We have been busy

Paying too little tax?

I thought not.

As a retired individual there is at least 20% income tax to pay when you take pension income, then there is 20% VAT to pay when we buy almost anything with that same income.

As an employed individual we have all the above and we suffer a further 12% deduction in National Insurance. Ouch!

But this isn’t news. We have always lived with this. It’s what makes the UK such a good place to live.

Let’s avoid some tax

If we can legitimately save tax, then we shouldn’t hesitate. So Melissa has been busy lately. Many of you with investments on Nucleus have probably seen a lot of activity.

By the 6th of April, as a group we had invested £620,000 into ISAs over the year. Much of that total was moved across from General Accounts just last month. By the end of this month, we will have invested a further £820,000. Absolutely all of that £1.4 million will be free from the ravages of Income Tax and Capital Gains Tax forevermore. Hoorah!

We are waiting for a few clients to get back to us at the moment, but I guess that over the balance of the 2017/2018 tax year, the total amount that we will invest into Tax Exempt Individual Savings Accounts will top £1 million in one year for the first time. The difference is because we can all invest up to £20,000 this year.

Now this £20k is on top of what we have in ISAs already. Between us we now have £16,164,584 in a totally legitimate tax free haven. That’s a lot of rainy day savings. That’s going to fund a lot of our dreams in the future. Tax free.

Have you got any lazy cash ISAs?

Bank cash ISAs are useless. What’s the point of tax free growth if bank ISAs don’t grow? Here’s how our Cautious, Moderate, Aggressive & AIM ISAs have performed. Your savings need to be growing! Get real. Get in touch!

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Our Shares

Since November we have each owned a multitude of shares. The results so far have been better than we dared hope. We hope you have all enjoyed our investment growth spurt along with discovering you own Fevertree shares whilst you sip your Gin & Tonics 😀

However there have been some unintended circumstances, especially for those clients with investment pots that have less than £50,000 in them. You see we can only buy or sell a minimum of £500 worth of shares at a time. Now nobody wants to hear they can’t get a withdrawal until somebody else also sells, so I have been carrying the slack by buying or selling as needed with my accounts. It’s meant that clients got their money on time, but I lost growth.

Introducing our Lite Portfolios

When the markets hit a high recently we sold down all of the smaller accounts. Today with the markets lower we have bought back funds only in those smaller accounts. The asset proportions remain the same as our full model portfolios that still hold shares, but these “Lite” portfolios only hold funds. But it now means any withdrawals, at anytime, can occur within 10 days at the most. It also means my accounts can remain fully invested too.

We could have continued to hold shares within many of these accounts, but just much fewer. Unfortunately holding fewer shares would have increased the risk. With shares there is safety in numbers.

We are Shareholders.


If I knew you 25 to 30 years ago, then I sold you life assurance companies policies. That made you a “policyholder”. After a decade I moved on to become Independent, proudly being able to offer all companies policies. But you would still have been a policyholder, just now you held many different companies policies. I moved on…


We had already started to recommend the funds of Investment fund providers like New Star and Invesco. That made our clients unit-holders too. As the firm continued to grow, we decided to drop all external influences. That influence was commission so we began to charge fees only in 2005. No longer would we recommend life assurance companies policies that only paid commission. Instead we recommended that clients buy a cheap product wrapper, like an ISA or SIPP, and then we filled it with directly owned unit-linked funds. That now made our clients purely unit-holders. We tried to find the best fund managers. We pitched one fund manager against another. We carefully assessed each fund managers charges, along with their recent performance record. Obviously recognising our Regulators eternal phrase;

“Past performance isn’t necessarily a guide to the future”.

In the long term no individual fund manager wins. Why? Because it is only the shares that give the returns and all investment managers buy mostly the same shares. Time to move on again.

Now I recognise how difficult it is to hold internationally listed companies like Apple. Those shares are denominated in Dollars and we invest in Sterling. So to some extent we will always be investment fund unit-holders where overseas investment is wise. Hence we still hold our Technology & Health and Pharma funds.


But we moved on once again and dropped most of our current investment managers. To be truthful we had dropped the vast majority of all investment managers back in 2007. We have had almost a decade of client returns powered purely by index-tracking funds. Today there has to be a compelling reason to pay any UK fund manager to buy shares on our behalf. Even though our chosen index-tracking funds were very cheap to hold. Because with £70 million between us, we are free to collectively buy our own shares now. We have become shareholders. Since November 4th the majority of our savings within our Pensions, ISAs and General Accounts have been invested directly into shares. We will no longer pay any annual fees to hold these shares. 🙂

But will our returns be any good?

I believe our returns will continue to be good. Our long term cost for holding our UK shares is now zero. That will yield a saving of about 0.5% a year. The main reason active (star) fund managers usually can’t beat the market is because they charge an arm and a leg. Index-tracking fund managers have to under-perform the index too, because although their charge is low in comparison, there still is one. The index and the shares within it have no annual charge.

And who says we need to out-perform the share market anyway? We simply need to achieve our lifetime investment goals and continue to be able to pay our bills. Neither of those are correlated to what the FTSE All Share Index is doing.

Highlights so far

Well, since we have owned the shares on 4th November 2016, which is less than 3 months.

  • Thankfully none of them have gone bust
  • One of them has been bought out giving us a 45% profit – Fyffes. Yes it’s bananas.
  • 12 of them have returned more than 10% – Ashtead, BooHoo, Carnival, CVS Group, Dart, Fevertree, Fyffes, London Stock Exchange Group, Nichols, Scapa & D.S. Smith
  • 3 have lost more than 10% – National Grid, Shaftesbury & Vodaphone
  • Overall the Moderate Portfolio has returned over 4.5%
  • Already we have all received some dividends too.
Here’s some frequently asked questions

Will we be keeping all these shares forever?
Forever is a long time. We constantly review our shorter term tactics, so who can say what will come next. However it is our intention to hold these shares for the long-term, removing the odd one and adding others from time to time.

What do the red flags mean that I see when I log into my Nucleus accounts?
Those red flags denote caution. They are applied to anything that isn’t a UCITS compliant fund. (I’m not going to explain what that is here). In the case of a share it means that a minimum of £500 a time must be traded. Since we bunch together when we buy or sell, our trades always exceed that amount. The red flag certainly doesn’t mean we have lost money and a green one would indicate that we have made some money. However it would be a quick way to assess performance though. I will asked Nucleus to look at colour on our print-outs.

Will we receive 50 or 60 share certificates?
Thankfully no. The shares are held between us on the one certificate. Plus its all electronic these days.

Will we receive the dividends we are due?

Can you still call yourself an Independent Financial Adviser?
I believe so. An IFA must be able to offer a client any product from any company. I still can and probably will do in the future. It’s just that right now I don’t feel many of them offer us value for money.

Can I recommend shares to you?
Please do. You can use the form below. We will investigate any UK share you feel we should look at. If it passes our selection process we will then buy it for all of us.

0 – £10 billion in ten years

This week I have been with Nucleus in Edinburgh. We meet for one day every quarter and have been doing so for years now. Together with a few other IFA’s, we help guide the future direction of the Nucleus platform. I guess that is why I’m so passionate about the Nucleus platform. H.J.Scott & Co. along with all of the daily feedback we receive from our clients, has helped shape what the platform is today and what it will be in the future.

The chart below shows an example of some of the recent reporting work that we have been involved in which will go live to clients next year. We are hoping it will answer the eternal questions.

How are my investments performing? and Will I run out of money in the future?

Screenshot 2016-06-02 13.59.11

In the twenty years or so before we used Nucleus, never once did any Insurance Company or Investment Company ask how they could do things better, for the benefit of their customers. To this day, they continue to be far too fixed on benefitting themselves and their shareholders first.

What is Nucleus

Even after 9 years using Nucleus, its sometimes difficult to explain to a new investor exactly what Nucleus is. It’s certainly easier to describe what it isn’t.

  • It’s not an insurance company like Standard Life or Scottish Widows.
  • It’s not an investment company like Invesco Perpetual or Fidelity.
  • It doesn’t make your savings grow, it just costs money.
  • Nucleus never recommends where we invest our savings
  • Nucleus doesn’t actually hold our savings, our money is safely ring-fenced away from their money

Nucleus is simply a financial administration company. We as clients subscribe to their service, which is basically software that lives in secure data centres. Nucleus hold authorisation with the UK financial regulator and so are licensed to operate amongst other investment wrappers, a pension scheme and an ISA scheme. We could never do that ourselves. The product regulation runs to thousands of pages, £millions of regulatory capital is required to back up their promises and the cost of each product licence alone runs to six figures. To do that job requires scale.

Constantly developing but maintaining the same at heart

Since the platform began it has stayed true to it’s word. To offer clients a transparent, cost effective, safe, unbiased placed to house their savings. The Nucleus fee of just 0.35% pa of a client’s savings held on the platform remains competitive, however the offering continues to just get better and better. It has to do. Other platforms are available and it is completely free for us all to leave Nucleus. Collectively as clients, we now pay Nucleus around £160,000 per year for their service.

It’s your Birthday

I’m back up to Edinburgh with Lesley on the 27th June to celebrate the 10th Birthday of Nucleus. With my surname I should probably attend their party dressed in a kilt.

Back on the 15th November 2007 we became the 28th firm to use their services. Our first client isa was set up shortly after, with an initial investment of just £7000. Back then the total held on the Nucleus platform was just £300 million.

It could be a fitting birthday present if after 10 years in business the platform closes in on administering £10 billion of clients savings. It will be a close call; assets at the end of May stood at £9.5 billion.