Taking income from investments
Two ways to approach your income-based strategy
There’s more than one way to draw a regular income from your investments
As always, we need to start with your goals. Because the best way to take an income from your investments will depend on the reason why you’re doing it.
When you’re looking to draw a regular income, it’s easy to hear ‘income-based investment strategies’, and assume that’s what you need. But that might not be true.
If you want to supplement your income, live on your investments, or achieve a more comfortable lifestyle, there might be better ways than prioritising dividend yields. We can help you map it all out in your lifetime financial plan.
Alternatively, if you’re planning for inheritance tax or funding a trust, dividend income might be exactly what you need. Happily, we can help in both cases.
On this page, we’ll outline your key options and share a little about our income-based investing arrangements. As ever, your Financial planner will always be happy to explain in more detail.
Generating an income from investments – two ways:
Income-based investment strategy
Classically, income-based strategies look for high dividend potential. This can be useful for inheritance tax planning, where gifts must be made from income. Some trusts also have restrictions about how the beneficiaries can be paid. For this we will recommend one or more income-based funds or could recommend you to a specialist investment manager. It depends on your personal situation. (You can read more about this below.)
Growth investing, fixed withdrawals
Unless you specifically need dividend income, you might be better off drawing a regular amount from a growth investment strategy. Companies that generate high dividends usually grow more slowly than those that don’t, and you could well find you can meet your income needs without decreasing your investment capital overall. Dividends can be unpredictable, too – so if you need a fixed, regular income, this could be a better option. Your Financial planner can map it out and see what’s realistic for you.
Learn about fixed income investments
Chartered Financial Planner Kevin Stoyle chatted with our Head of Investments, Mashud Rahman. They discussed common questions our clients ask about how fixed income investments work, and where they might fit in your investment portfolio.
You’ll find more explanatory videos on our Investments Hub page.
Hand-picked, low-risk funds
To help us serve clients who need an income-based strategy, we’ve chosen a combination of funds from Schroders and Legal & General.
These work well together and give us a mix of management and cost levels. Our recommendation for you will also depend on whether you need to take money monthly, or quarterly.
Crucially, these funds offer low-risk, diversified investment styles. Just like our growth, defensive, and sustainable funds, they were chosen by our investment management committee after an exhaustive selection process. And we manage, scrutinise, and reselect those partnerships in exactly the same way.
Could investing for income be right for you?
Chat with a Financial planner