As a skilled investor, sometimes I could lose sight to the fact that many people have a problem with financial matters generally and investments in particular. What may appear to be a straightforward concept to me, could well be problematic for others to understand. Among the aims of writing my books and setting up this website was to help regular visitors to better understand personal finance – especially the world of investments. I’ve recently been convinced that, for the vast majority of would-be investors, all they actually need is a simple, no-frills dry strategy which will provide a good potential for a decent end result. I had been lately assisting some good friends work through various investment options.
They were very aware they were dropping out by keeping almost all their keeping in a cash deposit accounts, especially with the low interest rates of recent years. I imagine there should be many people in a similar situation. Since the launch of the RDR in 2013, advisers can no longer receive commission payments from the funds they recommend so they often charge a decided up-front fee to cover the original work and suggestion. They might then charge an annual fee to review the portfolio on a regular basis. Although I am unable to give specific advice, with just a little ‘help’, my friends were able to think of a good solution really.
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They made the decision the Vanguard LifeStrategy (pdf download) funds were just what they needed. They offered a well-balanced profile of varied equities combined with some gilts and corporate and business bonds internationally. They were uncertain which broker to use – I suggested they take a look at the Monevator comparison. Although they would not be ideal for those seeking an increased natural yield, these funds seem to offer investors an extremely good low-priced option for a straightforward but effective investing solution. The account shall keep a mixture of the Vanguard stand-alone money.
The bond element (assuming you do not want the 100% collateral) will comprise a combination of UK gilts, global bonds, corporate and business bonds, and inflation-linked gilts. The equities component includes their UK all talk about tracker, global tracker, and lastly, a small contact with emerging marketplaces. 40% bonds made up of Global 19.3%, UK Gilts 5.9%, UK Corp. Appears to me that putting together a DIY investment collection does not come easier than this. You select your asset allocation, select your low cost broker, set up your automated regular direct debit – job done, can get on with your life! Do others hold this in their collection? Leave a comment and let others know very well what you see it.
If the company you purchased stopped raising its dividend you may want to reduce and/or divert the funds you were putting into that security into one that is carrying on its program of increasing their dividend each year. An organization may trim their dividend when and if this happens (and it does) my advice is never to be overly stressed to sell the stock.
Find the reason why the business is trimming their dividend. It might be to reduce debt or for the likelihood of acquisitions. The company’s dividend yield may have been around 6 percent, and all their peers dividend yields are around 4 percent. Certainly do not add to your holdings in this company, but give management a chance to see how they handle the extra cash, since they may actually have better use your money can buy, other than to pay their shareholders.