Taste the difference

bigadaj

letspretendforaminute wrote: »

£49,000 isn’t beer money.

Depends, it is if you're Philip green or Mike Ashley, but not for the vast majority.

PeacefulWaters

Think about all those people who held blue chip, high dividend, defensive banking shares.

letspretendforaminute

Thanks to all those who put forward their opinion and that has changed sentiment to some degree.

I decided to go half in or at least for the original sum invested and upped my position by 9,423 to 21,500 with a view to increasing this to 25,000 and leaving it there. I’ll ensure that the remaining pot is even more diversified by investing in a couple of funds.

jamei305

Upside: might perform slightly better than a particular fund
Downside: might lose everything

I know what approach I'd take.

Malthusian

letspretendforaminute wrote:

I have played the stock market with £49k of old pensions from 2012 and it’s current value (SIPP HL) is £113k with no additional contributions.

A portfolio consisting of 50% in a global equity index tracker and 50% in smaller companies funds (sector average) would have returned about the same, at a much lower level of risk. While this is a highly aggressive portfolio, it's less aggressive than "playing the stockmarket", so you haven't received any compensation for the risk.

letspretendforaminute wrote: »

I decided to go half in or at least for the original sum invested and upped my position by 9,423 to 21,500 with a view to increasing this to 25,000 and leaving it there. I’ll ensure that the remaining pot is even more diversified by investing in a couple of funds.

How will your retirement plans change if Sainsburys goes bust and your pension is worth half as much as you thought it was going to be?

bowlhead99

letspretendforaminute wrote: »

d it’s current value (SIPP HL) is £113k with no additional contributions. A large proportion of that (20%) is now held in Sainsbury’s shares

as a traditionally defensive stock I’m considering going all in (100%), adding £250 a month (£312 gross) plus compounding at £8,750 (~3,500 shares) per annum.

So you were considering literally having 100% of the portfolio in Sainsburys for the whole £113k, and adding about £4k more gross a year. Where does the 'compoounding at £8750' come from ? You don't have £8750 at the moment - with your 12500 shares you have £28k+; you are not going to be able to buy £8750 of shares (or 3500 shares) from the 3% dividends on a £117k investment. The £8750 number seems meaningless?

letspretendforaminute wrote: »

I hold 12,500 shares in Sainsbury’s currently and without dividends (£1,500) my unrealised paper loss here is £2,500.

OK so your track record is that you have lost more money on the share price than you have made in dividends, correct?

That’s nothing in the grand scheme of things and I agree with you luck has been on my side.

So, luck has been on your side yet you have lost £2500 but made £1500 of it back in divs. That level of performance doesn't bode well for when luck is not on your side.

I’d make a personal contribution of £250 a month plus the expected dividends for the whole £8,750.

I'm still struggling to see what the £8750 relates to. It's not the amount per year that £250pm builds up to. It's not the amount of SBRY stock you currently have. It's not the expected annual dividends on the whole £113k (or £117k after a year contributions) pension pot.

letspretendforaminute wrote: »

I decided to go half in or at least for the original sum invested and upped my position by 9,423 to 21,500 with a view to increasing this to 25,000 and leaving it there. I’ll ensure that the remaining pot is even more diversified by investing in a couple of funds.

So to clarify, now you have £49k out of £113k or 43% of your pension invested in Sainsbury. That's pretty ballsy when you consider what happened to your Carillion investment where you risked 20% of your portfolio in one company and lost about three quarters of it.

It seems terrible investing logic to say 'I'll put 43% of my pension into one company focused on the retail sector in the UK out of all the sectors in the UK, and in the UK out of all the countries in the world; my choice for this one out of tens of thouands is because I 'like the management team' and after all some people get cheap shares through work and end up with a lot of money in one company (although they get them at a great discount price which I don't) so it's probably fine...

letspretendforaminute wrote: »

Tesco (in my eyes) has always been a dog of a company, from a shoppers perspective. I really only invest in what I use/like.

I do agree with only investing in companies you think provide a decent service. (though personally I've always found Tesco fine).

However, the market doesn't always agree with your personal view as a shopper. Back in the mid 90s Sainsbury's levels of turnover were closer to Tesco; last year Tesco had over £45bn of turnover inc vat while Sainsbury had under £30m (Tesco 50% more) and the market values Tesco equity at £15bn compared to Sainsbury £5bn (Tesco 200% more) so your logic as to which companies might be successful may be a little off.

It’s very rare for an amateur to ‘beat the market’ and I doubt I’d be able to outperform.

That's why nobody is recommending you concentrate your pension in a tiny number of listed companies where you like the leadership team.

AnotherJoe

I'm still mystified as to why you think Sainsburys is such a good bet, just because you like shopping there gives you no insight into their profitability or prospects, and the retail sector is notoriously fickle and prone to blow-ups.

Unlike many here I also hold individual company shares in addition to funds, but they are either for income (I have an income portfolio as an alternative to just buying an income fund) or out and pure growth plays (gambles), which IMO these days pretty much means technology companies.

Sainsburys is neither, its never going to rocket, thats simply impossible because whatever it does can be matched by its competitors, nor can it promise long term rises in dividends as they are needed to fight off rivals to maintain market share, meaning that it literally cannot grow anywhere near as much as for example a portfolio of technology shares managed by the likes of say, Scottish Mortgage IT.

And its far riskier in the long term than such a portfolio by definition because its just one company; you said "Sainsburys will still be here in 25 years time" well that's by no means a given whereas "technology companies will be still here in 25 years time", is.

letspretendforaminute

Malthusian.

It’ll make very little difference as this isn’t half my pension portfolio, there’s a similar sum sitting in my current one and with twenty years to make further contributions, plus the option to cash build inside a ISA wrapper I’ll be looking at at a pension value of £450k and £150k outside in money as it is today. With no mortgage costs, the expectation that £1,500 a month in retirement is enough to live on then that’s attainable by aged 60. If sainsburys goes belly up I’m kissing good bye to £166 a month of net income. I’ll cut my cloth accordingly.

letspretendforaminute

Technology companies will still be here (I had a good run on tech) but you can’t eat silicon and Sainsbury’s is diversified, defensive and what they sell will never go out of date, unless protein pills takeover.

I’m reserving judgment on the discounters, they’ve very little fat to cut and their offering is vastly different to that of traditional supermarkets, and somewhat inferior. Products and experience, queues, variety, parking etcetera.

bowlhead99

letspretendforaminute wrote: »

Technology companies will still be here (I had a good run on tech) but you can’t eat silicon and Sainsbury’s is diversified, defensive and what they sell will never go out of date, unless protein pills takeover.

Soundbites like 'you can't eat silicon' are typically designed to make people think, "ooh that's pretty clever, this guy is clearly smart" but if they reflect on it they will realise that every level of management and logistics and point of sale activity at Sainsbury is powered by silicon and a business of that scale could not possibly live without it

Try selling £30bn of retail products per yr where every unit you sell has to have an individually handwritten price tag and you need to log your sales in a book ( (exclusively cash sales of course) so somebody can add them all up and put the order in with a carrier pigeon to a number of suppliers to see which one can deliver you the replacement merchandise the quickest this week.