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When to Top-Up a HYP not yet in Drawdown (spun out of ITH's Pyad update)

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moorfield
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When to Top-Up a HYP not yet in Drawdown (spun out of ITH's Pyad update)

#244128

Postby moorfield » August 14th, 2019, 6:43 am

IanTHughes wrote:The next Portfolio update will therefore be on 30 September 2019 with a Top-Up being made on the 10 October 2019


This is not intended as a criticism but raises a question I have often pondered reading various such HYP reports here:

Are monthly reviews / top-ups of HYPs really necessary?

Would reducing the frequency of reviews and top-ups to, say, quarterly or semi-annually make a noticeable difference to a future income over the long term (I mean at least 10 years)?

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Re: PYAD HYP 2019_04 REINVEST – Year 1 - August Top-Up

#244139

Postby Arborbridge » August 14th, 2019, 7:31 am

moorfield wrote:
IanTHughes wrote:The next Portfolio update will therefore be on 30 September 2019 with a Top-Up being made on the 10 October 2019


This is not intended as a criticism but raises a question I have often pondered reading various such HYP reports here:

Are monthly reviews / top-ups of HYPs really necessary?

Would reducing the frequency of reviews and top-ups to, say, quarterly or semi-annually make a noticeable difference to a future income over the long term (I mean at least 10 years)?


I thought top ups happened - in general - when there was cash to topup, not on a monthly basis. In my case I haven't topped up since April.

Arb.

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Re: PYAD HYP 2019_04 REINVEST – Year 1

#244159

Postby daveh » August 14th, 2019, 8:50 am

As Ian has said:
Top-Ups for this Portfolio will be made on the 10th day of each month or, should that not be a market day, the first market day after the 10th day, as long as a cash balance of at least £2,000.00 is available the day before. Therefore, based on current dividend expectations, the anticipated Top-Up timetable going forward is as follows:


So basically when there is enough cash from dividends to make a top up economic a new share/top up is bought. Its what I do with my own real life HYPish portfolio. I reinvest the dividends on a cheap dealing day or at my other broker as the trades are "free" whenever I have ~£1000 to invest. Its interesting to see whats being purchased as it occasionally gives me ideas for my own HYP.

This week I'll be buying RBS as a top up in my HYP as it is number 4 in my HYPTUSS and I want to buy before it goes xd for the interim and special. Top were PFC and GFRD and 3rd was South32. I'm wary of GFRD I think I'll wait until after the next set of results before even considering them. I'd be happy buying PFC or S32 and one of those may be next (or it may go into TRIG [renewables infrastructure fund] or a non UK ETF which are my equivalents of the ITs some people use).

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Re: PYAD HYP 2019_04 REINVEST – Year 1 - August Top-Up

#244166

Postby moorfield » August 14th, 2019, 9:38 am

Arborbridge wrote:I thought top ups happened - in general - when there was cash to topup, not on a monthly basis. In my case I haven't topped up since April.


Certainly I can see ITH won’t be topping up every month, at least not until the portfolio is collecting >£2000/month …

I ask because I’m currently contemplating fixing my review/top-ups to max. 4 times per year – a variation of the “no looking” threads perhaps. I find I am getting lazier in my middle age.

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Re: PYAD HYP 2019_04 REINVEST – Year 1 - August Top-Up

#244171

Postby Arborbridge » August 14th, 2019, 9:55 am

moorfield wrote:
Arborbridge wrote:I thought top ups happened - in general - when there was cash to topup, not on a monthly basis. In my case I haven't topped up since April.


Certainly I can see ITH won’t be topping up every month, at least not until the portfolio is collecting >£2000/month …

I ask because I’m currently contemplating fixing my review/top-ups to max. 4 times per year – a variation of the “no looking” threads perhaps. I find I am getting lazier in my middle age.


It's not a bad idea. I know when I go away for a long holiday, I don;t bother to do anything, and the HYP seems to carry on wuite well without me!

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Re: When to Top-Up a HYP not yet in Drawdown (spun out of ITH's Pyad update)

#244408

Postby idpickering » August 15th, 2019, 6:23 am

As may be well known here, I add new monies, mainly dividends received nowadays, every month. I like to get the cash working for me ASAP rather than it loitering as just cash. Today I'm topping up my Phoenix Group Holdings shares, next month it'll be DS Smith.

Ian.

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Re: When to Top-Up a HYP not yet in Drawdown (spun out of ITH's Pyad update)

#244513

Postby Arborbridge » August 15th, 2019, 12:43 pm

idpickering wrote:As may be well known here, I add new monies, mainly dividends received nowadays, every month. I like to get the cash working for me ASAP rather than it loitering as just cash. Today I'm topping up my Phoenix Group Holdings shares, next month it'll be DS Smith.

Ian.


We live in strange times. You mention DS Smith, which I also hold. Future yield 5.3% and under my median weight, so this would be a reasonable topup candidate - except that there are so many high-high yields around that it is actually more than half way down the top up rankings.

Arb.

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Re: When to Top-Up a HYP not yet in Drawdown (spun out of ITH's Pyad update)

#244527

Postby idpickering » August 15th, 2019, 1:38 pm

Arborbridge wrote:
We live in strange times. You mention DS Smith, which I also hold. Future yield 5.3% and under my median weight, so this would be a reasonable topup candidate - except that there are so many high-high yields around that it is actually more than half way down the top up rankings.

Arb.


Thanks for your input Arb, and I agree with your comment above regarding the number of high yielding shares currently. I’m reminded though of Dod’s wise words about chasing those high yields, so 5% from DS Smith would do me fine. I also want to buy more before the SMDS ex div date for the final, on 3 Oct, coincidently my 58th birthday. :D also the top up would bring them to average capital value weighting.

Ian.

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Re: When to Top-Up a HYP not yet in Drawdown (spun out of ITH's Pyad update)

#244542

Postby Arborbridge » August 15th, 2019, 3:18 pm

idpickering wrote:
Arborbridge wrote:
We live in strange times. You mention DS Smith, which I also hold. Future yield 5.3% and under my median weight, so this would be a reasonable topup candidate - except that there are so many high-high yields around that it is actually more than half way down the top up rankings.

Arb.


Thanks for your input Arb, and I agree with your comment above regarding the number of high yielding shares currently. I’m reminded though of Dod’s wise words about chasing those high yields, so 5% from DS Smith would do me fine. I also want to buy more before the SMDS ex div date for the final, on 3 Oct, coincidently my 58th birthday. :D also the top up would bring them to average capital value weighting.

Ian.


The thing is, that it's the market which has moved - nothing much has happened to the companies or the dividends they pay. The market is pricing in a risk of worse times to come, and that effects all companies, including DS Smith (which has a yield higher than usual). If those worse times do not materialise, or at least wash over us eventually, there's no need to worry about yields which are apparently too large. Those yielding 8.0% after the market fall are no riskier as individual companies than they were previously.
Outlandish yields are suspicious when it's the occasioonal company spiking, but not went it is a whole raft of them together.

Arb.

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Re: When to Top-Up a HYP not yet in Drawdown (spun out of ITH's Pyad update)

#244714

Postby IanTHughes » August 16th, 2019, 10:30 am

moorfield wrote:
IanTHughes wrote:The next Portfolio update will therefore be on 30 September 2019 with a Top-Up being made on the 10 October 2019

This is not intended as a criticism but raises a question I have often pondered reading various such HYP reports here:

Are monthly reviews / top-ups of HYPs really necessary?

Would reducing the frequency of reviews and top-ups to, say, quarterly or semi-annually make a noticeable difference to a future income over the long term (I mean at least 10 years)?

No criticism taken :)

Purely from an HYP point of view, I believe that any funds allocated to the HYP - in other words not cash reserves - should be "put to work" as soon as possible, just so long as purchases made are always of a size to be economic. For myself, with my own HYP, I make a new purchase or top-up whenever there is sufficient cash available such that the fixed commission charged by my broker is no more than the Stamp Duty of 0.50%. This means that the total fees including Stamp Duty will be no more than 1.00% on any transaction. In point of fact, because I am frequently adding new money as well as re-investing dividends, it is usually much less than 1.00% in fees.

For this "virtual" HYP I decided to further limit each transaction to a minimum of £2,000.00. This extra restriction was simply to limit the number of top-ups required so as to minimise the amount of work required to keep up to date what is after all, only a "virtual" portfolio. It is surprising the extra work involved when one does not receive a Contract Note from one's broker! :o So, going forward, as the dividend income increases, I may well increase that limit further! In fact I may well take up your suggestion to only make a top-up every quarter, whatever the amount. As well as ensuring suitably sized top-up amounts, that should also ensure that if the funds are allocated to a new holding, that new holding will be of a reasonable size even if it turns out to be the only purchase in it. We shall see.

Anyway, thanks for your comments


Ian
Last edited by IanTHughes on August 16th, 2019, 10:41 am, edited 1 time in total.

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Re: When to Top-Up a HYP not yet in Drawdown (spun out of ITH's Pyad update)

#244717

Postby 88V8 » August 16th, 2019, 10:34 am

Are routine top-ups a good idea?
Assuming the cash is there so one isn't buying in tiddling amounts.

On the one hand, they oblige one to do something rather than nothing, which gives the benefit of pound-cost-averaging.
OTOH, sometimes the right thing to do would be nothing.
Which on the whole is what I've been doing lately. Including this morning.

Unless of course one can guess which of the candidates with minimal cover is not going to join the 'rebasing' bandwagon.

Although in a year's time, when we are free of the EU and SPs have recovered, we may look back on this as a golden window of HYP opportunity.

V8

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Re: When to Top-Up a HYP not yet in Drawdown (spun out of ITH's Pyad update)

#244728

Postby pyad » August 16th, 2019, 10:57 am

88V8 wrote:Are routine top-ups a good idea?
Assuming the cash is there so one isn't buying in tiddling amounts.

On the one hand, they oblige one to do something rather than nothing, which gives the benefit of pound-cost-averaging.
OTOH, sometimes the right thing to do would be nothing.
Which on the whole is what I've been doing lately. Including this morning.

Unless of course one can guess which of the candidates with minimal cover is not going to join the 'rebasing' bandwagon.

Although in a year's time, when we are free of the EU and SPs have recovered, we may look back on this as a golden window of HYP opportunity.

V8


Yes, routine top-ups are a good idea because I don't agree with accumulating excess cash in the portfolio. By "excess" here I mean more than your economic top-up sum. Once you have that, no point in waiting I'd say.

As others mention, the reason is to get the money earning divs asap. In general an HYP should be managed so that all divs are reinvested in the portfolio to the extent that they are not needed for withdrawal and the time to make that reinvestment is always now, same as it is with the original capital investment. Timing the market with reinvestment of accumulated div cash is not going to work, on balance, because it doesn't work generally in this strategy with the original capital so it's not going to have more chance of doing so with div money. Otherwise known as the time to buy is now. It was now yesterday, it will be now tomorrow and it's now, now.

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Re: When to Top-Up a HYP not yet in Drawdown (spun out of ITH's Pyad update)

#244957

Postby Wizard » August 17th, 2019, 9:07 am

idpickering wrote:
Arborbridge wrote:
We live in strange times. You mention DS Smith, which I also hold. Future yield 5.3% and under my median weight, so this would be a reasonable topup candidate - except that there are so many high-high yields around that it is actually more than half way down the top up rankings.

Arb.


Thanks for your input Arb, and I agree with your comment above regarding the number of high yielding shares currently. I’m reminded though of Dod’s wise words about chasing those high yields, so 5% from DS Smith would do me fine. I also want to buy more before the SMDS ex div date for the final, on 3 Oct, coincidently my 58th birthday. :D also the top up would bring them to average capital value weighting.

Ian.

Why invest now in a share about to pay some of the money back (less tax), and then have to reinvest that money (less dealing charges)? Surely better to invest in a share not about to pay some of it back. The amount lost on one re-reinvestment may be small, but if it is a regular tactic the additional costs incurred over the life of the portfolio may become meaningful.

The only reason I can think of is because one enjoys the process of reinvesting, but that is then about a hobby rather than an economically rational decision. Nothing wrong with it, but a different motivation.

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Re: When to Top-Up a HYP not yet in Drawdown (spun out of ITH's Pyad update)

#244959

Postby Itsallaguess » August 17th, 2019, 9:26 am

Wizard wrote:
idpickering wrote:
Thanks for your input Arb, and I agree with your comment above regarding the number of high yielding shares currently. I’m reminded though of Dod’s wise words about chasing those high yields, so 5% from DS Smith would do me fine. I also want to buy more before the SMDS ex div date for the final, on 3 Oct, coincidently my 58th birthday. :D also the top up would bring them to average capital value weighting.


Why invest now in a share about to pay some of the money back (less tax), and then have to reinvest that money (less dealing charges)? Surely better to invest in a share not about to pay some of it back. The amount lost on one re-reinvestment may be small, but if it is a regular tactic the additional costs incurred over the life of the portfolio may become meaningful.

The only reason I can think of is because one enjoys the process of reinvesting, but that is then about a hobby rather than an economically rational decision. Nothing wrong with it, but a different motivation.


If we all agree that the single most important thing here is to simply keep 'plugging away' over the years, and it's acknowledged that large parts of the 'heavy lifting,' when it comes to long-term investments, are carried out simply by 'time itself', rather than any particular skew or slant that we might as individuals actually think we 'value-add' to that investment process, then I think it's very important for each of us as individual investors to simply find 'ways and methods' that suit us as individuals, and which allow us as individuals to simply 'keep on with the master-plan'...

So whilst we may be able to look at specific elements of each of our own investment processes, and perhaps say why they might not be 'optimal' from a purely 'investment return' point of view, I don't think we should lose sight of the fact that if a particular 'slightly non-optimal' process is favoured by individuals, and they choose to use those processes anyway (simply because they prefer to do things that way), but by doing so it continues to encourage them to 'keep on with the master-plan', then I honestly think that we should allow ourselves to persist with such a 'minor impact' process.

'For the greater good', if you like...

I know I probably carry out a couple of HYP processes where I could show that over many years I might pay a couple of hundred quid over what it might cost to perhaps follow some more 'financially efficient' processes, but I do so in the full knowledge that there's a slight cost to be borne by me following processes that I prefer to follow, over those which I wouldn't prefer to follow, but which might be slightly 'cheaper' over my investment lifetime.

I quite happily do this because I am much more comfortable doing so, and as we know, 'comfort' often comes at a cost, and this is a cost I'm really quite willing to pay, so long as by doing so it means that I can 'keep on with the master-plan'....

Cheers,

Itsallaguess

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Re: When to Top-Up a HYP not yet in Drawdown (spun out of ITH's Pyad update)

#244973

Postby idpickering » August 17th, 2019, 10:05 am

Well said Itsallaguess. I couldn’t have put it better, and as I’m not into finite HYP management, and believe in each to their own, with respect to Wizard, I wasn’t going to even bother rising to his bait anyway.

Ian.

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Re: When to Top-Up a HYP not yet in Drawdown (spun out of ITH's Pyad update)

#244976

Postby Itsallaguess » August 17th, 2019, 10:20 am

idpickering wrote:
..with respect to Wizard, I wasn’t going to even bother rising to his bait anyway.


I personally didn't see any 'bait' in his post Ian - I think we've simply got to acknowledge that where personal investment is concerned, there are some people that are able to take all 'emotion' out of the process, and try to simply find the most 'financially efficient' methods to proceed, and there are also some people who prefer to do things slightly differently, and allow themselves to stray off the 'most financially efficient' line if, by doing so, it gives them scope to be more 'personally comfortable' with their lifetime-investment plans.

If we accept that this is the case, and if one group of investors would simply like to 'gain some knowledge' of the other group of investors, and find why they might prefer to do things slightly differently, then that's fine in my eyes, and hopefully my post went some way to explaining why this is sometimes the case with me personally, as I'm very much in the 'willing to pay a small price for personal comfort' camp when it comes to my HYP investment processes, and I'm very happy to discuss why this is sometimes the case...

Cheers,

Itsallaguess

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Re: When to Top-Up a HYP not yet in Drawdown (spun out of ITH's Pyad update)

#244982

Postby idpickering » August 17th, 2019, 10:54 am

Itsallaguess wrote:
idpickering wrote:
..with respect to Wizard, I wasn’t going to even bother rising to his bait anyway.


I personally didn't see any 'bait' in his post Ian - I think we've simply got to acknowledge that where personal investment is concerned, there are some people that are able to take all 'emotion' out of the process, and try to simply find the most 'financially efficient' methods to proceed, and there are also some people who prefer to do things slightly differently, and allow themselves to stray off the 'most financially efficient' line if, by doing so, it gives them scope to be more 'personally comfortable' with their lifetime-investment plans.

If we accept that this is the case, and if one group of investors would simply like to 'gain some knowledge' of the other group of investors, and find why they might prefer to do things slightly differently, then that's fine in my eyes, and hopefully my post went some way to explaining why this is sometimes the case with me personally, as I'm very much in the 'willing to pay a small price for personal comfort' camp when it comes to my HYP investment processes, and I'm very happy to discuss why this is sometimes the case...

Cheers,

Itsallaguess


Fair enough Itsallaguess, thank you. Maybe my rising to the bait comment wasn’t the correct thing to say. No offence was intended, and if I did, I apologise.

Ian.

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Re: When to Top-Up a HYP not yet in Drawdown (spun out of ITH's Pyad update)

#244983

Postby vrdiver » August 17th, 2019, 11:06 am

Wizard wrote:Why invest now in a share about to pay some of the money back (less tax), and then have to reinvest that money (less dealing charges)? Surely better to invest in a share not about to pay some of it back. The amount lost on one re-reinvestment may be small, but if it is a regular tactic the additional costs incurred over the life of the portfolio may become meaningful.

The only reason I can think of is because one enjoys the process of reinvesting, but that is then about a hobby rather than an economically rational decision. Nothing wrong with it, but a different motivation.


Perhaps, but if you accept that the time to invest is "now" and that time "in" the market is more important than time "ing" the market, then you face the issue that the share identified today, as the best share for your money, may be rejected simply because it is about to pay a dividend, leaving you with an inferior option, or the decision to delay your investment.

I seem to recall that studies have shown that there is no significant advantage or disadvantage in investing immediately before or after a share goes ex-dividend, so as a HYP investor I simply ignore dividend dates until I actually own the share concerned.

VRD

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Re: When to Top-Up a HYP not yet in Drawdown (spun out of ITH's Pyad update)

#244985

Postby vrdiver » August 17th, 2019, 11:15 am

pyad wrote:
88V8 wrote:Are routine top-ups a good idea?

Yes, routine top-ups are a good idea because I don't agree with accumulating excess cash in the portfolio. By "excess" here I mean more than your economic top-up sum. Once you have that, no point in waiting I'd say.

Back in TMF days, this issue came up several times. I think it was
Gengulphus wrote:
who posted a handy formula that helps calculate what "economic" means, as that will vary depending on how much an investor is able to put into their HYP, as well as opportunity costs of not investing money. I don't have it to hand, but hopefully he will be along to post it again?

VRD

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Re: When to Top-Up a HYP not yet in Drawdown (spun out of ITH's Pyad update)

#244992

Postby Itsallaguess » August 17th, 2019, 11:49 am

vrdiver wrote:
Back in TMF days, this issue [the 'economic top-up sum'] came up several times.

I think it was Gengulphus who posted a handy formula that helps calculate what "economic" means, as that will vary depending on how much an investor is able to put into their HYP, as well as opportunity costs of not investing money.

I don't have it to hand, but hopefully he will be along to post it again?


Do you mean this one?

https://web.archive.org/web/20161111110 ... 44023.aspx

I tend to use £1000 as a useful 'minimum tranch size', taking into account stamp-duty and average on-line trading costs.

Cheers,

Itsallaguess


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