SDN’s HYP Report – Jan 2024 - Part 2

[SDN123]

SDN’s HYP Report – Jan 2024 - Part 2

Hi Everyone,

This is Part 2 of my annual HYP report. The first part attempts to stick to information that is more factual. This part contains more subjective commentary and opinions.

Indolence:

I managed to do absolutely nothing with my HYP this year. The fact that the income remained 5.4% for the year gives me comfort that nothing went too wrong while I wasn’t looking. The running costs (nothing!) seem very reasonable to me.

Total return:

After two years of outperforming my passive portfolio* there has been a reversion to mean and there was an underperformance this year. The difference this year has been some recovery in my bonds and a very strong performance by the USA (despite the headwind of the pound increasing in value by 5.4% over the last year blunting that performance in GBP terms).

*My HYP could not have been more passive, but I consider it an “active” portfolio compared to my other investments which are nearly all in index trackers.

Conclusions

Nine years into keeping careful records (and over 11 years after buying my first HYP share) it seems to me that...

- HYP remains my first choice for post-retirement draw-down if I need to need to "sweat" my capital for income .
- The approach is providing stable income through the continuing global turbulence.

- The annual income from the HYP continues to drop in real terms but it doesn’t seem unreasonable to hope for a real terms increase next year.

- Keeping a real HYP portfolio remains valuable for me to learn / practice how HYP works in reality.

Finally

Many thanks to the owners and moderators of the LF and the contributors to the HYP Practical Board, your contributions are really appreciated.

SDN
Jan 2024

[kempiejon]

Many thanks to the owners and moderators of the LF and the contributors to the HYP Practical Board, your contributions are really appreciated.

As is this post and your detailed records. Ta.

[Newroad]

Hi SDN.

Thanks for that. Your situation, in particular

"... Keeping a real HYP portfolio remains valuable for me to learn / practice how HYP works in reality ..."

sounds very much like my own, though I don't claim to have a HYP, but rather a Pseudo-HYP. Some big picture details via the link below if interested (but search for Pseudo-HYP if you want further)

https://www.lemonfool.co.uk/viewtopic.php?f=56&t=34988&p=599131&hilit=newroad+portfolio#p599131

I concur with your thanks to the moderators and fellow contributors - perhaps something I/we should say more often.

Regards, Newroad