Category Archives: premium bonds

Retire at 40?

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I’m way past 40 so it won’t be me! But who watched Channel 4’s 30-minute programme, shown on Monday night, ambitiously titled ‘How to Retire at 40‘?

I won’t go into the programme details myself except to mention that I didn’t think much of it, but there are some interesting discussions here and here, from bloggers who were actually featured (briefly) on the programme and one who missed the cut (unlucky, Huw!).

Watching the programme and seeing the young folk featured on it, I was reminded of how when I blundered into embarked on my own career in my early 20s, the very very last thing on my mind was retirement (although following my older sister’s advice, I joined the company pension scheme as soon as I was able to).

Traditional

I’m from the traditional/common way of thinking – go to school, go to university, graft for 40 years, retire in my mid-60s.

Nothing wrong with that way of thinking – it’s what many people do. I have been fortunate in that my 20+ years career (so far) has been largely fulfilling and enjoyable, and I have made close and life-long friends through work.

Despite spending most waking hours at work, I’ve been able to enjoy my life, including go on holidays every year, have enough time for family and friends, have hobbies etc. I have always been able to maintain a good work/life balance.

I will admit however that much of my life was fuelled by debt but that was me being stupid with credit cards until I came to my senses and paid them all off.

Throughout my career, I have never minded working for The Man/The Woman, although I guess I’ve been fortunate with my bosses in that they’ve all been pretty reasonable people (most of the time) and people who I respected. I may not be so fortunate in the future.

Be my own boss? No real desire to do that, sounds like too much hard work!

Anyway, what got me thinking about early retirement a few years back was stumbling across MMM and then wondering what I would do if I suddenly started to hate work and be fed up with the 9-5? Wouldn’t it be great to be able to just walk away?

Options

Well, without sorting out my personal finances, my only option would be to keep plugging away another 20 or so years until normal retirement age (67 for me). Ok if you like/love your job; not ok if you have health issues or dread going into the office every day, although of course, you can always switch jobs if this is the case.

I’m hoping that saving and investing hard now will build up a big enough pot which will allow me to choose to stop working full-time at age 55-56 (my stretch target) if I’m fed up with work by then. Some may not think this is early retirement but I consider anything <60 as early!

In the event that I’m not mentally ready to give up work then (like Jim from SHMD) or if I’m just content doing what I’m doing, I might choose to just carry on working and continue to save and invest. That’s the thing – I’ll get to choose.

I don’t think there’s such a thing as ‘too much’ in retirement funds (I won’t be anywhere near the lifetime limit!) but ‘too little’ would be a miserable scenario!

I’m barely two months into my new job and things are looking good so far but I must keep one eye on the future. I’ll be eligible to join the company pension next month so a few more £££s in the pot there.

Another win!

Anyway, ending on a good note: another month and another Premium Bond win for me (any wins for you, FiL?).

I won £50 so I’ll be lumping this in with other cash to be used to buy investments.

In it to win it, like the lottery only you get your money back (subject to inflation!)

Have a great weekend, all!

Investment Strategy – updated

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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]

 

FIRE Escape in Sheffield + Win

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So, Huw from Financially Free by 40 had organised another FIRE Escape gathering, this time in Sheffield.

I wasn’t able to attend the entire weekend so just dropped in on the Saturday.  This was the 4th such meeting I’ve attended.

The venue was Weaver’s Cottage, a superb detached, stone-built, Grade II listed property. It did look a bit stark on the outside but inside, it was beautifully refurbished with new, modern amenities.

It was good to catch up with Huw, Lou, M, Martina and Richard again, but also great to meet nine new faces – James, Ed, Eva, Valerie, Anne, Cora, Helen, John and Organised Redhead (OR did attend the last FIRE Escape, but wasn’t there the day I turned up!).

As with previous FIRE Escapes, it was a good mix of people, everyone at various stages of their lives and FI plans, from savvy millennials using enterprising ideas to make money, right through to folk who had already retired and were living off their investment income and those who are FI already who were happy to share ideas and advice.

We talked about all kinds of stuff including investing (shares and investment trusts), health and fitness, buy to lets and shared ideas on how to generate money such as buying stuff to sell on eBay, making things to sell, Kindle publishing, P2P, investing in whisky – maybe not a good one for you, FiL! 😉 and matched betting.

I have to say that after each gathering I’ve attended, I have ALWAYS come away with fresh ideas or end up learning about something which I want to research further – I learned some new stuff about matched betting (thanks M and James) and about investment trusts (thanks John).

I was there for 6 hours which just flew by and I wish I could have stayed longer. Had it not been for the fact that I really dislike driving down the Snake Pass in the dark, I would have stayed later. As it was, when it started to rain as I was driving back, I was glad that I left when I did.  Unfortunately, I don’t think I had the chance to chat to everyone properly but hopefully, I’ll get the opportunity next time.

Try It!

If you’ve never considered attending a FIRE Escape before, I would highly recommend these friendly and informal gatherings. I believe it’s Huw’s intention to continue to organise them and I for one am very grateful, as his efforts have enabled me to talk to people who understand what I’m trying to achieve and I love hearing about other people’s stories and plans for FI.

Whilst it’s great to put faces to bloggers, it’s also great to meet people who do not have blogs but who have similar goals, so cheers Huw for organising these FIRE Escapes!

PS – M, I forgot to grab one of your home brews before I left! Doh!

Premium Bond Win

I was out most of Friday so although I saw that I had received an email from NS&I about my premium bonds, I didn’t get the chance to log in to check my account and I only remembered after I’d gotten home from Sheffield:

I won £50 (2 x £25)! It’s my first win in 9 months. I can’t recall if I’ve mentioned this but some of my redundancy money has been used to purchase more premium bonds. These bonds are accounted for separately (in my spreadsheets) from the bonds in my Future Fund since they’re not part of my long-term plan.

Yes, premium bonds make terrible investments – however, if you don’t view them as ‘investments’, but as somewhere to park your cash because you’ve already exhausted the high interest current accounts etc, then I don’t see anything inherently bad about them. Plus, you can win something, like I have! 🙂

Anyway, until I’m gainfully employed again, as and when I need funds for my living expenses, I’ll be selling some of the bonds. Let’s hope I’ll have notched up a few more wins by then! Unlike Jim who treated himself with his winnings, I’ll be chucking mine into my ISA!

Premium Bond Win, plus my New Gadget

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Just because there’s crap going on at work, I don’t want to just blog about doom and gloom so here’s something on a lighter note.

I recently read that it was going to get even harder to win in the Premium Bonds – the odds of winning any prize were being reduced from 26,000:1 to 30,000:1.

However, I received what is now a ‘regular’ email from NS & I – does 3 wins in 6 months count as ‘regular’?

prembonds

Ok, so it was just another £25 win, but it’s not bad for what I consider as my ‘cash under the mattress’.

As I’ve mentioned before, premium bonds are rubbish investments, so just as well I don’t consider them as investments!

As before, I think I’ll chuck the winnings at my recently depleted emergency fund.

Here’s hoping for some more (and bigger) wins!

Shiny New Gadget

I also got myself a new ‘gadget’ recently.

It was a gadget which I didn’t really need, or even something I particularly wanted.

Still, the main thing was that it was completely free!

Yes, I got myself a smart meter fitted and my new gadget is the little monitor that came along with it.

For those who don’t know, a smart meter is a meter which can digitally send meter readings to your energy supplier. I’ve only had this fitted for my electricity and it will apparently ensure more accurate energy bills and the monitor should help me understand my energy usage better.

It shows you how much electricity you are using (either spend or wattage), compare different days, how much you have spent/used in the past etc.

With just my fridges, fridge freezer, clock radio plugged in and nothing else switched on, it appears that I spend £0.02 an hour.

smart1a

My ‘standing’ electricity spend per hour

Put the kettle on for a brew and this goes up to £0.45 an hour!

smart2a

Sticking the kettle on pushes up the spend by quite a bit!

Of course, this doesn’t mean that to save money I’m going to stop putting the kettle on, stop using the hair dryer or washing machine, but I will think twice about taking my time when ironing (including leaving the iron plugged in to go to make a cuppa….).  I also have a habit of pre-heating the fan oven and then forgetting about it, so the oven ends up being on a lot longer than it needs to be.

Switching the lights on in the kitchen also causes a spike, which means that I’ll need to make sure that I replace the old light bulbs with more efficient LED ones.

Does anyone else make use of these kinds of gadgets?