The good news is you still have time to build a healthy pot of money, by investing tax-free through your Stocks and Shares ISA allowance. And there’s plenty of opportunities out there right now.

As ever, there are risks, such as Middle East tensions and the global trade war, but world markets nonetheless rose more than 25% last year. Equities typically shrug off short-term problems like these, to post strong growth in the long run.

I think investment trusts are a good way to invest, as they tap into global growth and income opportunities. Here are two that could help you retire on a rising passive income.

Edinburgh Investment Trust

Edinburgh Investment Trust (LSE: EDIN) invests in the UK equity income sector, which means it aims to generate both capital growth and a rising dividend income, in this case from investing in the FTSE All-Share. Its long-term performance has been strong, delivering a total return of 156% over 10 years, according to the Association of Investment Companies.

There’s another attraction too. By investing in a spread of income-generating stocks, such as BP, Royal Dutch Shell, and Legal & General Group, Edinburgh generates a healthy yield of 4.55% a year. That’s far more than you’ll get on a Cash ISA, where even the best buy rates pay little more than 1%.

UK shares have underperformed global stock markets because of Brexit uncertainty, and I think they could now start catching up. This could make today a good time to buy this fund, ahead of the next surge in share values.

A big attraction of UK equity income investment trusts is they aim to increase their dividend payout every single year. Edinburgh has lifted its for the last 14 years. You can reinvest those dividends for growth and, when you retire, have a growing, passive income to live off.

Murray International

As well as investing in the UK, it could pay to spread your wings internationally. Murray International Trust (LSE: MYI) can help you do that, because it’s a global fund across Asia Pacific, North America, emerging markets and Europe, with less than a 10th of its portfolio invested in the UK.

Top holdings include renowned companies such as Taiwan Semiconductor, Swiss pharmaceutical firm Roche Holdings and US tobacco giant Philip Morris International, which means it could balance the UK-focused Edinburgh investment trust nicely in your portfolio. 

Murray has also delivered a strong performance, with a total return of 150% measured over 10 years and, better still, offers a generous income. It currently yields 4.21% and has a great long-term track record of increasing its dividend every year.

So if you’re 40 and don’t have any savings, these two trusts could help you play catch-up and build a passive income for a happier retirement.

The post No savings at 40? I’d buy these 2 investment trusts to retire on a rising passive income appeared first on The Twelfth Magpie.

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Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

And if you are looking for somewhere to invest your funds, I’m going to take a look at two of my favourite dividend investment trusts and outline why I think they deserve a place in your Stocks and Shares ISA. 

Global finance 

My first investment trust pick for income investors is Law Debenture Corp (LSE: LWDB). This company’s a bit of an anomaly in the investment trust world because it’s essentially a financial services business with an investment fund attached. 

The financial business provides essential management services to pension providers and asset managers. This side of the company is growing rapidly. Revenues increased 9% in 2018 and management is expecting this trend to continue into 2019, which should support further dividend growth. 

Indeed, this side of the business has helped the investment trust build a 40-year track record of dividend increases. During this period, the firm has delivered annualised dividend growth of 4.5%. On top of the investment business, there’s the group’s investment trust portfolio, which is currently comprised of leading blue-chip FTSE 100 dividend stocks. 

Management has followed a similar investment strategy for the past few decades and, over the past 10 years, growth of the portfolio combined with the growing investment services business has produced a total share price return for investors of 240.3%. That means £1,000 invested in Law Debenture 10 years ago would have been worth £3,4351 at the end of 2018. 

At the time of writing, the shares support a dividend yield of 3.1% and trade at a discount to the net asset value of around 7%. The annual management charge is approximately 0.45%. 

International income 

Law Debenture’s portfolio is very UK-focused. Considering all of the uncertainty facing the UK right now, I think it’s also sensible to have some exposure to international stocks, and Murray International Trust (LSE: MYI) meets this aim perfectly, in my view. 

Murry International’s portfolio is invested around the world, predominantly in North America and Asia Pacific. Only 10% of the portfolio is invested in UK equities, and the rest is spread globally, invested in cash-rich, high dividend stocks such as Mexican airport operator Grupo Aeroportuario del Pacífico. 

Other global income investments included Taiwan Semiconductor, Unilever Indonesia and Chilean Chemical company Sociedad Química y Minera. 

This global income portfolio provides a steady income for the trust, which it then returns to shareholders. The current dividend yield is 4.4%. 

The one downside of this international portfolio is that it’s slightly more expensive to maintain than a domestic-focused investment trust. Murray International’s annual expense ratio is 0.7%, and the shares currently trade at a premium to net asset value of 3.5%. 

Still, I think it’s worth paying the extra money to get exposure to a broad basket of international income investments, managed by a highly experienced team. The firm’s senior investment manager is Bruce Stout who’s been investing internationally since 1987. That’s why I’m buying Murray alongside Law Debenture for my ISA today.

The post 2 dividend investment trusts I’m buying for my ISA appeared first on The Twelfth Magpie.

More reading

• The £15bn defence splurge that could send UK shares soaring in July
• Up 446% in 12 months! What’s next for the Ceres Power share price?
• How much is needed in an ISA to unlock £1,220 of passive income a year?
• Forget meal deals! Here’s how £8 a day could be worth £357,000
• Up 132% and surging, how is this FTSE 250 share STILL so cheap?

Rupert Hargreaves owns shares in Law Debenture Corp and Murray International Trust. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

First step

I reckon the first step to successful investing is figuring out your objectives and risk tolerance. You need to define your goals and objectives before you are able to make good decisions on which investments to choose. What you’re investing for, the risks you’re willing to take and your investment horizon can all affect how much you’ll need and which options you should pick.

If you’re just starting out, you’ll probably want to consider investment trusts first. Shares in such trusts are traded just like other shares. But as a fund, investment trusts offer the advantages of being run by a professional fund manager and diversification from buying into a well-balanced portfolio of investments.

Growth and income

If you’re looking for a combination of growth and income, then the Lowland Investment Company (LSE: LWI) might be a great first pick.

This fund invests in a broad spread of predominantly UK companies, with the aim of giving shareholders a higher than average return with growth of both capital and income over the medium-to-long term.

With 121 holdings as at 31 December, the fund invests in a diversified portfolio of companies of differing sizes. Normally, not more than half of its portfolio by value is made up of the largest 100 UK companies, with the balance invested in small- and medium-sized firms.

Outperformance

The fund has a strong track record of outperforming the benchmark FTSE All-Share Index. For the five years to the end of December, the net asset value (NAV) of the trust increased by 79%, easily beating the performance of the FTSE All-Share index, which generated a return of 63% over the same period.

At the time of writing, shares in the trust offer investors an attractive dividend yield of 3.5% and it trades at a slight discount to its net asset value of 6%.

Global diversification

Investors seeking geographical diversification may instead consider the Murray International Trust (LSE: MYI)

Launched in 1907, this fund has invested in a well-balanced portfolio of UK and international shares, with the aim of delivering both growth and income to shareholders. Its investment approach is to seek undervalued, but quality, companies that have a solid business focus, sound management, a strong balance sheet and a good corporate governance record.

Fixed income investments

Equities dominate its portfolio, with an 83% weighting, but the trust also owns a number of fixed income investments, which account for a further 16% of its portfolio. This gives the Murray International Trust even more diversification than some simple equity funds, since the price of bonds generally do not move in tandem with the stock market.

The fund’s top five equity holdings are: Taiwan Semiconductor Manufacturing (4.8%), Quimica Y Minera (4.3%), Groupo Asur (4.2%), British American Tobacco (3.8%) and Unilever Indonesia (3.4%).

This fund could also appeal to income seekers, as shares in the trust currently offer a yield of 4.2%.

The post Looking for your first investment? Consider these growth and income trusts appeared first on The Twelfth Magpie.

More reading

• The £15bn defence splurge that could send UK shares soaring in July
• Up 446% in 12 months! What’s next for the Ceres Power share price?
• How much is needed in an ISA to unlock £1,220 of passive income a year?
• Forget meal deals! Here’s how £8 a day could be worth £357,000
• Up 132% and surging, how is this FTSE 250 share STILL so cheap?

Jack Tang has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.