Fees

I read recently that some poor bloke’s pension fund hadn’t grown in 11 years due to the extortionate fees charged by his provider and thought I’d mention something closer to home.

My sister has been over for a visit these past couple of weeks.  Over the course of catching up, conversation turned to pensions and she mentioned that a pension plan which she was saving into on a monthly basis in Hong Kong wasn’t ‘doing anything’.

In fact, not only was it not ‘doing anything’, it was actually worth less than the capital she had put in over the last 6 or so years! I asked her how this was so, as we were in a run of bull markets and suggested that she checked the fees she was being charged. She said she didn’t have time to look at such things so I said I’d look for her, if she provided me with her latest statement.

It turns out that she is investing in various funds (I didn’t make note of the exact fund names and no longer have her statement to hand) which have an initial charge of 5%, plus ongoing fees of average 1.7%. On top of that, her ‘financial advisor’ charged her an admin fee of 2%. Ouch!  All those fees were just gobbling up any profits the funds were making!

When I told her, she was really annoyed, both at herself (for not making the time to check the fees) and at her financial advisor. To add insult to injury, upon investigation, she found that there was a big exit fee if she were to transfer this pension to another provider. Double ouch!

It looks like the only thing she can do is to switch the expensive funds into cheaper trackers/ETFs (if she is able to do so), so that’s going to be one of her first tasks when she gets back home after her holiday.

Now that she is conscious of how devastating high fees can be to investments, she will also be considering other pension providers and if she can find a cheaper one, will stop contributing to the current one and set up a new account.

My family have been investing a lot longer than I have but it looks there’s still stuff I can bring to their attention! Perhaps I’ll speak to other members of my family to make sure they too are not paying too much fees-wise.

Me and my Funds

When I first started investing, my investments were all in funds. I then switched to cheaper tracker funds. However, just over a year ago, I switched nearly all the remaining tracker funds into ETFs to reduce fees further.

The biggest fund I own now is my Vanguard Life Strategy 80% but I’ve worked out that if I switch this one into an ETF, I’m not really saving anything so I’m going to leave it as is for now.

The two providers I use for my investments (SIPP and ISA) are Hargreaves Lansdown (HL)* and AJ Bell Youinvest (AJ)*. The latter is cheaper but service and website-wise, I have to say that it’s quite a bit behind HL.  AJ has FAR more downtime for its website at weekends (how annoying when the weekend is when I have more time to check my account!) compared to HL and ‘regular investments’ don’t always happen on the day they’re supposed to happen!

On the other hand, even if occasionally late, I prefer how regular investments are made with AJ than with HL (investments are made from monies within the account, rather than direct from your bank account) so there’re pros and cons to both, which I can live with.

Anyone else changed their investments or switched providers when they found out they were being ripped off?

[*note this is not a recommendation to use these providers, I’m just saying these are the ones I’m using – as always, please do your own research or better yet, check out Monevator’s broker comparison!]

July 2017 Savings, plus Other Updates

The other day, I was pleasantly surprised to spot a guy reading a copy of ‘Rich Dad, Poor Dad‘ on the tram into work! I’m glad he was really engrossed with his reading and didn’t look up, otherwise he would have seen some strange woman grinning at him, haha! I’ve not read it myself but I wonder if it will change his life as many readers have claimed?

Anyway, the month has flown by – I had family staying for a while so had a great time with them, plus the weather was lovely, which was a bonus.

I’ve also belatedly started having work done to the kitchen. It should have been sorted while I was unemployed and had lots of free time, but well, I actually didn’t think I would secure a job so quickly, so I’ve been busy sorting things there. And eating microwaved food as I have no oven or cooking hobs!

So, how much of my net salary did I save this month?

I saved 47.9%! A couple of meals out with my sis carved a little chunk out of what I could have saved but as I don’t get to spend a lot of time with family, it was worth that bit of cost.

My average for the year is now 47.8% so still slowly creeping towards my goal of an average 50%, but I need to get a few more >50% to hike it up. Might struggle with next month (more family members coming to visit), but we’ll see.

The above savings includes £50 from matched betting profits, £50 from my Premium Bonds win, £10 lotto win, £12.77 from TopCashback* and £57.08 affiliate income from OddsMonkey (thanks to all those who joined via my link – much appreciated!).

Shares and Investment Trusts

I sold my XP Power shares to take 55% profit (including dividends received over the 10 months I’ve held the stock) – yes I did it, FiL and of course, will now attempt to avoid checking up on XPP as I don’t want to see that it’s doubled in price now that I’ve sold, haha! :).

I don’t usually sell any of my shares, mainly because my strategy is to buy and hold, but also because I find it very difficult to decide when I should be selling. Banking some profit can’t be a bad thing I guess, plus at some point, I want to simplify my portfolio so may as well sell stocks off bit by bit.

The funds from the sale will be added to my usual monthly capital to top up one of my existing ITs. Current portfolio can be found here.

Future Fund 

Markets have continued to be mostly favourable, so my Future Fund now stands at £122,659. Continuing to advance towards my next big milestone!

Dividends and Other Income

Dividends received this month (which will be reinvested): Continue reading

June 2017 Savings, plus Other Updates

I have two sets of friends with whom I socialise on a regular basis so I ended up celebrating my birthday twice on the town this month!

Why not celebrate with both sets of friends together to save time and money? It has been considered several times in the past but dealing with potential clashes of characters and personalities (with alcohol involved!) really won’t be worth the money saved and is not my idea of fun!

I had a couple of great nights out, and inevitably suffered the consequences afterwards! However, I think I was more worried about my liver/kidneys, rather than my finances!

A Bit About Work

Am pretty settled in now, the days are flying by as I continue to get to grips with different processes, procedures and people.

At the last place I worked, there were quite a lot of folk who were in their 40s or older. At my new place, I’m definitely one of the few ‘oldies’, with most people sitting around me in their early to mid-twenties.

In the run-up to pay day, talk was just of what they were going to spend all their money on – mostly socialising and buying ‘stuff’, with one young chap ordering a pair of shoes costing over £500 (some ‘must-have’ brand I’d never heard of). I didn’t join in when the others had a go at him for wasting his money, for fear I would go into ‘FIRE mode’ haha! Ah to be young and so carelessfree with money!

With both my boss and the rest of the team not being based in the same office apart from on the odd occasion, I’m working pretty autonomously, more so than in my previous job. I think I will appreciate this more as time goes by, although I have to admit that I am actually starting to enjoy my work – not so clueless any more!

I still think it’s bloody hard – coming from a highly regulated environment to one that is not so (yet) regulated isn’t easy and my boss warned me that it could get a little frustrating but to be patient as things were moving towards more regulations and controls. I look at their processes and see so many things which would fail an audit.

I think I’m one of the few people who actually abides by the clear desk policy, which isn’t enforced but it’s how I’ve been working for the past ten years so I continue to do so. Still, it’s far too soon for me to be making major suggestions of improvements but I’ve been making notes for the future, ideas for projects and such like.

The lifts weren’t working the other day so I had to take the stairs. I realised that walking up to the 5th floor isn’t too bad and is a great workout, so from now on, I will climb the stairs every day.

Anyway, I got paid in full this month so how much of my net salary did I save? (no £500 shoes for me!)

I saved 54.6%! My average for the year is now 47.8% so slowly creeping up to my goal of an average 50%.

The above savings includes £100 from matched betting profits, £25 from my Premium Bonds win, £20 lotto win and £57.08 affiliate income from OddsMonkey (thanks to all those who joined via my link – much appreciated!).

When I saw the my wage hitting my bank account, I was pleasantly surprised. Until I realised that this is my pay without any corporate benefits deducted – I’ve yet to join the company pension scheme (although the contribution will be low) and I no longer have the ‘premium benefits’ I used to enjoy, namely medical, life insurance and critical illness cover. Oh and my corporate gym membership was also deducted via salary sacrifice.

Another birthday celebrated, another year older – although I keep myself pretty fit and healthy and have a fairly balanced diet, age will catch up at some point so perhaps I need to consider my own medical cover seeing as I no longer have it. I was given a quote by the insurers who used to provide my company medical cover but it was nearly 4 times what I used to pay! What a rip off! I’ll do a bit of research, methinks.

Future Fund 

I have now shifted what’s left of my severance pay into my Future Fund, giving it a decent boost and it now stands at £119,717. A good step towards reaching my next big milestone!

Dividends and Other Income

Dividends received this month (which will be reinvested): Continue reading

Race to £200k

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 1JK’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!