For other option see post below.

The SNOWBALL will earn repeatable income this year of around £11,000 on invested capital of 100k, no new funds will be added to the SNOWBALL, only the income earned. The actual income figure will be higher as it includes some special dividends. Whilst no dividend is 100% secure, some dividends are more ‘secure’ than others.

Annuity

Option take out an annuity currently yielding 7% but you have to surrender your capital. A huge gamble as you are relying on a known unknown, interest rates at the time your retire.

Canada Life figures show the 65-year-old with a £100,000 pension pot could buy an annuity linked to the retail price index (RPI) that would generate a starting annual income of £3,896. That’s up from £2,195 in the New Year following a 77% spike in rates this year.

Oct 22

The 4% rule.

If interest rates are low at your retirement date you could use the 4% rule.

The SNOWBALL has a comparison share VWRP, where 100k of capital invested on the same date as the SNOWBALL is valued at £158,963. Not too shabby, so could be an option for the tax free part of your pension retirement plan. Not advice DYOR as buying near the end of a major bull run could be very expensive.

The equivalent income would be £6,358.00.

Let’s jump forward ten years to a retirement date.

The SNOWBALL will have income of 20k plus, the amount is predictable, the time scale may vary. Once you have achieved the income in your plan, you could re-invest your dividends into ‘safer’ Trusts, like Dividend Heroes especially when Mr. Market is helpful, or higher coupons Gilts where the income is risk free, if you hold to maturity. Or invest in REIT’s where the values fluctuate but the income is ‘secure’.

A pension of 20%.

To receive the same income using Rule4 VWRP’s value would have to be £500k. GL with that gamble.

If you invest for the long term, hopefully you will have one or two Trusts that you can withdraw your capital from, re-invest that capital in higher yielders, it may have to be ETF’s and continue to receive income from at a cost of zero, zilch, nothing.

Remember no dividend is completely ‘secure’ but some dividends are more secure than others. The more shares you own the bigger the risk of owning a clunker but that risk is even bigger if you own only a couple of shares.

The SNOWBALL aims to own around ten positions but as the SNOWBALL matures the number of positions could increase.