Investing for income – PIBS & Infrastructure
Informed Choice chartered financial planner Martin Bamford was quoted in the Sunday Times today, in an article looking at investment sectors to consider for income.
Within the article, Martin described the risks associated with investing in Permanent Interest Bearing Shares (PIBS).
These are issued by building societies and tend to pay high dividends, which is why they can appeal to income investors.
Martin explained: “Holders of PIBS are further down the queue for repayment than many other creditors in the event that a building society is wound up. This used to be considered a remote possibility, but in current economic times poses more of a risk.”
Looking at other sectors which might appeal to income investors, Martin suggested infrastructure.
Companies in this sector are considered to be reasonably defensive as money is still spent on infrastructure projects, such as road building and power stations, even during times of recession.
Martin said: “Infrastructure funds tend to be relatively defensive, offering a good level of diversification because they behave differently to other asset classes.
“The recently-launched 3i Infrastructure investment trust offers a dividend yield of 4.8%, which is typical of the sector.”
Here at Informed Choice we regularly construct bespoke investment portfolios for investors who are seeking income.
We believe that linking individual investor objectives and risk tolerance to the selected investments within a portfolio is the key to long-term success.
Diversification to ensure an investor is not overly exposed to one asset class or sector also makes real sense to avoid taking too much risk.
Do speak to us if you need to invest capital to generate a sustainable and tax-efficient income.
Photo credit: Flickr/timo_w2s