TAKING THE PLUNGE

You may remember that I wrote to Alastair asking him how I should invest my money, thinking that as Chancellor of the Exchequer he would know everything. He told me "Moneybox Man knows everything!" and last week very kindly gave me and Miss Muddled a lift to Ullapool in the Queen's helicopter. It was a wonderful seminar (you were terrific doing the Highland Reel)  and I now want to invest my money. But how do I actually start? How do I take the plunge? Bewitched, Beckenham

Well, Bewitched Beckenham, the first thing to do is go to the Alliance Trust on line here and open a stocks and shares ISA for the current financial year. You don't have to put any money into it yet, but if you go through the formalities of opening it, you will be in a position to move swiftly when you want to (just as you did when Wee Willie Killicrackie of Dundee made those unfortunate advances last week at the buffet). All you have to do at the Alliance website is click "New Client" then click "ISA stocks and shares", confirm that you do not have a financial adviser - and fill in the form. If you were over 50 you would be allowed £10,200 for this year, but as you are clearly nowhere near 50 you will only be allowed £7,200.

When this account is opened you will be able to put the money in when you like (before April 5) very simply by debit card - and then when you feel like it you will be able to buy something!

I will be happy to talk you through that when you are ready. Or Alastair will. Or Wee Willie, of course.

After April you will be able to put a further £10,200 in for the next financial year.

TEN TRUSTS FOR STORMY WEATHER

ULLAPOOL SEMINAR PICKS ITS TRUSTS FOR THE LONG TERM

Ten trusts that will give you a decent income, long term capital growth, and protect your savings in stormy weather! There was warm applause in the Bonny Prince Charlie Function Room as Alastair announced the winners


INCOME WITH GROWTH IN THE LONG-TERM

Temple Bar

Edinburgh

Finsbury Growth and Income

Henderson New Star Asian Dividend Income Unit Trust


Temple Bar has increased its dividend every year in the last 25 years, and has an excellent growth record under manager Alastair Mundy. Like the Edinburgh Trust it is cautiously managed, and in both cases you get a sizeable chunk of Britain's biggest and most well-run companies - Glaxo, BP, Vodaphone, etc.

Edinburgh is a billion pound long-established trust now in the hands of Neil Woodford,  manager of the hugely successful Perpetual High Income Fund. The research resources behind Perpetual High Income are therefore available at no extra cost.

Finsbury is a much smaller UK trust with an individualist flavour. "The portfolio is full of companies whose products taste good – such as Diageo, Dr Pepper, Fullers, Marstons, Unilever and Youngs” says dashing manager Nick Train, who recently made a killing out of Cadburys.

Henderson Asian Dividend Income UT is the only unit trust to be selected. The seminar would have gone for Henderson Far East Income Trust, but this is so successful that it is currently at a premium of nearly 4%. Last autumn Henderson launched the Asian Dividend UT with the same manager, Mike Kerley, and the same remit. It has an initial charge of 5% but this can be reduced to 0.25% if bought on the Alliance Platform. It has an annual charge of 1.25%, but the agents' commission element will paid directly to you, again if bought via Alliance. (Fund symbol is EXPG)


GROWTH FROM THE WORLD'S ECONOMY


Murray International

Scottish Mortgage

Templeton Emerging Markets

Scottish Oriental Smaller

Hansa A

Murray International is run by sturdy Bruce Stout.  He earlier told the seminar: "Following last years stock market rally of relief, this year stock markets must deal with reality. The withdrawal of unorthodox policies and tightening monetary policy at a time of such economic fragility is bound to cause uncertainty. A solid buy-and-hold approach ignoring short term fluctuations, will remain central to our investment strategy going forward" (Applause)

Scottish Mortgage is a big, big internationalist trust with £1890 million of capital spread round the world. It has over 50% invested in Europe and the US, and is a big supporter of companies like Amazon and Google.  It has an excellent manager in James Anderson. It has very low expenses and a decent 2% dividend.

Templeton Emerging Markets is run out of Singapore by Dr Mark Mobus. It has a superb long term record. Co-manager Tom Wu works out of Hong Kong. The trust is big in China and Brazil.

Scottish Oriental is run by Sue Rippingale out of Hong Kong (see previous post) and is the only investment trust managed by the Australian First State Group. It specialises in smaller companies, where there is the maximum opportunity for growth. Expect it to be highly volatile - it has fallen from 434p a share to 389p in the last few weeks.

Hansa looks after the investments of the Solomon Family, and takes up large positions in companies where it thinks there is money to be made. It has a major holding in Oceans Wilsons, an emerging markets company that runs the ports of Brazil (and donates each year to a charity to rescue abandoned children in Rio). Hansa has had a bad couple of years, and is at an unusually wide discount.

PROPERTY

TR PROPERTY

Invests in property companies across Europe.

The ten trusts listed above give an average yield of 3.3%. A £100,000 portfolio therefore would return £3,300 a year in dividends.

Moneybox Man is hooked on yield. He would add two trusts out of the following.


Invesco Leveraged High Yield

Invesco Leveraged High Yield has a dividend of 8.6%. The value of the shares, however, has fallen by over 50% in the last decade. Yet look at the last 12 months - it's shares are up by 110% but its NAV by 160%. Volatile, but with terrific managers, take the dividends gratefully and don't pay attention to the share price (which anyway could easily double in the next decade).

Henderson High Income

Henderson High Income has 25% in bonds, and the rest in high-yielding equities, which inevitably means Vodaphone, BP, etc. It's well managed, and has an average risk rating and an excellent yield of 7.25%

Henderson Diversified Income

Covered in a recent post, this has an income of 7% from bonds.

Adding two of these high yield trusts will boost income significantly, and generally make life more interesting. A portfolio of £120,000 would yield 4.1% - that's £4,100 a year in dividends

A QUOTE FOR A STORMY DAY

"Picking developed world currencies now is like being asked to choose between horses in a glue factory – they are all knackered"
Recounted by Nick Train who manages Finsbury Growth and Income - a trust with a portfolio "full of companies whose products taste good". Finsbury has lots of shares in Cadburys, and the seminar enjoyed a lavish distribution of creme Easter eggs as they watched markets across the World fall, in the TV Lounge of the Tannochbrae Inn. Outside the skies over Ullapool were dark and stormy. Soon it will be time to invest!