Income Seekers

Are you looking for First Class Investment Income and the potential for Capital Growth?

There is a way of investing that can almost guarantee you will earn a substantial dividend income from the market. It’s unique and proven!

So what’s this all about? Put simply, invest in funds that regularly pay good dividends (dividends are payments that companies make to shareholders from a portion of their profits). If you are searching for better income opportunities than this is it!!!

Dividends are always King, whatever the prevailing market climate. Good and sustainable dividend paying funds are less volatile because since the companies pay out cash, investors are more willing to hold high yielding funds through bear markets. Of course there can’t be any guarantee of that. If interest rates go down, the prices of high yield funds tend to go up because dividends attract yield-hungry investors.

FOUR TRUTHS ABOUT HIGH YIELDING DIVIDENDS

A decent initial income and then crucially an increasing income over the long term, from high quality companies around the globe, subject to market conditions.
It provides proven capital growth over the long term.
They are tax efficient investing. Since tax is paid by the fund, a basic rate taxpayer has no further tax liability. Investing under ISA is tax efficient for all.
It offers supercharged saving. If you do not require the income just yet, reinvestment of dividends is almost like owning your own money printing press!

Put all of the above together – outperformance compared to other stocks during bear markets, regular income, steady long-term growth, historical outperformance and tax savings – and you have the recipe for the perfect long-term retirement investment.

WHY INVEST THROUGH FUNDS?

In order to build a diversified portfolio, professional fund managers should be able to select stocks efficiently and economically. All decisions about where and when to invest to meet a specific objective are made by fund managers with time, resource and research capabilities to assess the prospect of particular markets and companies. It also allows you to diversify your investments within different categories, sectors, spreading the investments into hundreds of quality stocks. High yielding funds also offer protection from the prospect of higher inflation.

Since the success of attractive yield and growth depends on locating companies that offers a margin of safety, why should the search be limited to one geographical area? Logically, being able to select companies from around the world maximises the chances of finding the best value available.

We appreciate that some companies will have to cut their dividends and the overall yield (income) on the market will fall. However there are still plenty of large, well-managed companies within the UK and around the Globe that will be able to maintain their dividends even in a recession.

Stock markets do get some dark days however they don’t last forever. When the market is volatile it may not bring you excitement immediately, but should bring you wealth in the longer period. The proper way to invest in stock market is steadily over 10, 20 or even 30 years, which allows investors to view any short term set backs with a long term perspective.

The important message:

a. Don’t get shaken out of the stock market on the inevitable down days.
b. Always keep investing. If lump sum investment is not possible invest regularly, ideally monthly.
c. Do not chase over-sized returns, always check the investment fundamentals.
d. Always invest in fully researched funds.
e. Diversify as much as possible specially in line with supply and demand trend.
f. Monitor investments on a regular basis. Do not be afraid to carry out any changes.

Imagine the scenario – taking into consideration the ups and downs of the stock market.

One client has an initial investment of £100,000 monitored and rebalanced as and when required His time horizon is 20 years and he is achieving 7% net a year including dividend income. Under these circumstances his fund would reach approx £386,900.00

Another client also with the same £100,000 over 20 years invests into a Balanced Growth Fund which is neither monitored nor rebalanced. He achieves a growth of 5% net a year. Under these circumstances his fund would reach approx £265,300.00

The difference between the two is £121,600.00.

What if:

a. The initial sum was higher than £100,000.00.
b. Further regular, monthly or annual investments are added.
c. The growth achieves more than 7.00% due to growing dividend income.

We are not being over optimistic but ask any long term investor who has already invested into dividend paying shares or funds and we hope they will tell you how pleased they are.

WEALTH WARNING:
All types of investments involve risk. Our guided service allows you to benefit from the vast diversity of products and provides you with complete control and flexibility. Therefore when selecting any investment/s, key features documents should be read as this will provide all relevant risk factors involved. Past performance is not necessarily a guide to future returns. (July 2009)