II purchase of TD Direct

So fortunately for me, someone on the FI London Facebook group highlighted that II had published the charges to accounts for previous TD Direct, now that the purchase has been completed.

I have to be honest, I had completely missed the update email stating that they were changing their charging structure – I had seen that they were going to, but missed the one that said they had. Given this, I thought I would share my thoughts and impact on this having read the terms and conditions – as I know it is always interesting to see what, why and how other people are changing their approach.

Please note: This is only taking their ISA product view – I don’t have a SIPP or Trading account with them (nor intend to) so is in isolation. Everybodies situation is different, so Do Your Own Research!

Current State of Play

Firstly – what do I hold? I have some Cash, Majority UK stocks & ETFs and <0.5% in funds over the entire portfolio. It’s not worth selling out my funds due to the dealing charge (or at least it hasnt in the past!). So I need to consider all of these factors in my numbers.

I don’t use the regular investment option within TD as to do so would have prevented me from using dividend reinvestment. So, my current charges are:

• £12.50 per trade. This however I take as a performance hit on the individual trade, so is simply added as an overhead, thus in effect increasing the overall price paid per share for my purchases
• £1.50 for dividend reinvestment. This is only on a few investment trusts so not a major factor, however again, this is included in my performance by taking the cost of this and spreading across the shares
• Platform Fee. This is very low as it is across the very small holding I have in funds, but is still a cost. The dividends the Fund pays out covers this, so I just treat this as a lower level of dividend payout

That’s it. So basically, if I didn’t trade (or traded once a year), and didn’t do dividend reinvestment my costs would pretty much be zero – a pretty sweet deal.

Looking back over the last few years, I have tried to work out what the total cost is to me against the portfolio.

The first thing that completely shocked me, is that despite believing I was a low volume trader, it appears that I may have been anything but as prudent as I thought I was.

In fact, in only 2 of the last 7 years have my total costs been below the new £90 cost – and that was the very first 2 years! Looking through the history to try and spot some trends, it leads me to this:

Dividend Reinvestment. Likely to continue, with SMT, NCYF always re-investing (6 per year), and so would JRS, JFJ, WPCT and Downing depending on what dividends they pay out – but I will go worst case and assume zero (i.e. deflate my costs). Anticipated cost is therefore £9.

I am also averaging almost 8 trades a year. Now, this is somewhat inflated due to 2013-2015, and the rebalancing I did earlier in the year. Assuming I purchase once per quarter, and add in a random purchase in between as well for balancing, that would give me 5 per year. Add in maybe 1 purchase per year for my “gambling”, that would give me a grand total of 6. Anticipated cost is therefore £60.

Sales. I am averaging approximately 2.5 sales per year. Whilst I am expecting the only things I will sell are going to be some of my gambles, I would imagine there would likely be 1 or 2 of these per year. For minimal cost, I will put this as 1. Anticipated cost is therefore £10.

So, based on that, the total cost of the new charges would be approximately £79. £11 down on the new charges they are bringing in. This is also based on a minimum trading. I can foresee selling BMS, PAF and potentially HGM at some point in the future, and buying other speculative shares, so I wouldn’t be surprised if I get close to the £90 anyway.

The New World

So, now they have published these wonderful new terms, what are they?

First – the big news is that they are introducing a quarterly charge – £22.50. Ouch.  £90 per year. Just for having an account with them.

They state that this cost can be used towards the cost of trading, so you can accrue trades (handy if you rebalance on say a yearly basis). The caveat to that is that the maximum value you can accrue is £90 (i.e. one years subscription). The plus side is that they don’t expire.

I won’t look into the frequent trading rates as you need to have, on average, traded more than 10 times per month for the previous 3 months to qualify on this – excluding regular and dividend reinvestment. I can’t imagine anyone going for FI would trade quite that much (people who have made it may well if their portfolio is of that size!).

Regular trading rates have also changed. If you carry out sub £100k trades infrequently then quids in – they have reduced the rates from £12.50 to £10. If your trades are more than £100k then the bad news is they have gone up – granted only by £10 per trade (£30 -> £40 for £100k – £500k, and £60 -> £70 for >£500k). I doubt that will affect many people out there but still impacts on overall costs.

Dividend and Regular investments are reduced to £1 – so a win there for me too.

Transfer out is £10 per line item, with a minimum of £30, a maximum of £250 – however they have said that this will be waived in the first year, so it gives me some time to make my mind up!

So, what does this all mean to me, and should I move? Now there is an element of the lazy here that it would be a real pain in the a$$ so I won’t do it if it will only save me a few quid. More than about £25 and I will seriously consider it. More than £100 and I would probably action it!

They are introducing a transfer out cost, however it is free for the first year, which allows me to buy some time.

What it means?

So, where does that leave me? I will continue to dividend reinvest my my Investment Trusts – however if I have read the terms correctly I will now pay £1 per reinvestment however I do not believe that is included in the trade credits they offer me, so no change to current on that.

I am not doing any regular investments, so nothing to note there either.

That leaves my day to day trading…. which, until now, I thought I didn’t do a lot of. The data says otherwise. What do I expect to trade over the coming months? Well, I have some cash sitting around that is ready to deploy into some ITs, so that is at least 1 trade. I will have swathes of dividends coming in each quarter, which will mean at least 1 more trade per quarter. That takes me up to 5 over the next year already. I expect at some point I will sell or trade on some of the higher risk shares I have so I am going to be close to the £90 per year.

I have traded more than the annual charges for the last 5 years (including this year to date) – quite frankly this surprised me.

As I have a year where it is free to transfer out for now I am going to sit tight. The IT trade I was going to make this month I will now delay, so I will sit on my hands and trade nothing until after the new charges come in (caveat: if I see something at a value I can’t say no to, I will still buy it), and monitor just how much I trade, with an aim to reviewing in maybe August next year.

Do you have an account with TD? What are you planning to do with it? Do you really trade as little as you thought you did?

 

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Why Saving for FI shouldn’t be your only priority

There is a lot of stuff out on the internet around the FIRE community about frugality and saving hard for your retirement and being able to kill the day job and have all the time in the world to do what you want. Sounds idyllic – it’s something I dream of being able to do, and my journey is taking a lot longer than most of the people you read out there striving for (or having achieved) FI. You can see people who hit FI in their 30’s – a seriously major achievement. For me however, FI is not the be all and end all utopia.

Whilst I am definitely not one of the You Only Live Once (YOLO) crowd, I do believe it’s as much the journey as the destination that counts.  I have been very fortunate over the years and traveled a huge amount, something that I have loved doing and would want to continue to do when I finally pull the trigger. The downside is that this costs money and so that drives up the final cost of the retirement pot, if I wish to choose to do it.

I can look back and I know that what I have done in the past, some of these I would struggle to do now, let alone when I am in my 60s. There are also some experiences that you will never be able to get again, and as times change it won’t matter, you will not be able to repeat them – one reason I like to travel to more remote places.

I can’t ski for as long as I did 10 years ago, nor can I do moguls as well as I used to – if I had waited until I was FI I would never have experienced this, nor had views like below for eating my lunch.

The other month we also went to see Nigel Kennedy in concert at the Royal Albert Hall. Whilst there is no doubt about his genius for music and interpretation (and ignoring the disregard for the audience with his timekeeping!) that made for a superb evening, it was not that cheap. The difference is I haven’t seen him play for many years, and, at the age of 60 (him, not me!), who knows how much longer he will be able to keep this up. On the plus side, his clear enjoyment at doing what he was, and his level of energy he has makes me wonder if he will ever stop! I could have put the money into investments and watched it grow over the next X years and see it to be generating £Y a year, but I couldn’t buy the experience.

For this reason, whilst FI is the end goal, it’s the steps to get there, and the potential missing of opportunities that stands out for me. I could have hit FI I guess a couple of years ago, but I look at what I wouldn’t have seen and done, and I would regret it.

Having said that, everyone is different. If you hate flying / cruises / circuses / foreign food etc. then actually you may be happy to not do those things, and live an equally fulfilling life somewhere in the UK (thinking along the lines of Last of the Summer Wine!). I have no problem with that at all, nor am I judging, after all if we all wanted to do the same thing and liked the same thing it would be dull. The challenge is figuring out what is right for you.

Just make sure that you don’t spend your life chasing FI at the cost of your time and health on this planet. Having known a few people who died early (30’s and 40’s), you need to strike the right balance. Spend some time enjoying the here and now, but just make sure you do it in an informed way of the impact, not blow it all on Cristal Champagne in clubs on a credit card!

What are some of your guilty pleasures that are delaying your FI?

Sep ’17 Go T’ Pub Performance

So here we are again, a little late in the month on the update but as always, here it is!

For the full details over all of the portfolios as a summary please refer to the full month end report – this is specifically looking at what has happened on the Go T’ Pub portfolio only.

So the key bullet points for this month:

• New Funds added. As always, the regular contribution of £1,100 has gone in
• This month the portfolio generated no dividends, so no income to help me through (VWRL will pay out in October)
• No withdrawal was made
• Left over cash from the previous purchases was left in

Overall performance: The starting value was £9,664.77, with £1,100 in new funds added, and £0 withdrawals, meaning total starting value was £10,764.77. We finished the month on £10,685.48, so the total performance across the whole portfolio was -0.74%. Disappointing when it ends less than it starts, but the main thing is the total value is higher than the previous month.

VWRL ETF

So the standard units were purchased – a further 18 units purchased at £59.49 per unit, making the average cost per unit of £60.27. So despite all the noise and yo-yoing of the market, the average price changed by just 17p. It all helps!

So – how does this now look as the graph data slowly builds up?

So right now, hardly anything in it between my contributions and the value. I should get another dividend next month from the VWRL so hopefully that will make a slight dint and show a bit more value than contributions, but I will save that excitement for now!

Cash Vs. Investment Trust

So  – back to the challenge of cash against investing for my emergency fund. Remember folks – you should not do this.

So, how is it looking?

Cash	Now stands at £5,127.06
S&S ISA IT	Now stands at £5,171.64

Yes, that’s right – I got a whole 4p interest in my cash ISA. The previous dividend from CTY was automatically reinvested, buying an extra 11 units (total cost, including trading fee and stamp duty just over £48) which explains part of the difference.

For those that prefer pretty pictures:

A nice little trend above the cash. One day we may even see the starting value line appearing underneath the cash line.

Conclusion

So nothing at all interesting happening here if I am honest! The overall value of the portfolio keeps on ticking up with the extra cash going in which is always nice to see.

September ’17 Performance

Firstly, apologies for the slight delay in getting the performance figures out this month – a very busy work schedule meant a fair amount of travelling, and then a sneaky week away with the families with only my work laptop meant I couldn’t post, and wasn’t organised enough to time the post and do it in advance.

So the month has ended, and so its time to take stock of the performance across my portfolio, and compare it to the usual index of choice. This enables me to see how I am doing. As I covered in my “How I measure performance” – basically I take the value of the portfolio at the end of last month, add on any contributions for the month, and that was my starting value. End value is the value at the end of the reporting period. Simples 🙂

So, what did September do to my overall performance?

 

Portfolio	Performance	Notes
Company Pension	-1.78%	No income generated as all funds are in growth or reinvested
Personal Pension	-1.69%	No income generated as all funds are in growth or reinvested
ISA 1	-0.34%	No income generated as all funds are in growth or reinvested
ISA 2	-0.99%	The performance does not include the income that was paid out into my account, but is covered by the income so really need to consider both in conjunction
ISA 3	2.22%	Although dividends are paid out, they remain in the ISA wrapper, and will get reinvested for growth. The performance figure includes both the Capital growth, and also income received which will get reinvested. The Income is the %age paid out by the portfolio but remains inside the wrapper to buy more goodies
ISA 4	-0.74%
FTSE-100	-0.78%	This excludes any dividends
FTSE-250	0.36%	This excludes any dividends
FTSE-All	-0.57%	This excludes any dividends
S&P500	1.97%	This excludes any dividends
Dow Jones	1.99%	This excludes any dividends
VWRL	-2.53%
VHYL	-2.65%
GBP/USD	3.72%

So, what to make of all this? Firstly, a fairly large jump in the strength of the pound against the dollar, which would explain why VHYL/VWRL dropped when the US markets rose so much.

My actively managed ISA put in yet another great month – and is really pushing up in value – obviously helped by the current strong bull market.

The rest of the portfolios – not so great with all the drops, but I just tell myself it means I buy more for the same amount of money! Overall, even with the drops across most of my portfolios, the slow and steady increase in my networth continues.

Total dividend income this month was down on last year just a little – disappointing but then I sold out some of the shares that payout in September, and the trackers didn’t pay out in September. Having said that it was still a noticeable income that will get reinvested / saved, so it all adds up!

How did you get on with the markets this month?

Sep ’17 Income and Expenses

I can’t believe just how fast September has gone by. I know I was struggling to post as often as I wanted to, but to be doing this statement already I find hard to comprehend.

It’s been a very busy month with a lot of travelling, both work and personal reasons, so what has this done to the overall month? Time to take a look!

As previously mentioned, the September statement for income is from my end of August pay cheque as this is the funds for the month.

Income

So with my new tax code, I found myself with a much larger pay cheque then I expected. Given that HMRC seem to regularly muck me around (last tax year I received I think it was 8, yes 8, different tax codes over the year), I took the view that any extra funds above my standard income will not be included and I will put to the side for now. As such the numbers below are based on my “standard” income.

My other half’s ISA also chucked out more money this month than ever before, so it is starting to really demonstrate the benefit!

Expenses

So, always a nervous time this, lets take a look at what the expenses are like…. I am sitting comfortably! It felt like I had a lot of expenses in September with a number of weekday networking and meeting up nights out, travel for work meaning that I couldn’t always make the cheapest options work, and then personal travel and visiting also adding to the costs.

Item	Notes	Amount
Things I choose not to avoid*	Mortgage, Insurance, shared bills etc. – yes, we could move somewhere cheaper, not have insurance, reduce our bills a bit and so on, but we are where we are.	40%
Groceries	All the food and other stuff needed for home	3%
Alcohol for home	Home alcohol consumption only	2%
Bicycles / Car related	Any costs related to either the bikes or the car	1%
Alcohol Out	Generally, its the pub….	3%
Eating Out	I include purchased lunches in this as well as meals out etc.	1%
Other	My catch all for anything I may have missed….	1%
Holidays	Any spending related to holidays, flights etc.	0%
Savings	Anything left over! This includes money into ISAs, mortgage payments and non relief pension contributions. My company pension comes out before it hits my bank account so isn’t included, nor do I include the “top up” of money when my money goes into my personal pension (i.e. I put in £100, I register it as £100, not the £125 that gets credited in my pension)	49%

Wowser. This is actually my highest ever savings rate (by 0.3%). Something I am super pleased with especially given how active this month was, so shows it can be done. I am sorry that I didn’t quite break the 50% level, but that gives me something to aim for still.

My overall alcohol out bill this month is a little bit higher than it should be, but reflected by the nights out I have had, all of which I enjoyed!

Groceries was also quite high this month, however some of that was food that will be going away with us when we next go on holiday, so not the end of the world.

Overall it feels a very odd September. I don’t feel like I had any time to do anything much (I struggled to even make 1 post per week) and yet despite all that, a very good savings rate. Having to pay back my savings for the building work has shown that I can still do this so if I can keep this going once the cash is replenished then I will look at how I can add this into my normal funds. Either towards holidays / general things or more savings, I will wait to see.

How was your September?