Dear John,
Before tackling your investments, make sure you have an up-to-date will which aligns with your latest wishes and check your inheritance tax position.
Generally, a couple can pass on up to £1m inheritance tax-free, assuming you leave your house to children or grandchildren. That’s because you can combine two sets of allowances – the £325,000 nil-rate band and the £175,000 residence nil-rate band.
If you expect an inheritance tax liability, a simple way to reduce your bill is to make gifts of up to £3,000 each per tax year, which are then immediately considered outside the estate for inheritance tax purposes.
Moving on to your portfolio. Your holdings are spread across direct equities, real estate investment trusts and income-focussed investment trusts and gilts, providing your portfolio with a trailing 12-month yield of 7.5pc, which aligns with your goal to derive income from your investments.
However, 15 holdings are quite a lot to keep track of, especially the single stocks which typically require a bit more attention.
There is no magic number of investments in a portfolio but I’m sure you will want to keep things simple, giving you time to relax and enjoy retirement.
You’ve got quite a few small positions such as Jubilee Metals Group, Aberdeen Asian Income Fund, Genel Energy and BlackRock World Mining Trust, which each account for less than 1pc of your portfolio, making them too small to impact your overall returns.
Therefore, they could be worth either letting go of or you could top some of them up to build more conviction holdings.
At the other end of the size spectrum, one company Legal & General accounts for a whopping 30pc of your overall portfolio.
No doubt its more than 8pc dividend yield is highly alluring and explains why it is consistently one of the most popular stocks on the Interactive Investor platform. However, this allocation is risky, as almost a third of your wealth is tied to the fortunes of a single business.
Stocks can be very volatile and there’s no way to rule out the chance of a negative shock that heavily punishes shares. Don’t forget that a company can always cut its dividend. Since nothing is guaranteed, diversification is critical.