Investment Trusts or and shares

As Paul puts it, he and his wife generally have a buy-and-hold approach, with their top 10 holdings making up more than half of the joint portfolio, largely because of a process of automatically reinvesting dividends. But he wonders whether the combined portfolio is too heavily focused on income stocks. “Should we have more in the US and growth-only stocks?” he asks.

The portfolio has taken some knocks. “We are down about 70 per cent on Watkin Jones (WJG) and Strix (KETL), which is not acceptable,” Paul explains. “We have losses of around 20 per cent on Central Asia Metals (CAML) and RIT Capital (RCP). We are happy with CAML’s losses as we like the company and its dividend.”

When it comes to investment goals, Paul notes: “A 5 to 7 per cent total return would be fine as we do not need dividends to maintain our normal lifestyle. We are saving for potential care home costs primarily. However, we used dividends to pay for major items such as a car, major holidays and recently solar panels. We also take money out at Christmas.”

Paul and Helen have two daughters in their 50s, and he notes: “We want them to inherit as much as possible, and our wills set out our wishes in percentage terms as we don’t know if we need extensive care. One house passes to our daughters on the first death, using the current tax allowances.”

The couple invested in Scottish Mortgage and Greggs (GRG) many years ago and withdrew their initial investments close to recent peaks, meaning “the value in the portfolio is all profit”. Paul is happy to stick with these names, believing they will “bounce back”.

If you buy an Investment Trust and it turns out to be a clunker as long as it pays a dividend, there is a chance that you will one day print a profit.