Re-configuring for retirement

[Gilgongo]

I plan to retire next year but have been flip-flopping on whether to buy an annuity with half of my holdings (due to market fluctuation worries mainly).

My investments are currently split 50/50 between and ISA and a SIPP. The ISA is primarly a HYP with a couple of ITs (CTY and MRCH). The aim there is for (hopefully) steady dividends in my retirement. I'm pretty happy with that.

The SIPP looks like this, and was originally to get diversification away from the HYP, but also reflects my indecision about the annuity, containing a combination of investements for both growth and income:



On balance I think I'll not buy an annuity (at least not yet), but instead swap out the growth investments with income-bearing ones.

Right now I'm favouring collapsing VUSA and WLDS into MYI to keep things simple (don't want to proliferate). But any reccomendations/thoughts welcome.

[Dod101]

I plan to retire next year but have been flip-flopping on whether to buy an annuity with half of my holdings (due to market fluctuation worries mainly).

My investments are currently split 50/50 between and ISA and a SIPP. The ISA is primarly a HYP with a couple of ITs (CTY and MRCH). The aim there is for (hopefully) steady dividends in my retirement. I'm pretty happy with that.

The SIPP looks like this, and was originally to get diversification away from the HYP, but also reflects my indecision about the annuity, containing a combination of investements for both growth and income:



On balance I think I'll not buy an annuity (at least not yet), but instead swap out the growth investments with income-bearing ones.

Right now I'm favouring collapsing VUSA and WLDS into MYI to keep things simple (don't want to proliferate). But any reccomendations/thoughts welcome.

Were I you unless you really need the income, I would not, especially early in your retirement, swap out of all growth investments. At least an element of growth will I think, come in useful as time goes by.

Dod

[Arborbridge]

I know what Dod means, and he is probably correct.

However, after a few years of holding growth stocks, I look at them and wonder what they are doing for me. Not much, until you either harvest the growth (a painful decision), or convert them to something which contributes at least a little to one's income. Otherwise, they just seem a waste of space.

Once you have attained enough income, then there would be room, in my view, of going for something more growthy - but I still like to see some income flowing if only a couple of percent.


Arb.

[Lootman]

I know what Dod means, and he is probably correct.

However, after a few years of holding growth stocks, I look at them and wonder what they are doing for me. Not much, until you either harvest the growth (a painful decision), or convert them to something which contributes at least a little to one's income. Otherwise, they just seem a waste of space.

Once you have attained enough income, then there would be room, in my view, of going for something more growthy - but I still like to see some income flowing if only a couple of percent.

I am curious why you find the decision to "harvest the growth" to be painful?

I find it rather satisfying to realise a profit.

One strategy that is popular with US retirees, but not so in the UK, is the practice of selling call options against long share and ETF positions. You can pick up a few percent a year of "income" that way, even from shares that pay no dividend such as Google, Amazon etc. And no tax withholding on options profits.

[Arborbridge]

I know what Dod means, and he is probably correct.

However, after a few years of holding growth stocks, I look at them and wonder what they are doing for me. Not much, until you either harvest the growth (a painful decision), or convert them to something which contributes at least a little to one's income. Otherwise, they just seem a waste of space.

Once you have attained enough income, then there would be room, in my view, of going for something more growthy - but I still like to see some income flowing if only a couple of percent.

I am curious why you find the decision to "harvest the growth" to be painful?

I find it rather satisfying to realise a profit.

One strategy that is popular with US retirees, but not so in the UK, is the practice of selling call options against long share and ETF positions. You can pick up a few percent a year of "income" that way, even from shares that pay no dividend such as Google, Amazon etc. And no tax withholding on options profits.

Looty - it's just "me"! I love watching capital growing over the years, so digging into to seems like selling off the family silver.
Yes, I know my attitude is all a bit irrational, but I can't help it! Selling down stock seems like a backward step and I have trouble getting over that. That's apart from the practical difficulty of what to sell.

Oddly enough, I bought JGGI - so if harvesting capital gains to generate income are done by a manager, I don't think about it! In fact, I quite accept it in that case - provided it works and they don't ask me what to sell!

Arb.

[SoBo65]

I am preparing for full time employment and decided not to buy an annuity and retain a high proportion of growth assets, mainly global IT's. One thing I am doing though is moving 10% of my portfolio into income assets, mainly irredeemable preference shares locking into perpetual yields of average 7.4% including General Accident (Aviva owned) GACA, GACB, BP (BP.A, BP. B), Northern Electric (NTEA), (owned by Berkshire Hathaway). I am generally avoiding banks, but purchased NatWest (NWBD). In the income bucket I also purchased an infrastructure fund (INPP) and Supermarket REIT (SUPR). These investments should cover the majority of my non discretionary expenditure.

[dundas666]

I plan to retire next year but have been flip-flopping on whether to buy an annuity with half of my holdings (due to market fluctuation worries mainly).
....
On balance I think I'll not buy an annuity (at least not yet), but instead swap out the growth investments with income-bearing ones.

Right now I'm favouring collapsing VUSA and WLDS into MYI to keep things simple (don't want to proliferate). But any reccomendations/thoughts welcome.

Hi Gilgongo, you could have a look at JGGI, a global growth IT that also commits to paying 4% of NAV in dividends.

That way you could keep a growth element in your portfolio which also provides a reasonable income.

Cheers, d6

[Dod101]

I know what Dod means, and he is probably correct.

However, after a few years of holding growth stocks, I look at them and wonder what they are doing for me. Not much, until you either harvest the growth (a painful decision), or convert them to something which contributes at least a little to one's income. Otherwise, they just seem a waste of space.

Once you have attained enough income, then there would be room, in my view, of going for something more growthy - but I still like to see some income flowing if only a couple of percent.


Arb.

I am not for a moment suggesting foregoing all income from growth shares. And as for harvesting some growth that is why I hold growth shares. I feel that it is important though that you give your portfolio a chance of growing and the evidence of the last few years suggests that that does not always come from out and out income shares. We are on the IT board so these comments may not be entirely relevant.

Dod