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Single-strategy income-investing vs multi-strategy investing

General discussions about equity high-yield income strategies
Itsallaguess
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Single-strategy income-investing vs multi-strategy investing

#257341

Postby Itsallaguess » October 12th, 2019, 12:06 pm

I've created this topic so as to keep any off-topic diversions away from a separate thread on this board regarding non-UK income-diversification via Investment Trusts -

https://www.lemonfool.co.uk/viewtopic.php?f=31&t=19869&start=20

I thought it was worth pursuing the diversion where a few of us started to discuss the benefits or otherwise of an income-investor perhaps preferring to use a (chiefly..) single-strategy income-investment approach through a lifetime of investment, compared to a potential investor who might wish to concentrate on capital growth via a 'total-return' approach in their earlier investment-years, before perhaps then switching to a more income-focussed approach when income was 'actually required' later in life.

I wanted to respond to a reply I had later on from 77ss, so I'll start this topic at my original post, and reply to that post later on -

Alaric wrote:
jackdaww wrote:
surely total of accumulated wealth is the ONLY benchmark? regardless of building or spending.


Don't risk saying that on the HYP Practical Board. Some contributors consider the amount of dividend the only benchmark, even going to the extent of buying just before a stock goes ex dividend.

Understandable perhaps if income to spend is a requirement but pointless if all they do with the income is reinvest it.



Well I don't think it's 'pointless' at all, but to understand why I think that you've got to first appreciate that there are two separate investment-related issues here, and your focus on 'total return' is just one aspect of that....

The other aspect is 'investment-process', and how simple, repeatable, and palatable a particular 'investment-process' might be over any other 'investment-process'.

So someone who might perhaps advocate splitting investment approaches, and hence investment-processes, into a more 'capital/total-return' oriented approach during those years where 'income' in and of itself isn't necessarily required, and then moving towards a more 'pure' income-oriented approach in the years when income itself becomes much more important to someone who desires regular use of it from their investments is really advocating the use of two completely different investment-strategies for different periods of time.

And it's this specific issue that perhaps means that some investors perhaps don't want to take that approach, even if there's a long-term performance 'levy' to pay on not taking it...

By taking a single 'income-oriented' approach to our investments, even during those years where income isn't necessarily required, such as during our working years, we are able to reinvest that unused dividend-income in exactly the same way as we do any additional investment capital that we accumulate via excess wage-related income, and I think being able to take that single investment approach for a lifetime of investment has a great deal of merit if you're the type of investor who would prefer not to have to worry about 'learning' or 'enacting' a completely different, capital-growth based approach as well.

The additional benefits, to me at least, of taking a more 'reinvesting income' approach to my investments, even whilst still working, are that it both enables me to track and largely predict the amount of income and income-growth that my single-strategy approach is creating, and hence how that might be tracked in future, which helps me to manage my long-term career and any potential retirement plans, and it also provides me with a single 'income-switch', which sits right at the very heart of my single-strategy approach, and which is currently switched to the side that says 're-invest income'.

If and when the time comes when I want to take, rather than re-invest that income, all I have to do is throw that switch from 're-invest income' to the side that says 'pay out income', and the whole of my investment strategy will stay exactly the same except for the fact that I'll then be taking, rather then re-investing that portfolio income from that time.

So whilst you might think that it's 'pointless' to take investment-income and then re-invest it, I think that view removes any credit that might be taken on the 'process' side of things, and the longer I go on investing, the more I find myself thinking that the 'process' side of things is, to me at least, of equal importance if not more so than a comparable 'total return' figure might be if I were to take a more 'multi-strategy' approach to things....

Cheers,

Itsallaguess

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Re: Single-strategy income-investing vs multi-strategy investing

#257348

Postby Itsallaguess » October 12th, 2019, 12:19 pm

77ss wrote:
Itsallaguess wrote:.....

So someone who might perhaps advocate splitting investment approaches, and hence investment-processes, into a more 'capital/total-return' oriented approach during those years where 'income' in and of itself isn't necessarily required, and then moving towards a more 'pure' income-oriented approach in the years when income itself becomes much more important to someone who desires regular use of it from their investments is really advocating the use of two completely different investment-strategies for different periods of time....


So? As one moves through life ones circumstances change. Sometimes drastically. Does it not make sense to change ones approach accordingly?


Well it might do. But then again it might not, and there are many variables to the decision as to whether it might be right or not to 'change ones approach', and one seems to have come along quite nicely here -


77ss wrote:
An unchanging strategy does have the virtue of simplicity, but other than that, 'one size fits all' makes little sense to me


Which is great if it makes little sense to you, but can you at least acknowledge that it might make sense to investors who might perhaps place greater emphasis on that 'virtue of simplicity' that you mention? I say this as an income-investor who does indeed place a very large emphasis on simplicity, so it makes an unchanging-strategy (income-investing with income-reinvestment during working years, and income-taking later on..) does indeed make a lot of sense to me...

77ss wrote:
After early retirement, I needed income, so a high yield strategy was the obvious approach. When my pensions kicked in, my need for dividend income diminished and I started to target total return, via low-modest yielding shares and ITs. As I age, I may well move back, as I may not have sufficient life-expectancy to ride out a slump.


Which is great - it sounds like you're an investor who is happy switching strategies to suit your situation, and look to make the absolute most of the investment opportunities that might be available to you at any given time.

But what if an income-investor were to say that they were quite prepared to forego some 'total-return' as the price worth paying for the benefit of maintaining simplicity?

When people buy cars, they buy them for many, many different reasons. Some like performance, some prefer comfort, and some look at things like price and reliability. All of the different approaches to car-buying will usually end up with a box on four wheels that will get the owner from A to B.

Some will get there quicker, and some will get there in more comfort, often with the price of that comfort being a time-cost due to lower performance.

Are those comfort-seekers wrong not to seek quicker travel times, or can we allow them to prioritise comfort at the cost of a different performance-metric?

Cheers,

Itsallaguess

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Re: Single-strategy income-investing vs multi-strategy investing

#257354

Postby Itsallaguess » October 12th, 2019, 12:37 pm

Alaric wrote:
Itsallaguess wrote:
So whilst you might think that it's 'pointless' to take investment-income and then re-invest it,


It was the advocacy that if there was a choice, investing cum div was better than investing x div because you got more dividends.

I'm not sure you do in the longer run, since if you invest x div after the price drop, you get more shares, so more dividend next time round.

You do however artificially boost the income received total in the current year at the cost of getting some of your purchase price back almost immediately and of probably having to pay stamp duty on it.


Thanks, and I can understand your point.

I think this actually comes down to some of the little mind-games we sometimes play on ourselves, and allow ourselves to play on ourselves, to help oil the investment wheels....

I think it boils down to that little kick of dopamine that we get when something happens that we like. As income-investors, we like dividends, so the sooner we get them, and the more that we get, then the more little dopamine hits are generated.

If we can buy cum-div, and get that dividend 'early' rather than late (ex-div), then the actual 'overall performance hit' of carrying out a trade that way might well be a price worth paying to get that extra dopamine hit earlier rather than later.

I really don't think it's any more complicated than that, to be honest, and it segues into the 'performance vs comfort' discussion I mentioned earlier in this thread, and also blends into how each of us might 'help ourselves' to continue pursuing what we're trying to do, which is to navigate through life maintaining long-term investment strategies.

If some of those strategies happen to be better than others in pure 'total return' terms, then it doesn't really matter if they are basically 'incompatible' with the investor trying to pursue them. If such investors can, however, find a strategy that *does* suit them, and which 'allows' them to pursue a long and fruitful life of investment using them, then perhaps 'total return' might take a bit of a back-seat over the 'comfort' factor' of a more 'user-appropriate' strategy....

Those mind-games you see - they allow us to play all sorts of trick on ourselves just to be able to get things done for the greater good....

Cheers,

Itsallaguess

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Re: Single-strategy income-investing vs multi-strategy investing

#257357

Postby Dod101 » October 12th, 2019, 1:01 pm

Thanks IAAG. I will respond later as I need to digest what you have written on this thread but I need to go out now.

Dod

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Re: Single-strategy income-investing vs multi-strategy investing

#257362

Postby ReallyVeryFoolish » October 12th, 2019, 1:35 pm

I'd say an excellent analogy would be playing a game of golf. Would you choose the golf bag containing just a single club? Or would you choose the bag with the full set of clubs available? Substitute investing and shares for golf and clubs and I think the sensible answer is absolutely obvious. However, I do recognise that there are folks around who will argue to the end of time that the single club strategy is the only true way to play golf.

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Re: Single-strategy income-investing vs multi-strategy investing

#257370

Postby Itsallaguess » October 12th, 2019, 2:00 pm

ReallyVeryFoolish wrote:
I'd say an excellent analogy would be playing a game of golf.

Would you choose the golf bag containing just a single club? Or would you choose the bag with the full set of clubs available?

Substitute investing and shares for golf and clubs and I think the sensible answer is absolutely obvious.

However, I do recognise that there are folks around who will argue to the end of time that the single club strategy is the only true way to play golf.


Your analogy is flawed.

I don't think anyone at all would argue that a single-club strategy 'is the only true way to play golf'.

I'm happy to be proved wrong if you can please find a single example...

What you *might* find, are people who say that they simply *prefer to play* with a single club, as it *suits them to do so*.

There is an important difference there, and you're not recognising it.

Cheers,

Itsallaguess

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Re: Single-strategy income-investing vs multi-strategy investing

#257371

Postby ReallyVeryFoolish » October 12th, 2019, 2:12 pm

Itsallaguess wrote:
ReallyVeryFoolish wrote:
I'd say an excellent analogy would be playing a game of golf.

Would you choose the golf bag containing just a single club? Or would you choose the bag with the full set of clubs available?

Substitute investing and shares for golf and clubs and I think the sensible answer is absolutely obvious.

However, I do recognise that there are folks around who will argue to the end of time that the single club strategy is the only true way to play golf.


Your analogy is flawed.

I don't think anyone at all would argue that a single-club strategy 'is the only true way to play golf'.

I'm happy to be proved wrong if you can please find a single example...

What you *might* find, are people who say that they simply *prefer to play* with a single club, as it *suits them to do so*.

There is an important difference there, and you're not recognising it.In fact I'd go further than that and suggest that the wording of your final sentence seems to be suggesting that people can't have any actual choice in the type of strategy they might choose to use....

Cheers,

Itsallaguess

I of course, respectfully disagree. Life is full of people who insist their single strategy is the only true way. The ridiculous Brexit situation is just the latest in public life. Religion is probably the biggest example that over a couple of millennia has cost millions of lives, all in the name of the "one true way". Following a chap who sells an investment tip sheet as the "one true way" is simply another example and if you can't find adherents really close by here, you aren't looking hard enough. I don't expect you to agree, but I feel my analogy is likely to be too uncomfortably near the truth for some.

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Re: Single-strategy income-investing vs multi-strategy investing

#257380

Postby Itsallaguess » October 12th, 2019, 2:33 pm

ReallyVeryFoolish wrote:
Following a chap who sells an investment tip sheet as the "one true way" is simply another example and if you can't find adherents really close by here, you aren't looking hard enough.


No, I really do think you're over-stating the situation for some reason.

You don't seem to be wanting to recognise the choices and strategic options that people may want to make for a whole host of different personal reasons.

I've talked about some of those reasons that are important to me personally earlier in this thread, but I wouldn't for a minute think that a particular strategy or approach that suits me for whatever reason is the strategy that *everyone* should use - that of course wouldn't be right, but it shouldn't stop people being able to describe why a particular strategy *does* suit them, and who should then be allowed to deny them that choice?

I fully understand where you're coming from, but all I see are people who invest in a way that suits *them*. They are not wanting to force a strategy on people - you are, with your enforced 'multi-club' approach....why is that?

I do find it interesting that others are often wanting to portray such 'single-club investors' as some sort of religious zealots, although I tend to think that it's perhaps those that do so that should look in the mirror a little more closely sometimes..

Cheers,

Itsallaguess

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Re: Single-strategy income-investing vs multi-strategy investing

#257404

Postby TUK020 » October 12th, 2019, 5:15 pm

ReallyVeryFoolish wrote: Life is full of people who insist their single strategy is the only true way.


Wrong board, I think.

Over on 'Practical' one needs to genuflect to the one true path of the Bland Annuity Replacement doctrine.

Here on 'Strategies', one is permitted to do variations on a theme, such as wider geographic diversification through ITs, top slice/re-balancing strategies, and so on.

The very valid point that IAAG makes is that by running a high yield portfolio strategy during one's build phase gives you confidence in the income generation strategy before you commit to needing it.
Very much a 'Don't take it on trust, but test it first' approach which is the opposite of just following a path dictated by tablets of stone.

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Re: Single-strategy income-investing vs multi-strategy investing

#257462

Postby IanTHughes » October 12th, 2019, 10:04 pm

ReallyVeryFoolish wrote:Life is full of people who insist their single strategy is the only true way.

Could you perhaps point to a couple of quotes to back up your assertion that anyone has ever said that any investment strategy is the "only true way"? I cannot say that I have come across any myself.

ReallyVeryFoolish wrote:Following a chap who sells an investment tip sheet as the "one true way" is simply another example and if you can't find adherents really close by here, you aren't looking hard enough. I don't expect you to agree, but I feel my analogy is likely to be too uncomfortably near the truth for some.

Again, I cannot recollect of anyone, on these boards at least, that consider following any chap as the "only true way" to invest, whether or not a Tip Sheet is involved. I can only speak for myself of course, which is to say that I use the HYP strategy because it works for me. Using a strategy that did not work for me would be really very foolish, don't you think? Would you be so kind as to enlighten us as to where these "only true way" investors are to be found?


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Re: Single-strategy income-investing vs multi-strategy investing

#257476

Postby ReallyVeryFoolish » October 13th, 2019, 1:37 am

Thank you IAAG, I like your response. Take a rec.

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Re: Single-strategy income-investing vs multi-strategy investing

#257487

Postby OLTB » October 13th, 2019, 7:37 am

Morning all

I have a strategy - it may not be perfect, but I'm happy with it, and that suits me fine.

My strategy is split into three elements. The first element is that whilst I am working, I build an income generating portfolio (HYP) that covers my fixed direct debits/standing orders that maintain my standard of living. Building this now and re-investing dividends gives me comfort that when I choose to retire, I am not then deciding which strategy to follow, discovering how it works and learning the practicalities of running a HYP. I will have had over a decade's experience of running a HYP and experienced the ebbs and flows of dividends as company executives make various decisions through their own market cycles. This will then (hopefully) make it mentally easier to transition from income builder to income receiver and more aware of a sensible withdrawal level given this past experience.

As IAAG has written about before, the then 'flick of a switch' decision at retirement from re-investing dividends to drawing them should be straightforward. I would draw a fixed income each month as a replacement salary (my preference) which would mean building the income pot in my final year of work to smooth out the lumpy dividend receipts throughout the year.

HYP is, however, not my only strategy - the next two of my three way strategy is an IT strategy and passive portfolio strategy for capital growth (and a little income). I do not know which strategy will benefit me most between now and retirement and beyond so I am, in effect, hedging my bets. I am not pinning my hopes on one investment strategy (I don't know any of us who are) so hopefully I won't be all wrong!

Right, time for tea and toast, cheers, OLTB.

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Re: Single-strategy income-investing vs multi-strategy investing

#257493

Postby Dod101 » October 13th, 2019, 9:03 am

I think that OLTB is about right. I have long since settled in to my investing strategy for retirement. I have a HYPish portfolio which provides the basic income I need to live off which includes four ITs, Murray Income, Murray International, HFEL and Edinburgh IT. Although I only have a small number of truly high yield shares (about 15 at any one time) I get the diversity through the ITs.

The rest of my portfolio (about another 10/11 holdings) are a mixture of ITs and direct holdings which is definitely not oriented towards income but capital growth, and I think that balance is needed. I have nothing in passives although of course I can see the benefits in that approach.

Actually as I write this I realise that I do not have a 'settled' investment strategy. It is continuously evolving, a bit like Unilever's portfolio of brands. There are shares that I have held for a very long time and have no intention of ever selling and there are others which come and go in my portfolio which inevitably alters the balance between one part of my portfolio and the other.

For those in the pre retirement phase, I think a strategy is what is needed and I am not sure that it matters too much what strategy

Dod

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Re: Single-strategy income-investing vs multi-strategy investing

#257517

Postby ReallyVeryFoolish » October 13th, 2019, 11:22 am

My strategy is to not have a fixed strategy. And that applies to all aspects of my life just as much as it does to investing. When circumstances change, I change my strategy. I'm not sure therefore, if I have a single strategy or not?

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Re: Single-strategy income-investing vs multi-strategy investing

#257564

Postby SDN123 » October 13th, 2019, 3:59 pm

In reply to the OP I am in the building phase with my investments and considering my income investment strategies.

Context: The nature of my job means that I may not be in control of my retirement date. I am also an expat planing to retire, eventually, in the UK. Both of which means that it’s hard for me to predict how much capital I’ll have at retirement. For some time I’ve run the stocks and shared parts of my investments as a passive portfolio modelled on Tim Hales’ ideas but with the UK allocation being an active HYP (as understood in LF) rather than a passive UK tracker. Originally my HYP represented around 10% of my total net worth (and about 90% of my thoughts and activities related to investments). The percentage of net worth of the HYP has crept up due to a number of factors (and the percentage of effort has remained about the sam).

Originally the idea was that I wanted maximum income in retirement while protecting the capital. I wanted to see if I could run a HYP successfully eg if I could cope with the reality of the decisions and inherent extra risk. The plan was to switch a much larger allocation into HYP on retirement - the exact amount to depend on my needs at the time and my appetite for risk.

A few things have changed / evolved since I started:

- it turns out that I really enjoy managing my HYP and it’s doing a good job of creating a high and rising income. However in terms of total return, compared to external benchmarks or compared to the rest of my investments, I’m either not very good at it or HYP isn’t great for total return.

- as a side effect of working abroad I’m limited as to how much I can subscribe to ISAs (nothing) and SIPPs (£2880 net per annum). Therefore I have a large amount of unsheltered investments and tax planing (eg CGT) means that it would not be sensible to “throw a switch” and sell everything overnight and reinvest in a HYP. So if HYP is my answer in retirement I will need some sort of transition from my current situation. The transition will take time and planning.

- I’m becoming curious about an IT approach to income investing to run in parallel with my HYP - mostly as a diversification on my HYP investment skills.

- finally I’m beginning to suspect that retirement (Eg the switch from saving to taking income) won’t be a simple on/off switch for me. I’m beginning to see that I may spend a few years in part-time or consultancy work - as much for mental health reasons (okay, to stop me being bored!) as much as for any financial reason.

In summary:

- I’m definitely committed to a total return strategy at the moment alongside a small amount of “practice” income strategy (HYP).

- I’m considering starting an additional income strategy “trail” (A basket of ITs).

- How to transition from the above into a retirement strategy (maximising income and, ideally, preserving income) is not clear due to tax planning AND because it’s becoming less clear to me what retirement looks like (eg it might include working).

SDN

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Re: Single-strategy income-investing vs multi-strategy investing

#257803

Postby Gengulphus » October 14th, 2019, 4:02 pm

Itsallaguess wrote:
77ss wrote:An unchanging strategy does have the virtue of simplicity, but other than that, 'one size fits all' makes little sense to me

Which is great if it makes little sense to you, but can you at least acknowledge that it might make sense to investors who might perhaps place greater emphasis on that 'virtue of simplicity' that you mention? ...

Eh? That exchange makes about as much sense to me as:

A: "Choosing the same size each time one buys shoes does have the virtue of simplicity, but other than that, 'one size fits all' makes little sense to me."
B: "Which is great if it makes little sense to you, but can you at least acknowledge that it might make sense to shoe-purchasers who might perhaps place greater emphasis on that 'virtue of simplicity' that you mention?"

Basically, there is semantic confusion in such an exchange which becomes rather more obvious when I make that substitution of shoe-buying strategies for investment strategies. For me, "buy size 11 shoes" is an excellent, simple shoe-buying strategy that suits me well and "one size fits all" is an obviously nonsensical generalisation of it - size 11 shoes quite simply don't fit everyone... There's no conflict between the two - nor any need for me to "at least acknowledge" one of those statements when I make the other!

So it seems to me that the first part of 77ss's statement is about what a particular investor might see in a strategy, but 'one size fits all' is a statement about how investors collectively should see it. And then the first "it" in the first part of Itsallaguess's statement is about that collective view of 'one size fits all' (or is a non-sequitur), but the second part goes back to how particular investors view the 'virtue of simplicity' in their own strategies. So your apparent disagreement seems to me to actually be agreement, obfuscated by neither of you apparently realising that the meaning shifts between the two parts of your statements (specifically, by 'one size fits all' not being a strategy in 77ss's, making the word "but" inapplicable, and by 'it' shifting between referring to two different things in Itsallaguess's).

Or much more briefly, it seems to me that you're 'violently agreeing' with each other, as a result of the semantic confusion!

More generally, I actually think there is some semantic confusion in the phrase "multi-strategy investing" used in the thread title as well, though I think that confusion has to be accepted. Each investor runs a single strategy (*), which is typically tailored to the individual investor, either by the investor themselves or by their financial advisor. That strategy will often have multiple components (**) - which can either be held at the same time or in succession. As an example, my strategy has major, roughly equal-sized components in HYP and in smallcaps, a minor component of investing directly in crowdfunded early-stage companies that I've started over the last few years, and further minor components held for legacy reasons (***) in VCTs, a delisted company, and a few funds. As another example, someone who chooses to run their portfolio in a growth-focussed way until retirement and then switches to running it as a HYP is using a two-component strategy, with the growth-focussed and HYP components being run in succession. So "strategy" is often used to mean "component of strategy" - but getting that entirely correct tends to result in more verbosity than it is worth!

The HYP Practical board seems to me to actually be about running HYP components of strategies in practice. My overall strategy is under 50% HYP, but if I wanted to discuss it, I would probably use the Investment Strategies board - possibly this one, but enough of its shares are not high-yield that it isn't obvious that this board is appropriate. But as long as I only want to discuss the HYP component, not other components or strategies, and I want to discuss how to run it in practice, not whether it's a good idea to run it at all (which inevitably involves discussing how it compares with alternative strategies I could run), HYP Practical is suitable. And as it happens, for various reasons I only very rarely want to say anything about the other components of my strategy, so the impression people probably get of my strategy from my investment posts on TLF is a lot more biased towards HYP than my strategy...

(*) Other than in the case where the investor is running multiple people's investments in a 'non-pooled' way. E.g. when I was basically running my mother's UK investments between my father's death and hers, I used an entirely different strategy for her investments than for my own - one that was fund- and cash account-based, with very little in the way of direct share investment, both because she would have been very unhappy if I'd made major changes to what she was used to, and also because the non-HYP components of my own strategy would have been far too risky for her circumstances. (I was actually quite glad that last was the case, because the smallcaps component of my own strategy sometimes makes trades that move the market quite noticeably. If that component had been suitable for her, I would have faced small-but-not-totally-insignificant conflicts of interest about which of my trade and hers to do first!)

(**) Or "elements" as OLTB has called them in a post during a long period when this post was sitting around nearly finished but unposted in my browser. I don't have any strong attachment to either term.

(***) The legacy reasons are tax-related for the VCTs - their dividends are a nice boost to my tax-free income and disposing of them would revive some long-deferred capital gains for CGT - and basically just inertia on my part for the others - i.e. I've never got around to tidying them up. In the case of the delisted company (one called Norman Hay), it's probably tidying itself up - it's sold off all its operating businesses, and on Saturday I received a letter about a proposal to voluntarily wind the company up, that I expect shareholders to approve.

Gengulphus

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Re: Single-strategy income-investing vs multi-strategy investing

#257808

Postby Itsallaguess » October 14th, 2019, 4:20 pm

Gengulphus wrote:
Itsallaguess wrote:
77ss wrote:
An unchanging strategy does have the virtue of simplicity, but other than that, 'one size fits all' makes little sense to me


Which is great if it makes little sense to you, but can you at least acknowledge that it might make sense to investors who might perhaps place greater emphasis on that 'virtue of simplicity' that you mention? ...


Eh? That exchange makes about as much sense to me as:

A: "Choosing the same size each time one buys shoes does have the virtue of simplicity, but other than that, 'one size fits all' makes little sense to me."
B: "Which is great if it makes little sense to you, but can you at least acknowledge that it might make sense to shoe-purchasers who might perhaps place greater emphasis on that 'virtue of simplicity' that you mention?"

Basically, there is semantic confusion in such an exchange which becomes rather more obvious when I make that substitution of shoe-buying strategies for investment strategies. For me, "buy size 11 shoes" is an excellent, simple shoe-buying strategy that suits me well and "one size fits all" is an obviously nonsensical generalisation of it - size 11 shoes quite simply don't fit everyone... There's no conflict between the two - nor any need for me to "at least acknowledge" one of those statements when I make the other!

So it seems to me that the first part of 77ss's statement is about what a particular investor might see in a strategy, but 'one size fits all' is a statement about how investors collectively should see it. And then the first "it" in the first part of Itsallaguess's statement is about that collective view of 'one size fits all' (or is a non-sequitur), but the second part goes back to how particular investors view the 'virtue of simplicity' in their own strategies. So your apparent disagreement seems to me to actually be agreement, obfuscated by neither of you apparently realising that the meaning shifts between the two parts of your statements (specifically, by 'one size fits all' not being a strategy in 77ss's, making the word "but" inapplicable, and by 'it' shifting between referring to two different things in Itsallaguess's).

Or much more briefly, it seems to me that you're 'violently agreeing' with each other, as a result of the semantic confusion!


I just took 77ss, when he later said 'one size fits all' to be referring to the earlier 'unchanging strategy' that he mentioned. The actual strategy doesn't really matter in that sense.

So when I said 'can you at least acknowledge', I was asking because it was fairly clear that he didn't put much emphasis on the potential 'virtue of simplicity' that maintaining a single investment strategy might bring, but I was pointing out that other investors might take a different view on that point, as I do myself....

Cheers,

Itsallaguess

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Re: Single-strategy income-investing vs multi-strategy investing

#257813

Postby daveh » October 14th, 2019, 4:33 pm

I run a HYPish portfolio. It consists of 38 holdings, mostly high yield shares. However I have added three high yield ETFs (EMDV, IAPD and IDVY) to diversify away from the UK (they cover emerging markets, Asia/Pacific and Europe respectively. I have recently added TRIG which is a renewables infrastructure fund as I think that will be a good (profitable) area to be invested in, they are investments I wish to support, and they pay a high and increasing (by inflation) dividend. I've also recently invested in two Vanguard funds (VVAL and VWRL) for very different reasons. The former was because I think value may start coming back in favour in the next couple of years, plus it is an accumulating fund and I needed to park some cash that was outside my ISAs in an investment that didn't pay a dividend (I understand about excess reportable income and made sure I wasn't holding the shares on the relevant date and have now moved it into my ISA). VWRL was a way to hold more US assets as, although its an all-world fund, it has >50% of assets in North America (last time I looked). I swithered between VWRL and VHYL (the high yield version), but the total return of the former has been much better over the past few years.

At the moment the ETFs make up just short of 20% of the portfolio. Most* of my reinvestment is going into the ETFs and TRIG, when they have reached a max of 5% of the portfolio I may look at ITs to increase my non UK exposure, but will still look to those with a higher yield. * I still do some top ups into individual shares as suggested by my HYPTUSS.

Like IAAG I like to see my income increasing year on year as I can see when I will be able to retire, and have something to live on if I lose my job and not have to change my strategy at the drop of a hat. Being a research scientist on short term contracts that could happen any time at then end of a contract.

My dividend income would now cover my living expenses and I have the added adavantge of paying into a DB pension plus some money into DC AVCs that I could take at 55 (The DB bit would be best left until at least 60 as before 60 I'd lose a lot taking it early).


As of today my HYPish portfolio has returned 7.4% pa and yields 5.4% on present value

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Re: Single-strategy income-investing vs multi-strategy investing

#257824

Postby TahiPanasDua » October 14th, 2019, 5:08 pm

SDN123 wrote:-
- as a side effect of working abroad I’m limited as to how much I can subscribe to ISAs (nothing) and SIPPs (£2880 net per annum). Therefore I have a large amount of unsheltered investments and tax planing (eg CGT) means that it would not be sensible to “throw a switch” and sell everything overnight and reinvest in a HYP. So if HYP is my answer in retirement I will need some sort of transition from my current situation. The transition will take time and planning.

SDN


If you intend to retire in the UK, you should sell everything that is in profit in the tax year before you come back. You can immediately buy them all back as you are free from capital gains tax as an expat and there is no need to consider bed and buy back time limitations while you are still abroad.

I did that and it starts the clock anew for CGT. This is obviously not an investment strategy as such so a bit off topic.

Good luck!

TP2.

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Re: Single-strategy income-investing vs multi-strategy investing

#257830

Postby SDN123 » October 14th, 2019, 5:42 pm

TahiPanasDua wrote:
SDN123 wrote:-
- as a side effect of working abroad I’m limited as to how much I can subscribe to ISAs (nothing) and SIPPs (£2880 net per annum). Therefore I have a large amount of unsheltered investments and tax planing (eg CGT) means that it would not be sensible to “throw a switch” and sell everything overnight and reinvest in a HYP. So if HYP is my answer in retirement I will need some sort of transition from my current situation. The transition will take time and planning.

SDN


If you intend to retire in the UK, you should sell everything that is in profit in the tax year before you come back. You can immediately buy them all back as you are free from capital gains tax as an expat and there is no need to consider bed and buy back time limitations while you are still abroad.

I did that and it starts the clock anew for CGT. This is obviously not an investment strategy as such so a bit off topic.

Good luck!

TP2.


Hi TP2,

I appreciate the suggested help. Briefly, so as not to hijack the thread further, where I work now taxes all global income and capital gains. I believe that selling all unsheltered shares in the UK won’t cause a UK CGT event, as you suggest, but it will trigger a local CGT event at a much higher coat than I’d pay in the UK! (Even selling something within an ISA, a concept that only has meaning in the UK, will cause a CGT event for me here.) I will, almost certainly, pay for tax advice before I return to the UK and will make use of every available legal method to minimise tax but, at least with my current understanding, this one won’t help me.

Thanks again,

Back to the topic now...

SDN


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