Portfolio Review 2024 – Mark Bentley
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Focussing on income instead of total return is surely not a sound strategy.
Hi Roger
You’re right, of course, that total return is what counts, ultimately.
However, my SIPP is my principal source of income. So, when I moved into “retirement mode” in 2017, I took the decision that 63% of my SIPP should be invested in stocks & bonds yielding > 4%. The rationale was that dividends/coupons were generally more stable than share prices and I didn’t want to be forced into a position where I had to sell investments to maintain my income when markets declined (as they inevitably do, from time to time).
Of course, when selecting investments, I am mindful that yield is not the be all and end all. The yield must be sustainable and preferably growing.
In theory, gains from dividends are equivalent to capital gains (when in a tax shelter). In practice, however, capital gains are subject to the vagaries of the market.
Best
Mark