Go T’ Pub ISA – The Numbers…

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!

Regular Investment

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!

 

 

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Author: fireinlondon

Fighting the high cost of living in London

9 thoughts on “Go T’ Pub ISA – The Numbers…”

  1. Hi FiL,

    Good effort! Saving £1,100 every month is essentially £13,000 over the year. Not a small number by any measure. I particularly like the way you think of investing £1,200 as creating £3 of passive income.

    I may be speaking for myself but one thing I’m really interested in is the actual figures like the way you wrote this post and not percentages. In some of your reports you state you used a specific percentage of income on alcohol for example and it doesn’t really mean anything to me. Not a criticism as I can understand the need to stay semi-anonymous.

    You’re one of the few UK finance blogs I continue to follow – keep it up!

    Rory

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    1. Hi Rory,

      Exactly – it’s a significant amount of cash to put aside, but I find it slightly easier (or less painful?) to think of as an extra £3 per month!

      I think most people would like to see actual numbers as this is always interesting to see (I know I prefer it), however for the bulk of the figures, I am not willing to share that level of detail. The reason I didn’t mind sharing this is it’s setting up a portfolio from scratch and people can see how it progresses and how it may work for them.

      Glad to hear it – and hope it proves interesting – I am certainly excited to see how it pans out!

      Cheers,
      FiL

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  2. That is a huge regular contribution! Well done. Am also investing in ITs including the one you mentioned above. I look forward to seeing how your portfolio develops which will hopefully inspire me and my family to keep going on this FI journey.

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    1. Hi Mrs Chai,
      Thanks for dropping by and joining the conversation! Yes, it is a huge whack to go in – and I recognise this and as I say, was more than I used to earn in a month when I started work nearly 20 years ago!

      I do like IT’s for longer term and SMT has done me very well, and I do believe for active managed they are good, but I know I am not in the majority.

      Yes – I wanted to share the actual numbers here so it would be meaningful, and people can see exactly what was bought, when, for how much and how it is gone. I remember when I first started investing it seemed to take forever to get anywhere much, so hopefully this will show these early painful periods are worth it – just keep the faith!
      Cheers,
      FiL

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  3. All the best with this, FiL – it’ll be a sizeable sum in 8 years’ time, no matter what % return! I continue to slowly build up my basket of ITs and hold both CTY and SMT. I bought a small holding in the latter a while ago and it’s showing an increase of over 48% – I’ve been waiting for the price to drop but I think I might just top up anyway soon.

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    1. Hi Weenie,
      Thanks – I am looking forward to it! Well the aim is to show what it can do over time, accepting it’s a larger amount than many people would be able or willing to but it will show what it can do over time, hopefully smash the amounts I say above!

      Nice on the IT’s – I do think they are under rated in general if you can find some good ones – like you I gave up waiting for a dip in the price and just tucked in – I am going to watch with interest the cash vs. IT graphs (not that anyone should do that!)

      Hope you are settling in the new job (just about to head over and read up!)
      Cheers,

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    Like

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