Where I’d invest money to get a monthly income

first_imgWhere I’d invest money to get a monthly income “This Stock Could Be Like Buying Amazon in 1997” When you retire, a reliable monthly income will probably be one of your top priorities. After all, you’ll need to replace your employment income.The traditional choice is an annuity. These provide a  guaranteed income, but annuity rates are low and choosing this option means you lose control of your capital forever.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…An alternative choice is to invest your pension fund directly to provide a monthly income. By doing this you keep hold of your capital and retain the option to spend it or — potentially — leave it to someone else.Today, I want to explain what the options are for UK investors seeking a monthly income from the stock market. I’ll also discuss how I’m building my own retirement income portfolio.Choosing a fundThere are lots of UK income funds available to investors, but only a small number of these offer a monthly income.Most funds will pay dividends quarterly or, more often, every six months. For example, fund supermarket Hargreaves Lansdown lists more than 70 UK equity income funds, but only 10 which pay income monthly.If I wanted a monthly income fund, I might consider the Threadneedle UK Monthly Income fund, which has a long track record and currently offers a 4.8% yield.For a higher yield, the Fidelity Enhanced Income fund (6.5%) might be worth a look. However, it’s worth remembering that funds with names including enhanced, maximiser or booster are generally structured so they provide a higher yield today but won’t generate any capital gains.What I’d really doTo be honest, I probably wouldn’t buy a monthly fund. There are two reasons for this. The first is you get a much bigger choice if you’re willing to consider funds which pay every three or six months.The second reason is I think it’s pretty risky to rely on monthly fund payments directly for your living expenses.What most financial advisers recommend is that you should build up a buffer of perhaps 12 months’ living expenses in a cash savings account. You then take your monthly income from this account while allowing your investment income to build up for the following year.Doing this means if markets crash, your monthly income will be safe for another year. This provides time for the market to recover and protects you from the risk of having to be a forced seller, accepting low prices for instant cash.I’m buying sharesI think there are some attractive income funds available at the moment. But I’ve chosen to buy dividend shares directly to build an income portfolio for my retirement. What I’m looking for are large businesses with good cash generation and attractive dividend yields.Examples of the kind of companies I’d buy for a long-term income in today’s market are Royal Dutch Shell (6.3% yield), HSBC Holdings (6.7%), GlaxoSmithKline (4.4%) and Aviva (7.6%).Stocks such as these can be found in many top income funds. But if you’re prepared to do a little research, you can invest directly and save yourself the annual fund management fees. That’s what I’m doing. Enter Your Email Address I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee.center_img Image source: Getty Images. Our 6 ‘Best Buys Now’ Shares Simply click below to discover how you can take advantage of this. Roland Head owns shares of Aviva, GlaxoSmithKline, and Royal Dutch Shell B. The Motley Fool UK owns shares of and has recommended GlaxoSmithKline. The Motley Fool UK has recommended Hargreaves Lansdown and HSBC Holdings. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Roland Head | Saturday, 18th January, 2020 See all posts by Roland Headlast_img read more

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