Invest for Income

If you have accumulated a healthy sum within your investment portfolio, you may want to
consider taking out some of this money. You can choose to sell some of your holdings, or
convert your holdings to income funds, or dividend paying shares, that aim to keep your
capital intact whilst paying you an income.

INCOME

"Diversification is important"

Capital income

There is more than one reason to look for investments that pay a yield. Many investors, particularly those who are retired, want to leave their capital invested and live off the income it provides.

A rule of thumb

For those investors, diversification is important. Buying company shares that pay a dividend can be very useful, but if markets fall their capital can take a serious hit.

Using a portfolio split between shares, bonds and a small amount of alternative sources such as property is a popular way to put a portfolio together. However, there are risks to all asset classes which have to be borne in mind.

There are also many investors who invest in income-paying shares for the total return benefits this brings.

Time horizon:

Our model portfolio and goal-based fund selections have time horizon and risk level guides to help you choose the right investments for you.

Power of compounding

Reinvesting the dividends you receive from shares is a proven way to improve your returns over the longer term due to the power of compounding.

If you earn 5 per cent per annum on an investment of £1000 and take the money out you will have £1500 after ten years, assuming you haven’t spent it. If you reinvest it at the same rate of return you will have £1629.

Level of risk:

Our model portfolio and goal-based fund selections have time horizon and risk level guides to help you choose the right investments for you.

Income from yield

Many investors also like the defensive nature of the stocks that typically pay a good, consistent yield: often they are in sectors such as utilities, tobacco and consumer durables which tend not to suffer as much in falling markets.

For these people equity income funds can be attractive, while investment trusts in the UK growth and income space are worth considering.

Investment trusts have the ability to smooth their dividend payouts by holding back money from one year to pay at a later date which could appeal to both sets of investors.

Solutions

We have assembled some links around this page that are relevant to investors looking for solutions to their cost of income needs, whether they be ready made solutions or 'pick your own' investments.
"Start exploring!"

The Income Generator

Model Portfolio

Aims to provide regular income without eroding original capital.

Investors who require Income instead of capital growth.

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5 BIG REASONS TO OPEN AN ACCOUNT
Square Mile adds 14 passives to Academy of Funds

Square Mile adds 14 passives to Academy of Funds

by Anthony Luzio
11:15 - 30 March 2017

Editor, Trustnet Magazine
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Model portfolios

The Accumulator

Long term growth over 20 years.

Risk level - Adventurous

The Consolidator

Medium term wealth over 20 years.

Risk level - Balanced

The Income Generator

Investment income over 10 years.

Risk level - Balanced

IDEAS TO GET YOU INVESTING
 
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