Pension
Income
Investor

Book update: how the yield on our portfolios has changed

UPDATED AUG 16 2019: You can now see up-to-date yield figures for each of our three portfolios in the new tables on the relevant pages: high-Income, inheritance and compromise. These tables also include the useful SEDOL and ISIN numbers and dividend dates for each fund.

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Readers of our book, Your Retirement Salary, may be wondering whether the yield figures quoted there for our three portfolios have changed since publication.

The answer is: yes, but only very slightly.

Our book included three portfolios that readers could consider as possible ways to invest their own pot of retirement savings in order to generate income, or to adapt to their own needs.

The first, called our “high-income portfolio”, was designed to deliver a high income from “natural” sources such as dividends and bond interest, but with a view to investors topping up that natural income by making gradual sales of some of their actual assets, to the tune of no more than 1% a year.

The second, our “inheritance portfolio”, was designed to preserve and ideally grow capital, with less emphasis on a high level of natural income. This portfolio might be suitable for those who want to leave a large inheritance for the next generation.

Our third basket of funds, the “compromise portfolio”, was intended to provide a high level of natural yield, which would not be topped up with gradual sales of assets. The capital, it is hoped, could therefore be passed on eventually  to children but generate a good income while the retired saver was alive.

The yield figures printed in our book for these portfolios were compiled on Feb 28 2019. Here is where they stand in late August 2019:

High-income portfolio: 4.7% (was 4.82%) 
Inheritance portfolio: 3.7% (was 3.85%)
Compromise portfolio: 4.7% (was 4.82%).

Note that we have decided to quote figures to one decimal place because yield figures change all the time as share prices and fund prices vary.

Note also that the figures for the high-income and compromise portfolios are the same. This is hardly surprising: the two portfolios are currently identical. However, they may differ in future if we change one or other according to new circumstances. The withdrawal strategy already differs for the two funds, of course, given that the high-income portfolio is designed to be used with regular asset sales and the compromise portfolio is not (at current yield levels at least).

All three current yield figures are high by historical standards and we cannot expect them to last for ever. We intend to keep this website updated with current figures. While high yields continue, however, there may be less need to top up natural income with gradual sales of assets.

Reducing these asset sales, perhaps to bring the total income from the high-income portfolio to 5% a year, would help to keep the pot sustainable. Currently, taking all the natural income and topping it up by selling 1% of assets a year would produce a total annual income of 5.7%.