In your 50s? I think these low-risk investment trusts are worth a look

Edward Sheldon looks at two investment trusts that are lower risk and pay high dividends, meaning they could be well suited for those approaching retirement.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Investing in your 50s is all about balance. On the one hand, you still want your investments to grow at a healthy rate above inflation over the long term, as you could potentially live for another 30 to 40 years. On the other hand, you don’t want to take on too much risk, as retirement is not far off and capital preservation is therefore important.

Today, I’m looking at two investment trusts that I believe could be ideal for investors in their 50s. Both trusts have a strong focus on FTSE 100 dividend stocks and therefore offer the potential for capital growth and income, but are also managed quite conservatively, meaning they are lower risk.

City of London Investment Trust

The City of London Investment Trust (LSE: CTY) could have a lot to offer investors in their 50s, in my opinion.

For starters, portfolio manager Job Curtis – who has managed the trust for nearly 30 years now – takes a cautious approach to investing, generally focusing on well-established, dividend-paying companies (top holdings in the portfolio at the end of 2018 included Shell, HSBC, BP, Diageo, and Unilever) and never taking unnecessary risks. This style of investing is well suited to older investors as it can offer downside protection when markets are falling. A look at recent performance shows that the trust outperformed its benchmark in the second half of 2018 when global equity markets declined.

Furthermore, the trust offers a nice yield of around 4.5% at present, meaning investors can pick up a healthy level of income from the investment, and it also has a fantastic dividend growth track record, having increased its payout every year for over 50 years now, which is an excellent achievement.

With fees of just 0.41% per year, I see CTY as an excellent core holding for investors in their 50s.

Merchants Investment Trust

Another investment trust that I believe is well suited to investors in their 50s is the Merchants Investment Trust (LSE: MRCH). This mainly invests in large, well-known FTSE 100 companies with the aim of providing investors with a high level of income, plus income growth and some long-term capital growth. Its top holdings at the end of 2018 were Shell, GlaxoSmithKline, HSBC, Imperial Brands, and BP.

What I like about MRCH is that the portfolio manager Simon Gergel is extremely focused on dividends. That makes it a good choice for older investors who aren’t far off retiring, as dividends could potentially be used for income in retirement. The trust currently offers a high yield of around 5.4%, meaning that a £10,000 investment could generate dividends of £540 per year (not guaranteed of course). And like CTY, it also has a good dividend growth track record, having increased its payout for 36 consecutive years now.

With ongoing charges of a reasonable 0.59% per year, I think Merchants Investment Trust could definitely be worth considering if you’re in your 50s and looking for lower-risk investments.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Edward Sheldon owns shares in City of London Investment Trust, Royal Dutch Shell, Imperial Brands, GlaxoSmithKline, Unilever and Diageo. The Motley Fool UK owns shares of and has recommended GlaxoSmithKline and Unilever. The Motley Fool UK has recommended Diageo, HSBC Holdings, and Imperial Brands. 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.

More on Investing Articles

Investing Articles

Despite rising 152% in a year, is Rolls-Royce’s share price still a bargain?

While Rolls-Royce’s share price has shot up recently, it still looks very undervalued against its peers, and the business looks…

Read more »

Investing Articles

Could Nvidia stock be a bargain in plain sight?

Nvidia stock has surged 252% over the past 12 months, but that doesn't mean it's expensive. In fact, it may…

Read more »

Investing Articles

Here’s why I think the Vodafone share price should be 110% higher

Reflecting on speculation, our writer believes there’s a case to be made for the Vodafone share price being more than…

Read more »

A pastel colored growing graph with rising rocket.
Investing Articles

Is this dividend star also the best bargain in the FTSE 100?

This FTSE 100 stock pays a whopping 8%+ yield, looks very undervalued against its peers, and is set for stellar…

Read more »

Investing Articles

2 FTSE 100 stocks. One sublime, the other ridiculous

Our writer doesn’t understand the appeal of Ocado. But looking at the grocer’s latest results makes him see the attraction…

Read more »

Portrait of elderly man wearing white denim shirt and glasses looking up with hand on chin. Thoughtful senior entrepreneur, studio shot against grey background.
Investing Articles

Down 18% in a year, what’s next for the Greatland Gold (GGP) share price?

The Greatland Gold share price has disappointed over the past 12 months. Our writer asks whether the company’s latest update…

Read more »

Investor looking at stock graph on a tablet with their finger hovering over the Buy button
Investing Articles

With 30% annual returns for a decade, I’m buying this for my Stocks & Shares ISA

Oliver Rodzianko has been looking for a new investment for his Stocks and Shares ISA. Here's one he's decided is…

Read more »

Investing Articles

These were the FTSE 100’s dogs and stars in February

The FTSE 100 limped along last month, but some Footsie shares soared while others slumped. Here are February's winners and…

Read more »