Sunday, 28 August 2016

A catch-up on how I invested my savings from March - August

One of my key goals for 2016 is to set myself on a path toward achieving Financial Independence. As part of my roadmap I intend to save money each month into my Freedom Kitty which is currently made up of two ISA's (one from the 2015-16 tax year, and one for the 2016-2017 year), and also into my Personal Pension which I hold with St. James Place. This post covers my investing choices for March - August.

Freedom Kitty Investment - March to April 2016

In March I used a combination of savings from February & March as well as profit from my flat sale to max out my 2015-2016 ISA with St. James Place. This saw me transfer in £14,810.53, meaning that the total money paid toward the ISA in the tax year was £16,010.53 (the excess over the annual ISA allowance of £15,240 was for initial fees).

Prior to making this lump sum transfer I'd only been investing £150 per month into the ISA and for that reason I'd been recommended to direct my money into just one fund. My lump sum investment therefore also went into this one fund. So my 2015-2016 ISA is invested in the UK High Income UT - Acc fund, a link for the Financial Times fact sheet on this can be found here.

At some point I will discuss with my financial advisor diversifying my fund choice a bit for the ISA - probably later this year.

Freedom Kitty Investment - May to August 2016

Of the available money I'd put aside for investing into my Freedom Kitty in May - August, I actually invested £2,500 of it. I was particularly busy with our house move during May and June so it took me a while to find time to investigate and choose where to invest for the 2016-2017 tax year. Making use of the Monevator's superb resource page "Compare the UK's cheapest online brokers" (which has been updated in August 2016), I finally made a decision at the start of July and opted to open an ISA with Lloyds Bank Direct Investments Online.

I decided that I would like to set-up a regular investment plan rather than just making ad hoc transfers into the ISA (in reality I will probably end up doing a combination of both). So I have set-up a plan to invest £1,000 per month from July onward. In addition to this, I also transferred a one-off contribution of £500 into the ISA in July so that I could test out how the investing process worked (seeing as I was completely new to online investing).

I have opted to keep things really simple for now, so my investments were as follows:

For now my ongoing regular investments are set-up to go into the Vanguard 60% LifeStrategy fund, but I may look to change this in future months.

Personal Pension Investment - March to August 2016

For the period March - August 2016 the following contributions from my Business Account were made into my Personal Pension:
  • March: £3,000
  • April: £3,000
  • May: £1,000
  • June: £ 350
  • July: £1,000
  • August: £1,000
  • TOTAL: £9,350

The amounts fluctuated because I was going through a period of not doing any work contracts (for 4 months), therefore without any income source I opted to reduce the contributions to my pension scheme slightly.

Since I have a financial advisor at St. James Place where my Personal Pension is held, they select the best investment options for me based on my propensity to accept risk. The approximate split for the current allocation of my investments is as follows (I've included links to the Financial Times fund factsheets):

SJP Global Equity - 14.5%
SJP Schroder Managed - 14.5%
SJP Strategic Managed - 14.5%
SJP AXA Framlington Managed Pension - 13.5%
SJP Global Managed - 13%
SJP Worldwide Managed - 13%
SJP International Equity - 9.5%
SJP Multi Asset - 5%
SJP Strategic Income - 2.5%

It's quite an interesting exercise for me to delve into the funds which are underlying my pension investments, because I have to confess that most of the time I'm largely unaware of where the money is invested having chosen to leave these choices in the hands of my financial advisor. I've received comments previously and have seen similar view points while reading other personal finance blogs, that the charges for my pension funds are considered high, particularly compared to what I would likely choose if I managed my pension investments myself. However, for now I'm happy with the status quo of where things are. Time is a very precious commodity for me, I have many projects I'm working on at any given time, so it's nice to be able to invest into my pension without having to worry about monitoring and selecting the investment choices. I'm having a dabble at my own investing in this year's ISA to see how that goes, maybe at some point in the future I'll reassess things, who knows!

The key thing for me right now is that I'm investing more money than I ever have before, and it's all moving me in the right direction to my goal of becoming financially independent by the time I'm 50.

If you have any thoughts on my investment choices, or anything else about this blog please do let me know in the comments below...


  1. Hi OR,
    Nice catch up - well done.

    As to the Personal Pension:

    Could you please explain what your goal with it is, i.e. growth, income, world tracker, UK only...? Also, what is your propensity to risk according to the advisor and do you agree with it?

    I've had a look at the FT links and all funds charge costs of 1.25% apart from SJP Global Equity (1.27%) and SJP Strategic Income (1.88%). There also is considerable overlap between these funds so I'm not sure why you need to hold 9 different funds.

    Regards, Pinch

    1. Hi Pinch,

      Thanks so much for your comment. When I had my consultation with my advisor prior to transferring in my pensions, I said that I was probably in the medium-high risk zone, rather than high risk. I haven't really been too involved with the fund choices for my pension to-date, because I wanted to rely on the expertise of my advisor given that I know very little about different funds, and don't have a great deal of time to spend investigating them myself. Perhaps this is not the approach most people would take I appreciate that - especially in the world of people seeking FIRE, but it's working for me so far. I will be keeping an eye on how it grows over time though and if I think it's not meeting my expectations will get more involved...

      In terms of my goal, I guess for now I'd say it's growth - I want to grow the pot as much as I can before I likely start using my pension from age 57 (in about 16 years)...

      Thanks for taking the time to look into it for me and providing your feedback, I really appreciate it.


  2. Hey OR
    People (including me!) have mentioned SJP's fees but you pretty much hit the nail on the head towards the end of your post - that you are investing more money than you ever have before. Retirement Investing Today has shown in his blog of 8-9 years that his portfolio growth has been largely due to new capital, not investment growth - that he has managed to keep his fees down has meant that investment growth wasn't eaten away by fees but in setting up your new regular ISA investment with a cheaper platform and with cheap funds, you are on the track to slowly reducing the impact of fees across your overall portfolio.

    Many people would not have bothered to take this step but you have so well done.

    As long as you are happy with the performance of your managed funds (and you appear to be), then may as well leave as is. With the amount you are saving, I think your are well on track to be retiring from age 57!

    1. Hi Weenie,

      Thanks for your comment, in particular your observation about RIT who found that capital investments impacted growth more than portfolio growth. This is reassuring. I'm somewhat caught in the pension situation I'm in for various reasons, and sometimes it bothers me a little. I am trying to make changes for the better (like my new ISA) so that helps me to rest easier, but I can't help feeling a bit anxious when the continuous message I see across the personal finance sites I read is about low fees and no financial advisors etc.

      It's really great to have your continued support and wisdom, thank you.


  3. I've never come across the St James's Place UK High Income fund before, but I see it is managed by Neil Woodford, and looks like it will probably be identical to his own fund, which only charges you 0.75% (depending on share class) vs 1.67% for your fund. Your fund also seems to have an initial charge, which I hope you aren't paying.

    So why invest in the St James fund and pay a higher rate, it's not like Neil Woodford is going to be keeping his best investment ideas out of his own fund?

    Not that I would necessarily go for the Woodford fund myself, but if you were looking for a UK Equity Income fund, it is probably a reasonable choice.


  4. It's good that you are becoming more interested in the choice of funds and costs, and that you are investing more. Personally, I would be quite unhappy with the list of funds you have shown in your pension.

    Charges are high, seemingly about 1.7%. Of the few I looked at, they seem to doing the same thing, investing in global equities, but then there are some Managed funds, which I assumed are splitting assets between bonds and equities. Although when I looked at one, it seemed to be mainly equities, and another was mainly bonds. So it seems quite hard to work out what your asset allocation is between bonds and equities. Perhaps your advisor provides you with this information. If not they should.

    With several funds doing much the same thing, it is quite likely you will be getting sub-tracker performance. I would look at the relative performance of the funds on Google Finance, but they don't have any information on the SJP funds.

    All the evidence is that paying for active management is unlikely to outperform cheaper index funds. You don't have to waste several years monitoring the performance of your funds to discover this for yourself.

    If I were you and I didn't have time then I'd work out what my percentage equity allocation should be and invest in the nearest Vanguard Lifestrategy fund via one of Monevators low-cost brokers, or perhaps one of their Target Date funds. For example if you say you are in the medium-high risk zone, get the Lifestrategy 60% equity fund.

    Opening a new SIPP online and arranging the transfer is only going to cost you a couple of hours of your time. Probably less than it takes to write a blog post.

    The fact that your high charging funds are now the status quo is not really a good reason for keeping them. I'm sure everyone is already telling you that the charges are too high and you are likely to underperform. If you started investing now I don't think you would choose the same funds, so why are you keeping them?


    1. Hi Andy,

      Thanks so much for stopping by, and for taking the time to leave your detailed comments. You are quite right that I've had a few people reach out to me about using SJP and whether this made sense. I even had one lady who thought perhaps I was recommending investing through SJP...which was certainly not the intention of my blog. I have simply tried to be transparent and show the full journey of where the money I'm saving is ended up invested.

      I have already been taking onboard much of the advice I've received since beginning this blog and through conversations with other commenters on my favourite personal finance blogs, and I'm more than aware that there is still more I can do to optimise. I believe this is a journey, and I will learn from my mistakes and get better as I go. For now, due to the terms I signed up with for the pension I would get stung by early leave clauses, but I'm confident that moving forwards I will make better decisions.

      Thanks again for your help, I really appreciate it.