it is quite difficult to know how well your particular approach is working out. This is why, in the past, as a DIY Income Investor I have looked at various benchmarks related specifically to income investing, as opposed to the other investment strategies.

So, imagine my interest in a comparison of the performance (over five years) of the 'best' professional income fund managers...

So, You Think You Know What You're Doing?

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It is quite amazing how faulty our human thinking processes can be.

If you are interested in the distortions - or biases - that we regularly come up with, take a look at this article. See how confident you feel after you have read it!

London's High Yield Dividend ETFs

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Investors Chronicle recently (June 2016) published an interesting review of high yield dividend ETFs (Exchange Traded Funds) offered on the London Stock Exchange (there are now, apparently over 30!). I say 'interesting' because there were a few I hadn't heard of.

One of the problems for DIY Income Investors interested in income-producing ETFs is that there is no easy source for the ranking of yield of different ETFs - you have to just hunt around.

I'm an Investor - Get Me Out Of Here!

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Choosing the right investment is hard work. You need to read up on the company, look at the accounts and set the activity against what you know (or think you know) about the wider market. However, I find that selling is even harder than buying.

Share prices go down as well as up. What should you do when this happens? Should you sell? If so when? Here's what I do - but be aware that it doesn't work all the time!

Try, Something New (Portfolio Buy)

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The DIY Income Investor portfolio continues to storm ahead in (Sterling) value at the moment. It feels somehow strange - but reassuring.

Having become a bit bored by just topping up existing holdings, I decided to try something new...

Tax Strategy (UK)

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Paying tax is your legal duty, as your civic contribution to paying for the goods and services the local and national governments provide. The range of taxes we pay is quite wide - almost anything we do incurs some kind of taxation.

However, a large number of tax allowances are available for savers and investors. One way of looking at these allowances is that they are intended as 'incentives' to encourage certain types of financial behaviour. It seems to me that, as good citizens, we should respond to these incentives where they are offered. In other words, tax avoidance is (almost) virtuous - helping the government achieve its objectives.

Splashing the Cash (Portfolio Buys)

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Cash sitting idle is no part of an investment strategy - it should be producing capital gain or income, one way or another.

A key feature of the DIY Income Investor approach is that it throws off a lot of cash. Add to this any additional ISA or SIPP contributions and there is enough to gradually re-shape and re-direct the portfolio.

More of the Same (Portfolio Buy)

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A lovely summer and the DIY Income Investor portfolio is up 19% (total return, including income and capital gain) so far in 2016. What's not to like?

I'm getting lazier than ever and with two ISA contributions to invest (in different family accounts, of course), I'm going to keep it as simple as possible.

The Benefit of Diversification

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Forewarned is forearmed. Investment in the stock market IS risky (compared to holding cash...) - and the risks are not always obvious. The DIY Income Investor portfolio is a case in point: it 'gambles' (not too strong a word) on the possibility that the market is over-pessimistic about certain securities (i.e. those with high yields).

But - as recent political and market events have shown - that is only the start of the process of dealing with risk. So how has the 'risky' DIY Income Investor portfolio weathered the storm?

Danger, Danger! (Portfolio Buy) - Updated

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The basic idea behind the DIY Income Investor is to take advantage of Mr Market's manic-depressive reaction to bad news - whilst collecting a nice income for your trouble. In other words, I buy high-yield securities that the market has marked down because there is a potential problem that may, or may not materialise.

The difficulty, of course, is judging whether the risk is worth it...

A Lucky Exit (Portfolio Sale)

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I have in the past extolled the virtue of turning your back when Mr Market gets depressed and things go 'pear-shaped'. This is in order to help to counteract our instinctive 'monkey brain' reaction to pull out our bananas and run away.

But it is possible to take this concept too far, as I have learnt today. I missed a bit of news - and that's cost me some money, fortunately not too much.

A Question of Trust (Portfolio Buy)

Steady, Tiger
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The DIY Income Investor portfolio is a cash-producing machine, even when it is sometimes grinding down value on some of the holdings. This is the trade-off that is the mindset of investing in high-yield securities. But at least the accumulating piles of cash (in different family brokerage accounts) means that the portfolio can be constantly refreshed.

Or not. Sometimes 'more of the same' is the best bet...

The Market Roars Back!

Upwards and Onwards
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Wow! Back from a three-week holiday and the DIY Income Investor portfolio has stormed ahead hitting a new all-time high.

The markets turned at the end of January - at least for my unusual collection of investments - and have provided three months of solid gains, totalling around 12%.

There are a couple of lessons I take from this....

Turning Tide? (Portfolio Buy)

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In an earlier post I used a sailing analogy and wrote about being 'hove-to' (or 'parked at sea') while the world-wide economic jitters pulled down stock markets.

Continuing the sailing theme - it feels to me now that the tide might be changing.

Heave-To! (Portfolio Sale)

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It's been a financial storm out there for DIY Income Investors - but it seems to me that the last thing to do now is run for cover and sell.

When I did my sailing - crewing across, and up-and-down, the Atlantic - I experienced bad weather. When  it gets too bad the final solution is to 'heave-to' and wait out the storm.

Dividends Uncovered?

Enough cover?
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'Dividend cover' is one of the key ratios that income investors should be looking at, as it is a measure of how affordable the dividend payments are for a company. However, like most things in investing, it pays to do a little more research into the underlying situation - and the level of commitment of the company management to income-oriented investors.