Frozen interest rates near historic lows after the Bank of England base rate left unchanged at 0.5 percent for 19th Consecutive month, my real losses for savers in banks and building societies, deposits, keep up with inflation. Here are 10 tips on how to invest for income and real returns without undue risk;
Top 10 tips investing
1. Avoid financial fashion. Neil Woodford, head of investment at Invesco Perpetual, said: “I look at companies that can invest provide sustainable and long-term dividend growth, if I can a company invest when their growth potential is not reflected in the valuation of the stock, including not just risk of losing money, increases the chance of the head.
2. Do not be greedy. Anthony Nutt of Jupiter Asset Management said, “Beware of high-yield shares – gaining twice as much as the FTSE 100 – and those in which the dividend has stagnated for several years, especially if the company has a high debt level.”
3. Consider international diversification. Stuart Rhodes, manager of M & G Global Dividend Fund, said: “In the UK, five companies account for 40 percent of UK dividends, and only five companies have 25 years of consecutive dividend increases, but delivered in the U.S., boasts nearly 100 companies. That the longevity dividend growth. ”
4. Be patient. Carl Stick, manager of the Rathbone Income Fund, said: “For investors, income required in retirement and not flash-in-the-pan short-term gain, is all about the compounding of returns for the long term on a rule those companies. Best positioned is to offer these show constant returns on invested capital and visible result streams. These include the likes of Diageo, British American Tobacco and Unilever. ”
5. Seek reliability. Michael Clark, managing director of Fidelity Income Plus Fund, said: “Some sectors of the stock market does not depend on strong economic growth to deliver attractive returns for investors, for example, pharmaceutical shares sell for less than 10 times earnings with dividend yields almost 5 percent of pharmaceutical sales representatives are plenty of.. Less dependent on economic growth, and enjoy a growing market of aging population in developed regions of the world, and how the standard of living and medical care to improve in developing countries. ”
6. Read the report and accounts. Mr. Nutt said, “Look for companies with a high and growing free cash flow – that is money left after all the investments, as this electricity from the rising dividends are paid higher the free cash flow relative to the payout ratio the better..”
7. Ignore volatility. Mr. Woodford said: “In the short term, stock prices are buffeted of all possible influences, but shine through extended periods basics dividend growth is the most important factor for long-term price performance, the rest is feeling.”
8. Need to worry, Mr. Nutt said. “Remember that the profits and dividends of utility companies are at the whim of the controller Beware of companies that pay high dividends because they have gone ex-growth one. Position is not sustainable indefinitely. ”
9. Spread risk. Often, said the first rule of investing, diversification, in order to reduce the risk is particularly important for income-seekers who cannot afford to lose capital.
10. Do not forget to tax havens. Most people can return by a quarter by increasing investment by an individual savings account (ISA), the tax-free income or a pension, where contributions attract tax relief may provide initial. There is no need for all risks taken by both options; you can hold cash deposits in both.
Top 10 tips investing