The joy of (work) travel

So, one of the fun parts of my role is that I travel a lot more than I used to. The plus side is that I put all the expenses on my rewards card which means more money back, which you have to love! The downside is the distances and the tiring nature of it (the worst case I have to do on a regular basis involves over 10 hours of commuting for about 5 hours in an office). Not ideal, but all part of the job and pays me. The plus side is that bit is coming to an end.

The flip side to this, is I get to do a lot of people watching as some of the trains I can’t work on (as there are no tables), or I have to change too frequently and I am not getting a laptop out for just 5 or 10 minutes. It isn’t the best use of my time, but it is all part of the job so for now I continue to suck it up, and to a degree enjoy the various areas of the UK countryside.

On a recent trip I got to go down the good old “commuter belt” from London and the home counties. Not too surprisingly there was the usual group of suited and booted types heading into work – just like me! There were the odd tourists or people clearly on a day trip, but they really were the minority. Funny how us humans develop our patterns of knowing exactly where to stand to get on the right part of the train to minimise the distance we need to travel when we get to our stopping point. Shame people don’t do the same for their finances. But I digress.

I do enjoy staring out of the train window, and looking at the countryside and houses. Whilst I wouldn’t want to live that close to a railway line, it is always nice to see different types of homes and give me an idea of what could be nice for when we retire. Every so often of course we hurtle (or sometimes stop) at train stations. What really struck me however was as we went past the various railway stations, what was in their car parks!

I am not a secret fan of car parks unlike some, however it was always the cars, and similarity that struck me. You had some of the sensible small cars there, however there was also row after row of high end BMW or Mercedes, Porsche or large 4x4s and it got me thinking of the level of insanity that exists in this country (and that’s without even talking politics!). Whilst I am not up on the costs of these I am fairly certain that these would be at least £30,000 each – and that’s assuming they were bought outright, something I highly doubt. Now I am not familiar with the intricacies of lease hire or hire purchase for cars (for obvious reasons), so I don’t know how much this would cost, but I would guess at least a couple of hundred quid a month.

What really got me laughing was seeing several Porsche 911’s in a railway car park. I am of course assuming the owners were commuting to work (but of course I don’t know for certain). So they spend, I would guess, £500 per month on the car, plus the daily parking charges, plus the train commute. Now I guess not everyone can (or would want to) live close enough to the train station, so I can imagine the belief that they must have a car. But seriously? A 911 and still having to commute and work?

Why on earth would you spend so much (I dread to think of the other associated costs) when you still had to work? Don’t get me wrong, I would love to have a Ferrari, but I wouldn’t pay for it in preference to paying down my mortgage!

For reference, years ago someone I know took their Ferrari in for servicing. 4 new brake pads. Can you guess the cost? It was £22,000. You could buy a whole knew car for that!

Over the years, the increase in London property prices has been mad, but compared to the cost (both financially, and health and time wise) of commuting, does living outside and facing that really be worth it?

When I first took a job in London (hands up, I was attracted by the massive increase in salary) I thought I would commute it. Back then my rent (one room in a shared house) was £200 per month, and my transport cost was £250 per month. The commute time? Just over 2 hours each way. The cost of renting (a room in a shared place) a 25 minute walk from work? Just over £600 per month. So £150 per month bought me 3 hours a day, or 60 hours a month – so £2.50 per hour. I knew there was a reason I did it!

Would it be possible to do it now? I suspect it would be a challenge – central London rents being what they are, but it is possible to find something for under £1,000 per month. No you don’t have your own place and you share it, but think of the amount you can save this way. The cost of renting a flat on your own in central London, or even buying, are just prohibitive unless you land some insane banking job.

It’s what I did (share, not land an insane banking job!), and I think it still is, it is just that people would rather live further out and spend the difference on something else they don’t need! I can accept that with a small kid or two people would want more space that you don’t get (at a reasonable price) in London, but that opens up the can of worms of should you have the children if you can’t afford that side. But that is a different conversation!

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Evaluating my insurance

So, further to my contemplation moment, I have been digging into my current cover and what this may mean for me. As we approach end of tax year, I can also change my benefits package so I want to be ready – I only have a week or two to make these changes so I want to be ready. Sadly I can’t look at it for now for another 2 weeks whilst they prepare for the 2018 – 2019 year.

Right now with all the opportunities at my current company, I can’t see me moving for a good few years by which time I am confident I will be comfortable enough to cover this with the mortgage coming down. The question I always ask myself is, “Could I see myself retiring from this job”. The answer right now is yes – for the first time ever.

So first up – payment on my demise. My company actually has death in service benefit (I need to check if this pays out while I am on holiday / weekend etc.) which I hope I can take up to to cover the outstanding mortgage. On the assumption I can dial it up enough to cover the outstanding mortgage (which will of course reduce month on month), then this means I can kill off one of the insurances.

Unemployment Income protection. So I do have this outside of my companies benefits, but not with them. If I were to cancel this the only risk is if I lose my job at work. I certainly don’t intend to be fired (in the sense of out of a job), so the risk would be redundancy.

I’ve been given notice / put at risk of redundancy on multiple occasions – not a nice feeling, but I’ve never been made redundant. If I were to be made redundant I would be made some form of offer, and I would be able to find a new job before I run out of cash.

Given this, I am going to be bullish and say I won’t need this, but I do need to build up some cash reserves.

So, this just leaves the income / critical illness insurance. I can elect exactly how much of my salary as a percentage I can take as income, so I can dial this up so that I can not only cover my basic expenses, but also save and invest – or overpay the mortgage for the few years it applies.

I’ve got all the previous years insurance documents that I am still reading through (and will bounce past my IFA – he does need to earn his fees!) but the first conversation was a good open discussion. Given where we are now it looks likely that I will drop the insurance, however I will only know this for certain once I can change my benefits.

Right now I am so certain that I will be able to drop private insurances for now that I will start looking at which Investment Trust to put the premiums in! I won’t be changing anything until the new tax year so I have some time to just be comfortable with my decision.

Will I be able to sleep at night if I cancel the insurance? Yes – provided the numbers add up! Adding the premiums into my ISA for the next 7 years would, at roughly 5% returns, add a good extra bit to my total pot when I retire.

I plan to do the same with the premium investment trust as I do with my cash reserve experiment. I will drip feed each month and reinvest the dividends. Mentally I am also setting myself that I can sell this if the need arises (unlike my main ISA) to cover expenses as it is “free” money that was going into insurance.

I have a strong sense that I am over insured at the minute but until I finish running the numbers I won’t be certain. The only reason I am looking at it now is how much my investments have grown over the last few years – the bull market has been good to me, and rebalancing has taken out a chunk of the volatility.

I am a little apprehensive at the minute, but once I gain access to the new benefits I will be able to run the numbers and be comfortable…. watch this space!

 

Why I (and you) should invest more in trackers

So today’s post is starting out as a much shorter quick one given the week and various other personal commitments that I have had – however I thought it worth sharing for people to laugh at me!

I’ve always been trying to pick my own stocks, from investing starting over a decade ago, and even when I was a small kid (how many 8 year olds do you know who read the FT and went through the share prices to check their fantasy portfolio?! :)) so it is something that I really enjoy. I will be honest, it is starting to get better. My first few forays were not good – I lost everything on Northern Rock (granted I didn’t put a lot in, and it was after it had already crashed so mentally I knew it was a gamble). I’ve lost money on others, but doing those was educating myself (buying a stock a mate recommends? Yup – lost money there as well) which means I got back into making sure I did more and more research before purchasing something (what, you mean a name you like isn’t just enough?!).

Think of a mistake you have read in a book, blog or heard on a podcast? Yup, I probably made it. The flip side is that I now seem to be doing quite well as I have learnt over time, and am still learning (rebalancing my portfolio in the summer of 2017 means I have lost out on an approximate 20% increase in BLT). I constantly look at the prices as they go up and down, and love seeing the dividends roll in. This could just be the bull market of course, who knows.

So why do I say I should invest more in trackers? Firstly, the volatility – of course this depends on what you are tracking, but I can’t think of much (ignoring crypto currencies!) that would contain that high a volatility. As my portfolios have grown in size, this means my individual share holdings are getting larger and larger. It got to the stage that I had to split my my approach, rebalance and get more investment trusts and trackers simply as I wasn’t comfortable with the amount of holdings of individual shares I had.

With the GTP ISA it is now pure tracker for my investments (I don’t count the cash experiment) – into VWRL on a fire and forget approach.

So with the increase in the use of trackers, what have I noticed?

Firstly, I don’t pay as much attention to them. Yes, I am buying VWRL every month and I know roughly how much it goes up and down, but nothing on a par with what I do for the individual stocks.

I don’t take it personally if the trackers go up or down – it is just doing what the market does. With the ones I choose I have the usual emotions – should I sell, did I make a bad choice, how long do I wait for etc. It doesn’t matter what I tell myself when I bought the share, the emotions are still there.

Whilst I love seeing my overall retirement savings continue to rise over time, I don’t feel any special “relationship” with the trackers. It has completely removed any emotion from it, and as such has meant I worry less and less about it, just as long as my investments trickle in. I will continue to do some form of selection but I am limiting that within my portfolio.

What do I take from this? That the best way to build the nest egg is not to try and time the market, select your shares etc. but just simply shove it into a tracker (or potentially a good Investment Trust) and forget about it.

So if you are happy to get rich slowly, and without stress or worry, setup a direct debit, buy a tracker fund/ETF and just forget about it – enjoy your life now knowing that you are also building your future.

 

Jan ’18 Go T’ Pub Performance

So once again, enjoying the fire and forget approach, knowing there is nothing I can do about world performance, I am getting whatever happens in the markets. I really can’t believe how much this has taken away some of the scrutiny I put in and how much less this (should) make me worry about money.

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 however I added an additional £30 to this, taking it up to £1,130 so that I was certain to get 18 VWRL units
  • This month the portfolio threw out £28.51 courtesy of VWRL…
  • No withdrawal was made
  • Left over cash from the previous purchases was left in

So once again just the fire and forget approach – don’t under estimate how nice and simple this is! Just over £9 per month in income basically, so that means I have now bought myself a free “Pint and a bag of crisps” each month 🙂

Overall performance: The starting value was £14,557.75, with £1,130 in new funds added, and £0 withdrawals, meaning total starting value was £15,687.75. We finished the month on £15,499.17 so the total performance across the whole portfolio was -1.20%. Not good as it came down (although total value still up) – hopefully soon the value of VWRL will start to drop so that I can buy more than just the 18 that I have to keep adding funds to make sure I can get! Otherwise it’s nice seeing how the income starts going up.

As a question to regular readers – would you be interested in seeing how the income from VWRL grows over time with the regular investments?

So, time to get into the detail…..

VWRL

So I added some extra cash to keep the 18 unit purchases going at £64.37 making the average cost per unit of £61.62. Main thing is more and more units getting added which is nice!

So looking at the lovely graph again…

201801gtpub

So the second month in a row with a clear break between the value and the contributions – it is rather nice seeing that! Given the dividends will provide (hopefully) a bit more of a gap going forward. I am sure this will change in the next slump but I will relish it for now! That said – if the values drop then I can get more units so in 7 years it will be good….

Cash vs. Investment Trust

So for me this was the more interesting part of the overall approach – I transferred 50% of my last remaining cash ISA over to an IT and will be tracking the two together to see how things perform. Remember – you really, REALLY shouldn’t do this. Keep cash on hand, be able to sleep knowing your bills would be covered etc.

So, how is it looking?

Cash Now stands at £5,127.63
S&S ISA IT Now stands at £5,194.00

A stonking month for the Cash ISA – a whole 45p this month! I can’t believe how well that is doing ;-). Seems CTY had a bit of a lapse this month but still above the cash value, so that is something…

How does the rollercoaster look now? Well, very much like this:

201801cashvsstock

Motion sickness tablets anyone?! Not too bad, but doesn’t make it easy to sleep at night if this was your only emergency saving!

Conclusion

More of the same – slow and steady with the total value just continuing to tick up… all helps towards my end goal.

As I previously mentioned, I am thinking seriously about my insurance. If I do stop paying the insurance, then I will look at adding this into this ISA – most likely an Investment Trust with dividends reinvested to form yet another bunch of “emergency cash”.

My thinking of putting in some money and selecting stocks is still on hold for now – mainly because I don’t have the spare cash 🙂

Jan ’18 Performance

So January has finished, Christmas is but a distant memory – so how does it look? A hangover January? The month has screamed past with work being insanely busy meaning I only had 1 day completely off work since the 2nd January – but then I do enjoy it as it really gives me something to get my teeth into.

Portfolio Performance Notes
Company Pension 0.35% No income generated as all funds are in growth or reinvested
Personal Pension 0.78% No income generated as all funds are in growth or reinvested
ISA 1 0.21% No income generated as all funds are in growth or reinvested
ISA 2 -0.41% The performance does not include the income that was paid out into my account, and was another very good month of payouts!
ISA 3 -1.56% 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.
ISA 4 -1.20% Go T’ Pub ISA
FTSE-100 0.14% This excludes any dividends
FTSE-250 0.38% This excludes any dividends
FTSE-All -1.99% This excludes any dividends
S&P500 5.86% This excludes any dividends
Dow Jones 6.11% This excludes any dividends
VWRL -0.11%
VHYL -0.70%
GBP/USD 4.89% This was taken on the spot rate on the close of the last day of the month. Going forwards I will pick up the exchange rate from www.xe.com for consistency and real life 🙂

So what to make of all this?

The obvious one for me is the strengthening of the pound – which explains why the US Markets powered up but everything else went down!

I am continued to be surprised that, despite the fees, my IFA is powering up on the returns (no I am not plugging him!) – which slightly grates as I want to show I can do better!

Despite all the negatives in there, the nice thing is that the absolute amount is still going up. Slowly but surely I am getting there. Putting it all into pretty pictures, it is something like this:

201801PerfGraph

So amazingly after 9 months my IFA has given the best returns, even after fees, although my personal managed ISA and VWRL not that far behind. ISA 2 continues to lag the field, but then it was mostly designed to generate income and pay out (helping me further pay down the mortgage).

So not a lot to really shout about – the main thing is money goes in, invests and some comes out. The total amount is still increasing so I can be happy with the fire and forget approach.

Update: I forgot to add one of my targets – losing weight. Unbelievably I have managed to lose 1 stone since January 1st. I put this mostly down to reduction of the alcohol consumption although reducing my food intake slightly has also helped. That’s the easy win though, I think the next stone will be harder….

How was your January?