Income strategy | A case study

Dr Jones was a retired doctor looking for someone to help her invest her savings. She wanted to generate an income to supplement her NHS pension. She also wanted to be in a position to pass on the capital to her children.

Dr Jones had already looked at a number of options. She found that bank savings accounts, whilst safe, paid very low interest rates. In contrast the wider stock market, although it offered a better prospective return, was likely to be too volatile for her. So, she was looking for a better return than that available from the bank savings accounts, but without the volatility associated with the stock market.

We suggested a portfolio made up of approximately 60% bonds and preference shares, 15% lower risk equities and 25% equity growth funds. It had generated attractive returns at much lower levels of volatility than the stock market. Please see link for past performance.

Dr Jones also asked if we could try to gradually raise the income over time. She said that this was important to her as her neighbour Mary, who had retired ten years ago, had been living off a fixed income each month. Unfortunately, Mary had found she could gradually afford fewer luxuries as prices had kept rising while her income had stayed the same. We reassured her that the strategy was designed, where possible, to gradually raise the income generated as time went by.

Dr Jones was also keen that we aimed to increase the capital sum by a small amount each year. By doing this it would mean that the value of her savings remained roughly constant when measured by what she could buy with it. It would also mean that there would be a nice sum of money to pass onto her children. Indeed because of the success of the strategy Dr Jones had already started to pass on capital to her children. Although this strategy might not be appropriate in all cases, it had worked for Dr Jones and helped give her family peace of mind.

If you would like to know more please contact us on 07838 360579 or email rf@coloma-wealth.com

Past performance is no guarantee of future returns. Investors should seek advice about their own circumstances.

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This post was written by Tim