Due to my previous thread being hijacked by those who wanted to start an active versus passive and income versus growth debate I have decided to start this as a new thread.
As I said before this I am posting for information only. It may be of interest or use to some. Please do not hijack this thread.
The goal of this portfolio is primarily to add some income to the top of a small DB pension that Mrs Quint will start to draw when she turns 60 in just over three years time. We have worked out the required income based on what she is currently living on now (and has been for the past three years, 8 months of which have been since FIRE at the end of Feb). The DB pension will meet about 50% of this income so the SIPP needs to provide the other 50%. Holidays and luxuries are provided for by a separate S&S ISA. Safety net of cash and bonds are held outside of the SIPP and would account for total loss of income from both SIPP and DB pension for 5 years. Once the DB and SIPP are being drawn on she will have seven years until the state pension kicks in. She will receive the full state pension.
SIPP is now fully invested, no additional money will be paid in but dividends will be reinvested for the next three years.
I have split the SIPP in to two elements, one to provide income to meet the requirement and one to provide some growth although this does provide some additional income which can be taken as extra income or reinvested in either the income or growth areas.
Currently the Income portfolio is (based on trailing yield) generating the income that will be required in 3 years time plus about 4% if I add the income from the growth portfolio this goes up to income required plus 15%. This is after deducting the platform fee which is capped at £200 p/a.
Once I had finished building the portfolio (this has taken nearly a year as the SIPP was combined from transferring in two separate pensions which came in six months apart) and is now split as below
Income = 62%
Growth = 36%
Cash = 2%
The detail of how this invested is below
Code: Select all
Income | % of Income Portfolio | % of Total Portfolio
BT Group plc | 3.9 | 2.4
City Of London Investment Trust | 17.2 | 10.6
CQS New City High Yield Fund | 8.0 | 4.9
European Assets Trust | 4.0 | 2.4
Henderson Far East Income Ltd | 8.4 | 5.2
Imperial Brands | 4.0 | 2.5
Lowland Investment Company | 7.9 | 4.8
Murray International Trust | 9.1 | 5.6
National Grid | 3.9 | 2.4
North American Income Trust | 7.8 | 4.8
Regional REIT Ltd | 3.9 | 2.4
Scottish American Investment Co | 8.1 | 5.0
Standard Life Private Equity Trust | 7.9 | 4.9
Vodafone Group | 5.9 | 3.6
Total | 100.0 | 61.7
Code: Select all
Growth | % of Growth Portfolio | % of Total Portfolio
Finsbury Growth & Income Trust | 20.0 | 7.2
Foreign & Colonial Investment Trust | 20.0 | 7.3
Henderson Smaller Cos Investment Trust | 20.0 | 7.3
Scottish Mortgage Investment Trust | 20.0 | 7.2
Witan Investment Trust | 20.0 | 7.3
Total | 100.0 | 36.3
The plan was initially to hold only investment trusts but I did decide to add four direct share holdings but at a minimal capital value as part of the portfolio to boost income. This was because recent falls had pushed the dividend yields up to much higher levels than historical averages, all have been raising the dividends at a decent rate in recent years, I know BT have held the dividend this year but they have indicated that next year it should start to rise again albeit probably not at the pace seen in recent years.
Two top ups have been made with received dividends, these were City of London and Murray International and one top up of Vodafone after a price fall since initial investment. The plan is reinvest dividends primarily in the Growth portfolio and leave the Income portfolio to do its thing, if the overall income increases roughly in line with inflation I will be happy, if it increases ahead of inflation I will be very happy. If necessary elements of the growth portfolio can be top sliced to either provide additional income of reinvested in the income portfolio if it really becomes necessary and this would be in the Investment trusts and not direct shares. In time I would imaging the direct shares will become a smaller and smaller percentage of the overall portfolio.
When the pensions are taken the 25% of the DB will be put aside to be used and the 25% of the SIPP will be created by selling down the required value from the growth portfolio which will be then reinvested in her ISA (and some in a fund account until it can all be moved in to the ISA) and the same products repurchased, or potentially I may look at putting some in to a global ETF. This decision will be made nearer the time when I can evaluate the performance of the growth products I have selected.
Feel free to comment but please no hijacking.