John Kingham who runs the UK Value Investor blog recently posted about aiming for a £1 million portfolio within 30 years and talked about the theory of doubling up.
I posted a comment and in his reply, he challenged me to see who will reach £200k first.
Of course, I accepted the challenge! 🙂
The Runners
In Lane Number 1: JK’s Model Portfolio
John started his model portfolio in 2011 with £50k, which is made up of 30 stocks. Its aim is to generate more income and growth than the FTSE All-Share.
Through active trading alone (with dividends reinvested), this portfolio has since doubled, having had no extra capital added! Wow!
John’s strategy is that the least attractive holding is sold every other month and replaced with a new investment the following month. He details his analysis and reasoning in a newsletter, which is aimed at defensive and dividend-focused value investors. The newsletter is subscription-only and includes a stock screen containing over 200 dividend-paying companies from the FTSE All-Share. There’s plenty of useful stuff to read on his website and blog too that doesn’t need a subscription.
I can confirm that I have met and spoken to people (at the last FIRE Escape gathering) who subscribe to said newsletter and whose investments have done extremely well by it, so yep, John knows his stuff!
In Lane Number 2: Weenie’s Future Fund
Yep, my mixed bag of a portfolio – it’s got a bit of everything! 🙂 Its aim is to provide me with income when I choose to retire early.
I practice a predominantly buy and hold strategy, drip-feeding capital every month, making the most of pound-cost averaging.
The amount I save/invest depends largely on my expenses and whilst I’ve got the basic costs buttoned down, as I’m not practising extreme frugality, things like social life, holidays and celebrations can sometimes get in the way!
Also there’s the amount I can earn from my side hustles, ie matched betting, cashback and affiliate income – I try to chuck all of that into the pot. Oh and any lotto or premium bond wins too!
You may recall that my Future Fund hit £100k recently. In total, it took me 8 years to reach this milestone – 5 years for the first £30k (when I had no plan), then 3 years to get £70k (with my plan).
I have only been investing for around 3 years so I can’t say that I know my ‘stuff’ but I seem to be doing ok!
Five Years
According to my own projections forecast spreadsheet, I reckon I could hit £200k in around 5 years. It’s possible I could get there earlier but this is my estimate, using conservative returns, whilst assuming that I will maintain an average savings rate of 40-45%. Hmm!
Over the last five years, JK’s Model Portfolio achieved an annualised rate of return of 14.6%, so if at least the same return can be achieved, then it’s going to be a close competition!
Of course, it could take longer than 5 years and things could go pear-shaped for the both of us with the markets tanking, although with his strategy, John will be poised to ditch the rubbish shares and get some good ones in, while I will be trying to ignore all the noise and continue to chuck in my monthly capital regardless.
Different Strategies
I hope people will find this friendly competition interesting as it showcases different investing strategies.
This is all just a bit of fun but also another thing to keep me focused and motivated.
Ladies First
I think I’ve got a bit of a head start as I reached £100k before John did, plus I’ll be transferring the remainder of my severance pay into my Future Fund this month.
Still, I’m hoping that doesn’t mean I’m the Hare and he’s the Tortoise!
Actually, I feel more like I’m Rocky Balboa to his Apollo Creed, except this isn’t Hollywood so there’s no fairy-tale ending guaranteed!
Anyway, good luck to the both of us – let’s get ready to rumble!
I signed up to Oddsmonkey for my arbing through your affiliate link last month, so that little bit of commission you will have received is my contribution to your cause !
Good luck on getting to the 200k mark…
Thanks for signing up via m link – much appreciated and yes, it goes towards my cause! 🙂
Hi Weenie,
I look forward to following your race up to the £200k mark! What better way to really turbo charge up the returns and the investments than to have that encouragement.
Maybe I should throw in the Go T’ Pub ISA to try to get to £100k whilst you go for £200k 😉
Good luck!!
Cheers,
FiL
Hi FiL
Thanks and yes, I am encouraged by a little bit of friendly competition and may have to review my portfolio again to see what I can tweak!
Haha, getting your Go T’ Pub ISA to £100k will be a fantastic (and fun!) goal – the first £100k is supposed to be harder to get than the second, although it depends on the capital you will have available to transfer into it (from your cash/surplus funds?).
Hi Weenie,
Yes – if you can see at month X you are only slightly behind it may encourage a slight squeezing to just catch up by those few extra pounds!
Haha – it is, believe me I have done the “first 100k” sooo many times with different pensions, investments etc. that it is painful. Limited what extra I will be able to put in over the coming couple of years, but lets see 🙂
Cheers,
FiL
Looking forward to it weenie. Should be interesting and fun (as long as I win!)
Cheers John. I’d like to say that it’s not the winning that counts, it’s the taking part, but now that I’ve blogged about it, I do want to win! Bring it on! 🙂
But what are the stakes? Is there a trophy? Or is it for that noblest of prizes, a pint?
Your followers need to know these things!!!
Good luck to you both!
Haha, sorry PwF, I missed out the important stuff! 🙂
No trophy but I guess if I me and John find ourselves in the same drinking establishment in around 5 years’ time, the loser can buy a pint of the good stuff for the winner!
HI weenie,
This is exciting! Good luck to you both!
I am working my way slowly to my first £100,000 and it’s so great to see what is possible.
I think previously you said that you wanted to keep your severance pay in premium bonds for a while. It sounds as if you ahve chnaged that approach now?
Thanks Learn to FIRE.
I still intend to keep the severance pay in premium bonds for now but I have stopped purchasing new bonds on a regular basis (I cancelled my standing order to NS&I). However, I do have a small cash ISA so I will transfer that into my S&S ISA.
Cheers and good luck with your first £100k!
Hi Weenie, ooh yes, good to have the competition, a great way to keep motivated! I’ll be watching the race with interest. I’m definitely more aligned with your strategy (if I can call what I’m doing a ‘strategy’ – makes it sound very grand, it’s passive investing into an index fund, and my company pension, increasing contributions when I can!), but it will be good to see how active investing with no additional contributions compares. Good luck, and thanks for the intro to another blog too! 🙂
Hi Sarah, I had to call what I’m doing a ‘strategy’ just to call it something but like you, I’m not sure it deserves to sound so grand haha! I guess the main thing is that it’s being compared to active investing with no additional contributions, a strategy which I haven’t seen on any of the PF/FI blogs I follow. Thanks, I will need some luck!
Hi Weenie,
I love a bit of healthy competition! I will follow your journey to £200K with great interest. Good luck to you both.
OR
Cheers OR!
Just to say I keep reading and learning (I hope!). Looking forward to seeing you reach your goals!!!
It’s really interesting how I am kinda at the same stage as you are with this. £200,000 would be my next major target financially also however currently I would still say £150,000 is the current target which I am not too far away from.
Chris
Hey Chris
Great to hear that you are nearing your next milestone. I’m sure I’ll have a ‘halfway there’ mini celebration when I get to £150k myself!
Just stumbled upon your website, enjoying the reading, all the best with your goal!! I’d be interested in attending the next Manchester FIRE meetup, hopefully see you there when it happens!
Thanks for stopping by, ash. Discussing with others, I think the next one is likely to be in April. I will post the details once I know (and closer to the date).