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The inheritance portfolio

Now that we have explained what our retirement income portfolios are intended to achieve and how we have arrived at the mix of assets, it’s time to present the individual holdings. 

If you are an experienced or confident investor, you may wish to use the following as a basic guide around which to adjust your existing portfolio. But we have designed these portfolios with the novice investor in mind.

Select one of the three portfolios that suits you best. You then log in to the account where your amalgamated pension is held and invest your pot in the funds in the percentages shown, ensuring of course that your one-year cash buffer is intact.

For an explanation of how to actually take income from the portfolios, see Step 4.

Target for the inheritance portfolio: an annual income of 3% of the initial portfolio value, rising with inflation, with maintained or increasing capital value in real terms, so that a large legacy can be left. Only natural income will be taken, so your capital will not be eroded by withdrawals and there should be no need to buy an annuity at any stage.

Inheritance portfolio: the holdings

Cash reserve:

One year’s worth of target income held outside the pension in an easy-access savings account or cash ISA.

One mixed-asset fund:

◆ Troy Trojan fund (12.5% of the portfolio)

Two income-focused investment trusts:

◆ City of London (12.5% of the portfolio)

◆ Temple Bar (12.5% of the portfolio)

One global stock market fund that targets growth:

◆ Fundsmith Equity fund (12.5% of the portfolio).

Two funds that invest in bonds:

◆ Janus Henderson Strategic Bond (12.5% of the portfolio)

◆ Jupiter Strategic Bond (12.5% of the portfolio)

Two funds that invest in commercial property:

◆ Standard Life Investments Property Income (12.5% of the portfolio)

◆ Regional REIT (real estate investment trust) (12.5% of the portfolio)

The following table sets out how the portfolio would look if you invested a total of £300,000 in it (in addition to your cash buffer). The table also includes each fund’s ‘SEDOL’ and ‘ISIN’ numbers, which will help you to identity the exact one to invest in (although some platforms have their own variants of the funds with different SEDOL and ISIN numbers).

<< Return to: Step 3: What to invest your pension in

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