This week in MoneyWeek: the investment trusts that consistently raise their dividends; how to avoid “lethal” stocks; and how to take equity out of your home.
Plus, Matthew Lynn on the desperate need to make free markets work for the younger generation; how to handle student debt; and a pensions victory for same-sex couples. All that, and our usual roundup of political, economic and markets news, share tips and in-depth analysis can be yours for just £12. For that, you’ll get 12 issues of MoneyWeek magazine delivered straight to your door, full access to the MoneyWeek website and the smartphone and tablet app too. Why not sign up now?
The investment trusts to buy for a reliable income
Investment trusts are one of our favourite investment vehicles here at MoneyWeek. Essentially, they are companies that invest in other companies. And because they are listed, you can buy and sell shares in them as you would any other company. Many of them have an impressive record of paying out consistent dividends, which is attractive for income investors. But there is often a catch. Because our prolonged era of low-interest rates and slow growth has made it difficult to track down decent dividend-paying stocks, an alarming number of investment trusts are drawing on capital reserves to boost dividends. This isn’t necessarily a good idea.
“The difficulty arises from the potential lack of transparency”, says my colleague Sarah Moore in this week’s cover story. In a rising market, the value of the investments the trust holds is rising too, so “the nibbling away of capital gains is not as obvious”. The trouble comes when markets weaken and the underlying portfolio falls too. Sarah explains how to identify when a trust is using these tactics, how to sidestep it, and how you can profit. And she picks seven investment trusts that have enjoyed 50 years of rising dividend payments. Find out what they are with a subscription to MoneyWeek magazine now.
How to avoid lethal stocks
If you’d bought shares in support services group Carillion a couple of weeks ago, you’d be sitting on a 70% loss. “Very few stocks recover from that sort of collapse”, says our executive editor, John Stepek, “and certainly not on a timescale that anyone nursing that sort of loss would feel happy about.” So how do you avoid getting yourself in that situation in the first place? On his analysis page this week, John points out three red flags that “could have alerted investors to Carillion’s woes”. Find out what they are in this week’s MoneyWeek magazine.
We must find a way to make the free market work for younger people
With the Conservative party “descending into chaos” and Jeremy Corbyn seeing a “surge in popularity” it’s not inconceivable that we could soon see “the most far-left Labour government since 1945” says Matthew Lynn. If we do, he says, it will be “on the back of a huge rise in support for Labour among the 20-somethings who are angry with a system that doesn’t seem to be working for them”. Young people are losing faith in a free market economy in a dramatic way. So the government and business leaders need to work out ways to give them more of a stake in the system. But how? Matthew lists four places for them to start. It’s a fairly controversial list, and it’s safe to say that not everybody will agree with all of them. Will you? Find out what they are – sign up to MoneyWeek now.
Releasing home equity, and dealing with student debt
If you borrow the full amount of student loan for a three-year undergraduate degree and you’ll leave university with a debt of £50,000 hanging over your head; almost £6,000 of that will be interest charges. Ruth Jackson looks at how to handle that, and the repayment options open to new graduates.
With property prices having risen so much in the last few years, many homeowners will have found themselves with “significant amounts of equity” in their homes. It may be possible to borrow against that, says Emma Lunn. But there are a few pitfalls. Find out what they are in this week’s magazine.
Elsewhere, David Prosser looks into the Supreme Court victory for a retired businessman that “paves the way for thousands of gay couples to claim improved retirement benefits. Max King explains why you should beware of funds issuing equity, and Chris Carter looks at t the business of collecting vintage aeroplanes. Matthew Partridge gives an update on his trades, and we look at the high cost to small businesses of going cashless.
All that, plus holidays over water, properties with follies, wine and toys, and of course, a whole bunch of share tips and investment advice and comment. Why not sign up now?