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!
