Equity Income Funds
Discussion
Sure this is more of a question for a FA but want opinion of you peeps who appear to deal in this.
Was reading this piece the other day and it got me thinking:
http://www.theguardian.com/money/2016/aug/12/low-i...
Currently we're putting aside an amount every month for our child. This is with the Halifax in a children's savings account with a favourable interest rate, that at the end of the year moves into a standard children's savings account with a low interest rate. Therefore we have some savings that won't get touched doing not a great deal. I still want to keep the monthly payments to Halifax but wondering if the accumulated amount is worth moving into an investment fund.
My questions are:
How simple is it to get into a equity income fund? OK I understand you just sign up and invest but are there any gotcha's?
Can we use it like a savings account i.e. just put the money in and leave it to gain interest or do we have to manage the fund?
Like the children's savings account, can it be opened in my child's name but have me or my wife as a nominate signatory? Is there any benefit to being in my child's name?
Hopefully pretty simple questions and mainly come around because the last few paragraphs of the article mention researching funds, which I understand but gives the impression I need to look at more than yield.
Was reading this piece the other day and it got me thinking:
http://www.theguardian.com/money/2016/aug/12/low-i...
Currently we're putting aside an amount every month for our child. This is with the Halifax in a children's savings account with a favourable interest rate, that at the end of the year moves into a standard children's savings account with a low interest rate. Therefore we have some savings that won't get touched doing not a great deal. I still want to keep the monthly payments to Halifax but wondering if the accumulated amount is worth moving into an investment fund.
My questions are:
How simple is it to get into a equity income fund? OK I understand you just sign up and invest but are there any gotcha's?
Can we use it like a savings account i.e. just put the money in and leave it to gain interest or do we have to manage the fund?
Like the children's savings account, can it be opened in my child's name but have me or my wife as a nominate signatory? Is there any benefit to being in my child's name?
Hopefully pretty simple questions and mainly come around because the last few paragraphs of the article mention researching funds, which I understand but gives the impression I need to look at more than yield.
Zaim said:
Sure this is more of a question for a FA but want opinion of you peeps who appear to deal in this.
Was reading this piece the other day and it got me thinking:
http://www.theguardian.com/money/2016/aug/12/low-i...
Currently we're putting aside an amount every month for our child. This is with the Halifax in a children's savings account with a favourable interest rate, that at the end of the year moves into a standard children's savings account with a low interest rate. Therefore we have some savings that won't get touched doing not a great deal. I still want to keep the monthly payments to Halifax but wondering if the accumulated amount is worth moving into an investment fund.
My questions are:
How simple is it to get into a equity income fund? OK I understand you just sign up and invest but are there any gotcha's?
Can we use it like a savings account i.e. just put the money in and leave it to gain interest or do we have to manage the fund?
Like the children's savings account, can it be opened in my child's name but have me or my wife as a nominate signatory? Is there any benefit to being in my child's name?
Hopefully pretty simple questions and mainly come around because the last few paragraphs of the article mention researching funds, which I understand but gives the impression I need to look at more than yield.
I'm sure there are Child / Junior ISAs or equivalent that you can set up for this purpose.Was reading this piece the other day and it got me thinking:
http://www.theguardian.com/money/2016/aug/12/low-i...
Currently we're putting aside an amount every month for our child. This is with the Halifax in a children's savings account with a favourable interest rate, that at the end of the year moves into a standard children's savings account with a low interest rate. Therefore we have some savings that won't get touched doing not a great deal. I still want to keep the monthly payments to Halifax but wondering if the accumulated amount is worth moving into an investment fund.
My questions are:
How simple is it to get into a equity income fund? OK I understand you just sign up and invest but are there any gotcha's?
Can we use it like a savings account i.e. just put the money in and leave it to gain interest or do we have to manage the fund?
Like the children's savings account, can it be opened in my child's name but have me or my wife as a nominate signatory? Is there any benefit to being in my child's name?
Hopefully pretty simple questions and mainly come around because the last few paragraphs of the article mention researching funds, which I understand but gives the impression I need to look at more than yield.
You would just invest a lump sum and / or regular amounts into the fund which would be managed on your behalf, according to the investment strategy that you choose.
I think there are tax benefits for the Junior ISA (presumably set up in the child's name), not sure how this differs from a normal ISA - one of the helpful resident advisors will be along shortly!
Researching funds is primarily deciding what level of investment risk you want to take. On that note, one question - if you're looking for growth rather than income from your investment, why do you want an equity income fund?
Edited by sidicks on Sunday 14th August 21:24
Zaim said:
Good point. From the article I just looked at the headline interest rate.
Like anything I need to shop around and understand what's available.
Headline interest rates would be relevant if you wanted the income (but need to recognise that higher income might mean lower (or negative) capital return!Like anything I need to shop around and understand what's available.
I put in £80 per month for my 3 step daughters, 3 grandchildren and my wife. It is put into a pension for each on the Transact platform via my IFA.
We choose suitable funds for the money as and when there is sufficient money available.
The Govt tops this £80 up to £100 every month.
They cannot touch their pots until 55 at least.
Any use to you?
We choose suitable funds for the money as and when there is sufficient money available.
The Govt tops this £80 up to £100 every month.
They cannot touch their pots until 55 at least.
Any use to you?
I'm sure you understand this, but because of your wording I think it is worth highlighting.
Equity Income Funds do not pay interest or work like a savings account in any way (though you can invest in one just as simply as a savings account). They pays dividends from a portfolio of shares (which is managed for you).
They invests in shares that have a high level of income. So you have the same capital risk as any share based fund. The main principle is that shares often pay a higher level when the share price is low (to attract investors) and when the share price increases sufficiently the dividend is usually reduced. So your fund manager is buying a portfolio of good value stocks with a high dividend yields and as the share price rises/dividend falls with any particular individual stock they will sell this stock and purchase another to start over again. That is the theory anyway.
Because of this they are frequently used for growth (with the income reinvested) and then later on for income from the yield on the (hopefully much larger) sum.
I personally really like them and suggest you take a look at Neil Woodford as a fund manager. His track record is excellent.
You can invest lump sums and regular contributions and hold them tax free in an ISA/Junior ISA/SIPP. You can take money out whenever you like but as with all stock market investments the fund value can go down as well as up so they are medium to long term investments.
Equity Income Funds do not pay interest or work like a savings account in any way (though you can invest in one just as simply as a savings account). They pays dividends from a portfolio of shares (which is managed for you).
They invests in shares that have a high level of income. So you have the same capital risk as any share based fund. The main principle is that shares often pay a higher level when the share price is low (to attract investors) and when the share price increases sufficiently the dividend is usually reduced. So your fund manager is buying a portfolio of good value stocks with a high dividend yields and as the share price rises/dividend falls with any particular individual stock they will sell this stock and purchase another to start over again. That is the theory anyway.
Because of this they are frequently used for growth (with the income reinvested) and then later on for income from the yield on the (hopefully much larger) sum.
I personally really like them and suggest you take a look at Neil Woodford as a fund manager. His track record is excellent.
You can invest lump sums and regular contributions and hold them tax free in an ISA/Junior ISA/SIPP. You can take money out whenever you like but as with all stock market investments the fund value can go down as well as up so they are medium to long term investments.
Jockman said:
I put in £80 per month for my 3 step daughters, 3 grandchildren and my wife. It is put into a pension for each on the Transact platform via my IFA.
We choose suitable funds for the money as and when there is sufficient money available.
The Govt tops this £80 up to £100 every month.
They cannot touch their pots until 55 at least.
Any use to you?
UI'm seriously considering this for my daughter- what happens if they die before they are 55? is the money lost?We choose suitable funds for the money as and when there is sufficient money available.
The Govt tops this £80 up to £100 every month.
They cannot touch their pots until 55 at least.
Any use to you?
A good summary from Julian. It's worth remembering too, we all still have a dividend allowance of £5000 pa on top of our personal annual allowance. If you're taking income from investments and are a higher rate tax payer (especially so), having an income stream via dividend units instead of accumulation ones is a very useful string to any portfolio bow.
I was planning on opening a junior isa for my newborn but didn't like the fact you were restricted to it being there until she was 18.
I ended up just opening another S&S fund with Cavendish under my name & paying monthly into that. OK it's not in her name & I'll need to watch the limits but at least it's flexible. If I want to take it out and stick it into a pension/other investment vehicle I can
I ended up just opening another S&S fund with Cavendish under my name & paying monthly into that. OK it's not in her name & I'll need to watch the limits but at least it's flexible. If I want to take it out and stick it into a pension/other investment vehicle I can
PugwasHDJ80 said:
UI'm seriously considering this for my daughter- what happens if they die before they are 55? is the money lost?
Never really given thought to the kids dying but I'm sure it will simply form part of their estate along with their house or other assets. They own it and all tax relief is at their rate not mine / yours.
^^^ I think that's all changed. These days pensions can be left tax free to others in the family so long as (1) the deceased is under 75, and (2) it goes into the recipient's own pension pot. I'm no expert on this. Check these links,
http://www.thisismoney.co.uk/money/pensionfree/art... but .
http://www.hl.co.uk/pensions/retirement-options/pe...
http://www.thisismoney.co.uk/money/pensionfree/art... but .
http://www.hl.co.uk/pensions/retirement-options/pe...
Be mindful of falling foul of IHT409, if the view is taken that you made contributions knowing that you were ill and/or likely to die. If you do so within two years of making unusual or nusually high contributions into your pension or carry out other actions such as transferring away from a DB scheme, the steely gaze of the taxman may fall unkindly on your wilting executors.
https://www.gov.uk/hmrc-internal-manuals/inheritan...
https://www.gov.uk/hmrc-internal-manuals/inheritan...
We were in a similar position a number of years ago and invest £100 a month into the Foreign and Colonial Investment Trust savings scheme (A bare trust, basically) for each of our two children, now 15 and 13. Charges are very low and performance seems to have been ok although I haven't benchmarked it. The kids each have about £18k, the elder has another three years before she goes to uni and the funds will help defray some of the costs. Glad I did it, and I'll keep doing it i hope.
williaa68 said:
We were in a similar position a number of years ago and invest £100 a month into the Foreign and Colonial Investment Trust savings scheme (A bare trust, basically) for each of our two children, now 15 and 13. Charges are very low and performance seems to have been ok although I haven't benchmarked it. The kids each have about £18k, the elder has another three years before she goes to uni and the funds will help defray some of the costs. Glad I did it, and I'll keep doing it i hope.
Well done you, and best wishes to your family.I've chosen the pension route as I don't want the grandkids to get their hands on it for another 60 years. I won't be around but I know a man that will do me a cheap coffin!
The attached is well worth a read (and a watch) in my view. http://monevator.com/this-former-hedge-fund-manage...
I'm going to buy this guy's book but he makes some excellent points particularly when it comes to fees.
On the back of this I put a small amount into the Legal & General International Index Trust (accumulation) as I already have a lot of UK exposure.
I'm going to buy this guy's book but he makes some excellent points particularly when it comes to fees.
On the back of this I put a small amount into the Legal & General International Index Trust (accumulation) as I already have a lot of UK exposure.
Ginge R said:
A good summary from Julian. It's worth remembering too, we all still have a dividend allowance of £5000 pa on top of our personal annual allowance. If you're taking income from investments and are a higher rate tax payer (especially so), having an income stream via dividend units instead of accumulation ones is a very useful string to any portfolio bow.
Just to clarify, if you have a stocks & shares ISA that provides dividends, do these contribute to the above allowance, or does the ISA wrapper exempt them?Gassing Station | Finance | Top of Page | What's New | My Stuff