Dogs of The FTSE – Q2 (2017)

It’s been nearly 6 months since I set up my experimental Dogs of the FTSE portfolio.

So how have the mutts done?

Are they still in the doghouse or vying for Crufts?

As at close of trading on 25th July 2017, the portfolio was showing a 5.24% gain from its starting value.

Including dividends received, it’s a 8.18% gain.

Over the same period, the FTSE 100 Total Return was 3.85% so the Dogs are looking good on both counts!

Showing its ‘pedigree’ is Capita (CPI) which was actually booted out of the FTSE 100 in March 2017. Persimmon is also looking good right now.

Four of the Dogs are looking a bit flea-bitten but there’s nothing to do really except to keep track of dividends as they roll in and see how things look in another 3 months’ time!

Riveting stuff! 🙂

Retire at 40?

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!

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!