I would be grateful for suggestions on how I might improve the portfolio to better match my requirements. Or should I just leave it alone? I tinker far too much and I'm aiming to stop.
DB pension: better, I suspect, than many people can look forward to, but far from gold-plated. Just over half the pension has statutory LPI (CPI up to 5% or 2.5%), the rest has discretionary increases and my ex-employer is currently defining "discretionary" as "zero" from 2021. Effectively this means the value of the pension will decline in real terms.
State pension: in about 9 years I will be eligible (unless the rules change again) for the state pension. Currently 4 years short of NI contributions for a full pension.
Investments: the capital originated from a combination of a S&S ISA plus AVC (stopped paying into this after Equitable Life imploded) and DC pension (my DB scheme was closed a few years before retirement) taken as a cash lump sum when I started drawing the DB pension.
My objective is to provide enough income to maintain my standard of living and which grows ahead of inflation to offset the decline in DB income. The current dividend yield is about 3.7%.
The rationale behind ITs is 1) the lower holding charges compared to funds - although I could switch platforms, 2) the ease of finding information about ITs compared to funds and 3) the ability of ITs to smooth income flows
There is a bias towards ITs which don't rely on using capital to provide income and a bias towards those that have a track record of growing dividends ahead of inflation
I may need to sell some of the portfolio in a few years to help children with mortgage deposits (not certain this will be needed)
SIPP: this is invested fairly evenly across Scottish Mortgage, Finsbury and Edinburgh World Wide. The rationale being that over the next n years they may increase significantly in value and if they don't, I haven't lost a great deal. The plan is to largely ignore the SIPP, simply making sure there's enough cash to pay the platform fees. In total it's about 5% of the size of the ISA & dealing account portfolio
Notes:
- The DB pension means I don't have to be as cautious / defensive as I would if the portfolio was my only source of income
- I've focused on dividends, rather than overall return, its possible I would be better off allocating at least some of the portfolio to growth orientated investments and selling capital to provide income - not sure I'm entirely comfortable with that approach though!
- cash deposits are pretty small, at about 3%
- the IT yields are calculated, based on current share price and historical dividends adjusted where there are stated intentions about future payments.
Code: Select all
IT Yield % of portfolio
Bankers Ord (LSE:BNKR) 2.12% 11.1%
City of London Ord (LSE:CTY) 4.39% 10.8%
Henderson International Income Ord (LSE:HINT) 3.28% 11.0%
Henderson Smaller Companies Ord (LSE:HSL) 2.52% 7.9%
HICL Infrastructure Company Ord (LSE:HICL) 5.16% 9.6%
JPMorgan Claverhouse Ord (LSE:JCH) 3.90% 10.8%
Lowland Ord (LSE:LWI) 4.37% 8.2%
Murray International Ord (LSE:MYI) 4.40% 11.1%
North American Income Trust Ord (LSE:NAIT) 2.78% 9.5%
Schroder Oriental Income Ord (LSE:SOI) 3.69% 10.0%