October 2016 Investment Review

Many Happy Returns

This month we celebrate our fourth complete year of managing our portfolios using our discretionary permissions. It’s great that for most of us, this valuation will be the highest valuation we have seen. Throughout the period we have taken the opportunity that being able to change investment direction quickly has presented to us.

I’m not going to describe blow by blow how we achieved it, instead here are just our 4 year results. To put them in context remember

  • 7.18% p.a. would double your savings every 10 years.
  • The FCA caps the investment illustration rates at 1.50%, 4.50% & 7.50% before charges.
  • Our annual returns shown below are after we have deducted our 1% p.a. and 0.35% p.a. for Nucleus.

But chiefly today I want to describe what comes next.

Cautious Portfolio 5.73% p.a.

4yr Cautious Portfolio

Moderate Portfolio 9.06% p.a.

4yr Moderate

Aggressive Portfolio 11.44% p.a.

4yr Aggressive

The Future

As you will no doubt be aware from my recent emails and blogs, we never rest on our laurels. We are part way through a large-scale investment rebalancing exercise, which has seen us divide our portfolio across many shares instead of across just a handful of funds. In effect cutting out the middleman.

The missing piece of the jigsaw

Shortly you will see the last tier of purchases. Here is the background of how we chose those purchases.

It struck me that if we each threw a list of our direct debits into a pile, that it would be difficult to differentiate yours from mine. People like us all pay our bills. Mine will look similar to yours. United Utilities, British Gas, Council Tax, Home insurance etc. etc.

I began to look for a fund that owned all the companies that we pay bills to on a regular basis. After all, if we are all continually contributing to these companies then they probably are amongst the safest companies to invest in. What if the companies we pay our bills to returned our money to us by way of dividends? An idea was formed and the research followed. No fund existed, so we decided to do it ourselves. We eventually selected 29 individual companies that people like us regularly purchase from. We thought it would be a steady place to invest. We are not trying to pick the 29 best shares or the 29 highest dividend payers. Simply 29 shares we can all understand because we are their customers.

bills1

History shows that many of these companies would have been a great investment irrespective of the dividends they have paid. Some are obvious like United Utilities, some less so like Pennon (They empty our bins) and some we are guaranteed to need in the future like Dignity (Undertakers).

The Usual
  • Past performance isn’t necessarily a guide to the future.
  • Investor’s Capital is at Risk – the value of an investment can go down as well as up and investors may not get back their initial investment.
  • This is not general financial advice. After all anybody can read this. I may not even know you. I only give regulated financial advice on a personal face to face basis