Investment Strategy – updated

It’s been over a year since I made a ‘tweak‘ to my investment strategy so I guess it’s about time I did a bit of an update and rehash of the post.

Party Politics?

This post follows hot on the heels of the UK snap election. I have to say that my investment strategy was going to be the same regardless of what happened and I’ll not be doing anything different now that we have a ‘not very strong and stable‘ government for another five years and there are the extremely rough seas of Brexit to navigate through yet.

Original Plan

My original plan had been to build up a large enough pot of investments (funds) and to sell off funds gradually, until I was able to draw down on my company pension at 65 and then state pension at 67.

My money was pretty much all in tracker funds, which followed my Portfolio for All Seasons plan, a plan which I set into motion in 2014.

When my company pension got frozen in 2015, I realised that I needed to review my whole investment plan, as I would need some extra income to make up for the unplanned pension shortfall.

Income

It’s still my plan to try to get dividend income of at least £3000 per year. Obviously, more will be better, but this is the minimum that I’m aiming for, and I think I’m on track for my goal of £1500 this year.

I know it seems like it would be easy to just double it but I’m still adding to the tracker funds too so my monies are spread out.

£3000 a year currently covers the following expenses for me – electricity, gas, internet/broadband, mobile phone, water, boiler cover, TV licence and dental/optical cover. That’s a lot of bills to not have to worry about!

Of course, these costs are likely to go up with inflation but hopefully, if I’ve invested wisely, my dividends will also continue to grow and kind of keep in line with inflation.

Share and IT portfolio can be found here.

Last year, I switched some of my tracker funds into ETF equivalents which added to the monthly income received, whilst at the same time reducing some management fees (the fees on my investing platforms are capped for ETFs but not for funds).

Living off dividend income is very appealing but to only live off income and not sell off any capital would be pretty much beyond my financial capacity.

I don’t earn a mega salary, there’s only one income coming in (gotta get dating again) and I don’t have the luxury of saving/investing for >20 years to build a massive pot, not if I want to retire early.

I could probably save and invest more but who wants to live like a frugal nun? Not that I have anything against frugal nuns but I choose not to go down the extreme path.

This past year or so, I’ve been steadily throwing cash at a basket of investment trusts to grow my dividend income. The shares I already own also contribute to this income. I practice a buy and hold strategy, apart from the little experimental portfolio I have, whereby I will sell in accordance to the ‘Dogs of the FTSE’ strategy – well, I’ve not sold anything yet but plan to do so early next year!

P2P and Property Crowdfunding

As well as the trackers/ETFs and the shares/ITs, I’ve also got a small amount in peer-to-peer (P2P) loans and some in property crowdfunding (via Property Moose*).

I’ve been invested in P2P for 3 years and my portfolio has grown by over 15%. However, I have now started to divert some of the P2P funds (interest and repayments) into my other investments.

This is for no reason other than to start simplifying my portfolio, although if it was possible to convert my existing P2P accounts into one of those new innovative finance ISAs (it’s not), I would probably just leave them as they are.

I won’t be cancelling or cashing in any P2P loans early, just withdrawing the repayments and interest, so this exercise could take up to 4 years before the loans are fully cashed out, since I took on some long term loans early on when the interest rates were really high (some of my Funding Circle loans were at 17%).

I’m likely to keep the property crowdfunding ticking over for a while longer – I want to see how it does since it has been purely funded by matched betting profits.

SIPP or ISA?

Aside from the bit of money tied up in P2P and property crowdfunding, the rest of my savings/investments are ‘tax efficient’, ie either in my SIPPs or my ISAs.

I’m continuing to invest in both, although I plan to build up more in my ISAs as I feel they offer more flexibility and (hopefully) will continue not to be subject to tax. I currently have more in my SIPPs but hopefully that will be addressed over the years.

Cash

As someone who may consider stopping working full-time within the next ten years, I don’t have a huge amount in cash in my overall portfolio.

The latest Monevator post reminds us that we’re not getting any younger and that your investments should reflect your age.

The classic principle governing age and asset allocation is:

Hold 100 minus your age as a percentage in equities
Hold the remainder in bonds (or cash?)

Equities currently make up around 85% of my portfolio which is pretty high risk for my age. I’m ok with that.

The majority of the 15% cash element is sitting in premium bonds. Yes, I know, crap returns and all that, but I don’t care – I just love that every month, I get the chance to win something. In fact, I won again this month, the second time this year, although it was just a £25 prize!

It’s possible that I might not leave so much in cash/premium bonds – I might feel the urge to pick up some bargains when the stock markets take a dive. Or not. Probably not. Who knows if I’ll be feeling ‘brave’ when the news and noise is full of doom and gloom!

Anyway, as mentioned in my May update, my emergency fund isn’t looking too shabby now, with the equivalent of about 4 months’ living expenses, courtesy of some of my redundancy payout.

So that’s my investment/savings plan for the next couple of years or so.

It’s not set in stone and is subject to change depending on what obstacles life (or government legislation) throws at me and will be reviewed as required.

How are you investing for your future?

[*referral/affiliate link]

 

May 2017 Savings, plus Other Updates

Firstly, heartfelt thoughts to the families and friends of the 22 whose lives were mindlessly cut short at the Manchester Arena.

The arena is only 5 miles from where I live, the streets where alleged accomplices of the bomber have since been arrested are ones which I have often driven down. This is scary stuff pretty much on my doorstep but talking to my friends and people at work, there is a sense of strength and solidarity, we will not let terrorism beat us. I would have loved to have gone to the ‘One Love‘ gig that’s on Sunday but there was no chance I was going to get any tickets.

Work and Pay

Well, I’ve been flying by the seat of my pants at work these past couple of weeks. It’s been both scary and a bit of a rush but I did ok! Anyway, it was fortunate that I started my new job just before payroll cut off so I received a bit of a wage in May which I thoroughly deserved, if I say so myself! Woo hoo! 🙂

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

I saved 40%! My average for the year is now 46% so not too far off my goal of 50%. I’ll need to put in some good months to haul it back up.

The above savings includes boosts of £400 from matched betting profits, £28.31 from TopCashback*, £43.50 from football predictions, £69.35 from Google Adsense (my second payment ever!) and £51.36 affiliate income from OddsMonkey.

Redundancy Cash

I still have just under 80% of my severance pay left. I’m going to invest some of it next month but think I will err on the side of caution and leave most of it sitting in cash (premium bonds) for now and review my options when I feel the urge to do so.

I’m not bothered about the crap returns from premium bonds – when I started planning for FI/retiring early, I never thought I’d be including any redundancy money so it’s a bonus already on its own. I think this will bring the cash element of my portfolio to around 14-15%.

I’ve topped up my emergency fund so that it now covers around 4 months’ expenses which seems to be an amount I’m comfortable with.

Future Fund 

With the markets buoyant this month, my portfolio has continued to grow. At the end of May, my Future Fund ended up at £104,753.

Dividends and Other Income

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

April 2017 Savings, plus Other Updates

The eagle-eyed among you may have noticed my amended logo to show the new £1 coin – thanks to The Investor from Monevator for reminding me to change it!

Anyway, I have to confess that I have really felt like not publishing this update.

For the past 3 years, I’ve been saving a large part of my salary towards my goal for FI/retiring early and happily documenting my progress on this blog.

This is the first month I have had no salary in over 20 years and I wasn’t sure what I could say, without coming over all miserable with doom and gloom – there’s still nothing on the work front yet although I continue to actively job-seek.

But hey ho, spare me the pity, I’m a mostly glass half-full kind of person and as I said in my last update, my goal to FIRE is still on, just suffering a bit of a ‘blip’, so without further ado…

Bad News Alert!

My savings rate this month is ZERO! 

This is because I have always worked out my savings rate to be what I save from my normal working wage. I know others work out their savings rates differently but I’m just being consistent with my own calculations.   I’m now living off my severance pay – ouch!

All Is Not Lost

That’s not to say I haven’t added to my Future Fund at all this month – I made investments using the following income: £400 from matched betting profits, £92.49 from TopCashback*, £138.47 affiliate income from Odds Monkey, £50 rent received and £40 from a lottery win!

This income is by no means guaranteed on a monthly basis so in the short-term, I’m going to try to continue to invest as much as I can for as long as I can, to keep the investing momentum going. I did toy with the idea of investing nothing while I wasn’t working but that didn’t seem to make sense to me, not when I had the means to make some cash which I did not require to live on.

Future Fund 

After hitting my big milestone of reaching £100k in savings/investments last month, my Future Fund continues to grow, buoyed by the announcement of our own snap election and the elections in France. At the end of April, my Future Fund ended up at £102,023.

Dividends and Other Income

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

March 2017 Savings, plus Other Updates

An ‘action-packed’ month, filled with interviews, lots of matched betting, plus a short trip to Hong Kong to see my poorly Grandma (getting better but not fully recovered).

My ‘income’ this month has been derived from the last of my pay-in-lieu-of-notice (PILON) from my last job.

So, how have I done in March?

After last month’s record-breaking savings rate, it’s back to a good solid savings rate of 58.6%.

This pushes my average savings rate so far to 64%.

As I’m still only at interview stage with regards to my job hunting, it’s highly unlikely that I will have a salaried wage in April.

As I have always worked out my savings rate to be what I save from my normal working wage, this means that my savings rate is going to be a big fat ZERO! I know others calculate their savings rates differently but I’m just being consistent with my own calculations.

I think I’m likely to continue to invest using matched betting and other income – I guess others might not save/invest whist unemployed but I feel that I need to keep the saving/momentum going, even at a reduced rate. At least in the short term, anyway.

March’s savings was boosted by the £50 I won in Premium Bonds, £50 from rent received, £292.40 Jobseekers Allowance (ahem, continuing to make the most of ALL my income while I can), £14.62 from TopCashback*, £250 matched betting profits and I was lucky on the lotto again so another £10 win has been chucked into the pot too.

Future Fund 

As mentioned in my last post, I hit my biggest milestone so far, that of reaching £100k in savings/investments. With Brexit triggered and more Trump shenanigans in the news, the markets wobbled a little but my Future Fund ended up at £100,442.

Dividends and Other Income

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