How I invest: ‘I need the cash to live’: rewiring a portfolio for unemployment
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The UK job market is a tough place to be right now, with the jobless rate unexpectedly rising to 5% in the latest ONS figures, just as the number of job vacancies fell to its lowest level in five years.
Losing your job is one of the most stressful experiences someone can go through and for Luke, it’s caused him to totally change course on how he’s investing to support himself while he looks for a new job.
In his 40s, Luke found himself unexpectedly unemployed last summer after a career in financial services.
Alongside a tough hiring market, looking for a new job during an extended cost-of-living crisis made worse by the war in Iran and the consequential energy shock is an especially painful combination and, as a result, Luke has taken to his Stocks and shares ISA as a tool to derive some income in the absence of monthly pay packets.
Pivoting his portfolio to meet his immediate needs
After the pandemic, Luke bought into the Ninety One Global Gold Fund, which invests around 60% into gold mining stocks. This was about a third of his portfolio but says he was “too early” in retrospect, with the investment plodding along with no major growth for several years before it was kicked into gear in 2025 when gold experienced a year of record highs.
From the start of 2020 to date, the fund has made almost 230% total returns but if you had sold out at the start of 2025 before the gold rally, you would have only made around 30% over those five years, according to data from FE Analytics.
Making 30% between July and August 2025 alone, Luke took some of the profits out of the gold fund and put them into the high dividend paying stocks he’d selected to bring in some income “to help tide me over”.
Investing for income
Using your portfolio to provide an ‘income’ is a well-established practice, but it’s usually done during retirement.
Typically, you transition your portfolio from more aggressive wealth building focus to providing a more stable cash flow via dividends and bonds, or selling portions of your assets as needed.
The broad concept can be applied at any point in your investment journey, and for Luke he strategically put his gold returns into high dividend yielding UK shares like Aviva, Legal & General and British American Tobacco.
All these stocks offer a dividend yield ranging from 5% to 8% annually, and Luke drew up his own dividend calendar to buy into them just before their payments went out before swiftly exiting the stocks.
This is known as a ‘dividend capture’ strategy and involves owning an investment purely for short-term income rather than hold the stock long-term.
It’s a semi-questionable investment method, as dividends are not guaranteed, even from companies heralded for them, something Luke acknowledges.
“People say to invest with a five-year time horizon, but I don’t have a job at the moment. So I need to look at things which are going to bring in a bit more of a return in the short-term,” he says.
“I need that cash to live,” he says later on. Coming into June, Luke is looking at bringing in around £1,200 worth of dividend income.
“Once I’m back in employment and I’ve got a regular income stream and spare money to invest then I’ll start splitting my money and putting it towards retirement say.”
Putting that ‘income’ to work
Luke first started in investing in 2009, coming into the market right at the ‘bottom’ after the 2007/8 financial crisis, and it was here he developed his investment approach: looking at the top-down macroeconomic environment and investing in what he thought would do well in the coming years.
While his holding timeframe has shrunk dramatically during his current situation, Luke’s investment process remains the same: “look at the macro and then work out what the macro trend is and then try to ride that wave for a while”.
The Ninety One gold fund is still his “star performer” and Luke is assessing where to put any spare dividend income once he’s covered day-to-day expenses and his top-down view is steering him towards oil and commodity exchange traded funds (ETFs) and away from the Magnificent Seven.
Luke is “understandably”, fairly pessimistic at the moment, although he says he’s always had “quite a cynical attitude” and is concerned that the US equity market is in bubble territory, akin to the dotcom boom.
“It’s better to be cynical and protected than optimistic and broke,” he says.
At the time of speaking, the Strait of Hormuz remained closed and no deal between the USand Iran had been agreed.
Oil has stayed around the $100 per barrel mark, and concerns are brewing about the state of global reserves and how long the world economy can handle a $110 or $120 per barrel rate.
Even if a deal was agreed this would not solve the supply issue overnight as a full reopening and getting regional energy infrastructure back on stream will take months”.
Casting his view on the bond market Luke is hesitant to dive into UK government debtfor income amid the political turmoil prompting a surge in gilt yields.
Stocks over funds and trusts for income
Investing on such a short timeline means Luke has also had to weighed up what type of products he’s investing in.
While specific stocks are well known for their dividend paying qualities, equity income funds and investment trusts are other established options which can offer a diversified stream of income leaving you less exposed to one or more of your individual holdings cutting or cancelling their payout.
The Association of Investment Companies (AIC) has a list of ‘dividend heroes’, trusts which have paid out and increased their dividend annually for at least 20 years, with some delivering this for six decades.
Luke says that he has looked at these, but because his investment timeline is out of synch with the usual long-term picture, he feels these aren’t the best options for him now.
Research by AJ Bell’s Investments team found that around 70% of income funds only pay out a dividend twice a year, which isn’t ideal for Luke’s needs right now.
And when it comes to the oil and commodity exposure, he’s opting for ETFs to keep the costs of investing down. ETFs trade on the public market 24 hours a day, meaning you can instantly buy and sell at market price.
Figuring out what to do while looking for a new job in any respect is tough but one where the world feels chaotic – US, Iran, oil, gilts are just some of the headlines Luke noted – is tough but he is able to keep a steady head on his shoulders when it comes to his portfolio.
“Many people invest emotionally and it all goes horribly wrong. You have to set yourself an objective and once you hit it, you have to bin it off,” he says.
“It’s that classic quote ‘the things you own will own you’.” Never be too emotionally attached to physical objects or investments is a mantra Luke aims to stick to.
Eve Maddock-Jones: Funds and Investment Trust Writer
Eve joined AJ Bell in 2026 as a funds and investment trust writer. She was previously editor at Investment Week, reporting on all major retail investor news, covering funds and investment trusts, ETFs and regulation...
