So, the moment you have (probably not!) been waiting for…. the numbers! I decided to split this out ahead of the month end reports when I will go into the details on performance and the tracking, but otherwise that first one would end up being a monumental update!
So these are now setup, although I am a little disappointed with the timings, but you know what, I just need to get over myself on that.
So the money leaves my account on the 1st (unless its a non working day, in which case the next one). This is good as it takes the money out of my sight so I forget about it. It then sits in my Selftrade account until between about the 22nd and the 24th of the month, when the regular purchase will (apparently!) kick in.
Not ideal as it means there is almost a month behind me earning the money and it getting to work for me. Still, we are talking just under a month. With an investment horizon of at least 8 years – that’s nothing really.
So, the magic number I went for? Slightly higher than I have failed to save every month of last year! I am putting in £1,100 per calendar month.
I appreciate that this is a fair chunk for most people (it is to me too!), but this is to start providing me with my social budget, so I am deferring my socialising a bit *cough*.
What will happen to those funds? Well, if I were to continue this rate for the next 8 years (to my target date), at a 4% rate of return, this would give me just under £125,000.
At 7% that would be £141,000. Now these assume dividend reinvestment (which I may or may not do) and that then entire 100% will be invested (which it won’t as it will be rounded). So either way I expect it to hit over £100,000 – and that assumes I don’t try and increase it. I would like to get it up to £1,200 simply as at that point I can mentally tell myself that I am buying £3 income per month, every month.
It will be interesting to see where I end up in another 8 years. Given it appears that selftrade will allow me to do dividend reinvestment with VWRL, I intend to fire that off as soon as I can.
As I say above, appreciate that is more than a lot of people may be able to do, all I will say is firstly you may well get to that point, and for clarity – that is more than I ever earned in a month in my first 2 years of working! Secondly, hopefully if nothing else it will demonstrate how things grow.
The Cash ISA vs. Stock Experiment part
So, firstly the disclaimer. DON’T DO THIS. You need your emergency fund in cash that won’t have such a volatile time, and if you do need it you won’t have to sell at a loss. I am doing this as I haven’t touched this emergency cash in YEARS – even when I could claim it was close I haven’t needed it. I am comfortable in effect reducing my emergency funds.
The question was, what to invest in? I wanted to utilise an Investment Trust (mainly as my TD Direct doesn’t allow me to reinvest dividends in ETFs – I didn’t know Selftrade would let me, and I haven’t seen it yet actually happen). So, what were my criteria?
- Well recognised, long established IT
- Good solid record of regular dividend payments, ideally increasing
- Quarterly dividend payments (when I stop contributing to this ISA this will help me avoid charges, and also allows me to push compounding a little faster)
So, not a lot! With this in my mind, I selected the City of London Investment Trust (CTY). A massively impressive dividend record, long established and quarterly payments.
I would have considered Scottish Mortgage if a) I didn’t already hold it in my other ISA and b) had it paid dividends quarterly.
So, my cash transfer completed, and 50% of the reserve went into my Selftrade ISA. This means I had £5,126.84 in both the cash ISA and the Go T’ Pub ISA.
With my identified Investment Trust, I eventually purchased 1,203 shares in CTY (after the fun of screwing up). Sadly I just missed the ex-dividend date (the date when it becomes too late to get the dividend in laymans terms). A bit of a bugger but such is life – the next dividend I will get from it will be approximately August, and for about 4.3p per share – or about £50.
The dividend reinvestment is set so I can now forget about it. What will it look like in 8 years time? Well, at the current approximate 3.7% return, it will be about £6,889. At 4% it would be just over £7k and at 7% just under £9k. So it looks like I will never double the money to make me feel secure enough to put the rest of the cash in during the time frame I am looking at, but certainly interesting. Depending on how I do with other cash positions I may end up moving this, but let’s see.
So there you go – the details on the Go T’ Pub ISA – keep posted for the update on how the first month goes!