Peering over the hill...

Grogged

The MrsG September SIPP Update

 

This is the story of the good SIPP MrsG which started her voyage in 2020 (16 months ago) with an investment of £1,440 and two transfers from previous pensions.

 

As MrsG earns no income, her maximum contribution per year is £2,880, which the kindly tax man will top up to £3,600 with tax relief.

 

The aim is to get a pot of £50,000 by retirement in 2035.

Mr Spreadsheet is comfortable that we’ll at least double that, giving an annual pension of either £2,000 from income, or £6,000 by cashing in some investments every year.

 

Current contributions are £250 per month (£200 + £50 tax relief).

 

The portfolio is fully invested, with the aim of keeping a running cash balance of £7 to cover the quarterly charges.

 

The aim is for simple 6 fund portfolio that replicates much of what a LifeStrategy or retirement fund would do, but at a cheaper cost overall.

 

Weight Symbol Investment

84%                     Equities

10%       VMID    FTSE 250 UCITS ETF

19%       VHYL     FTSE All-World High Dividend Yield UCITS ETF

22%       VWRL    FTSE All-World UCITS ETF

27%       VEVE     FTSE Developed World UCITS ETF

4%         V3AM   ESG Global All Cap UCITS ETF

16%                     Bonds

16%       VAGP    Global Aggregate Bond UCITS ETF Distributing

 

August                £16,098

September         £16,021

 

We made the decision to include some ESG (environmentally sound) investments and have started to invest in their newly launched Global ESG ETF fund.

 

September saw a loss of £78 (0.5%), although the real loss was £328 (2%) if you subtract the monthly contributions.

(£250 of that was from dividends, MrsG and the tax man).

 

The annual income is £171 (1.1%) - £14.23 per month – the target is 1.1%.

The annual portfolio investment return after fees is 9.4%.

 

Annual values are calculated as (current value / portfolio age in months) * 12.

 

The bond fund pay dividends monthly and the equity funds quarterly.

 

The current weighting is 84:16 equities/bonds, the plan is to move to 80:20 by retirement.

 

Being a small pension, we want to maximise its overall value.  The strategy is investing more in what is profitable and less on what isn’t.  We’ll do this by allocating each month’s payment according to the overall contribution made by that investment.  What we won’t be doing is selling anything, so it will be a gradual process.

Looking at the funds MrsG is invested in, 90% of their return is through their growth in value and 10% from the income they produce.  That drives the decision process as we’re looking to maximise the overall return, not just the income.

 

This flexibility allows the right weightings to be maintained going forward.

The portfolio is balanced monthly from contributions, tax relief and dividend payments.

 

In September, we again concentrated on investing in VMID and V3AM as both are underweight.

 

The portfolio is held with Vanguard, which whilst not the cheapest, is close for the level of investment and peace of mind.  It also helps that there are no transaction costs, so every penny can be invested.

 

Stay safe,

G.

Grogged

The September Update

Usual money stuff first; gossip, tea and biscuits follow...

 

Mortgage

End 2020            £87,985

Sep 2021            £81,919

Change               £6,066

%Change            6.9%

Overpaid            £3,588

Sep 21 OP           £101

 

The goal for 2021 is to pay off £10,000, with a view to paying it off in full in 9 (stretch of 8) years.  We’re scheduled to pay £8K off through normal payments.  I will look to make between 2 and 4 extra payments throughout the year.  Our NW mortgage is structured so that if you OP by at least £500 you get to either instantly reduce eth term or monthly payment.

Currently at £690 of the £2,000 target for 2021 and snook into the £81s!

 

EF/Cash

End 2020            £24,550

Sep 2021            £30,250

Change               £5,700

%Change            23.2%

Target                 £27,300

In Sep 21            £533

 

The plan for 2021 is to add a month to the EF and continue this every year going forward.  This will enable early retirement if needed (although not by much!).

Each month I aim to open a new 12 month high interest (lol) account to try and maximise the EF savings.  This will ultimately provide a years buffer, the excess will be held in PB, etc.

Due to the low rates on offer, when the Marcus one matured, we moved £5,000 into PB, rather than opening a new monthly account.  With average luck, we should “win” 4 times a year, which would match or beat the current high interest savings rates on offer.  That £100 (4x £25) works out at 0.64%.

Pensions

End 2020            £221,400

Sep 2021            £256,400

Change               £35,000

%Change            15.8%

Target                 £350,000

In Sep 2021        -£4,872

 

Pension (as dividends if taken today)

Annually             £6,578

Target                 £8,761

Monthly             £548

The state pension would be added on top of that (another £9K at today’s rate).

This could be boosted by drawing down on the capital, etc.

 

The big ii pension portfolio is managed on the same philosophy as MrsG, except it has more funds in it.  These all do the same job as the Vanguard funds but pay better dividends and are all long term holds.  Still continuing to rebalance, which have been timed around dividend dates.  Where transaction costs have been incurred, they are covered by the incoming dividend payment.  As it stands today, it should pay £9,800 in annual dividends, which combined with the state pension is our minimum pension requirement.

There are 3 more investments that are now significantly overweight, rebalancing these (one per month) should see the dividends increase by a further £200 per year.  All dividends are reinvested using the monthly free regular investing feature.

 

We are mortgage neutral with our savings, so if needs be, at least the mortgage is covered.

 

Grogged Towers News

September saw a last-minute dive in the stock markets, which saw the portfolio lose £4,782 (1.86%), which as I understand it, is because the world has been going through a rough patch and isn’t recovering as quickly as everyone wants it to.

In portfolio terms, it doesn’t mean that much as is just part of the general background noise.  Historically, something bad happens in the stock market every 10 years (a cycle), that takes a few years to recover from, which is why you’re advised to invest for at least 5 years, ideally longer.

For us we still got paid our usual dividends, made our normal investments and missed out on buying a bit cheaper as we invest around the 10th and 20th of the month, which is when we can invest for free with our providers.

 

In positive news with YG, they have finally given me the survey needed to tip me over 5,000 points so I can be paid. 😊 We also had a £25 PB win, so intend to split the YG money £25 to PB and £25 as an OP.  That takes our PB wins to 5 this year (forecast with average luck was 4) giving a return of 0.78%.

Have also been boosting our OP with proceeds from Prolif1c, which have only recently signed up to.  This is averaging an extra £20 odd per month, so pleased with that, but also annoyed that didn’t sign up sooner, despite heavy promptings to.

 

Finished 3 DIY jobs, painting the front door, replacing the hinges on a window and re-roofed the pergola.  There will be a special DIY picture post for those interested (you know who you are 😊).

Replacing the window hinges was unexpected, we opened it and the right hinge broke. This meant it didn’t close properly, so it needed to be replaced.  As it’s a first floor window, the glass had to be removed so that the window was light enough to remove and work on the hinges.

 

We’ve started to actively search for a rescue dog, which despite the media saying there’s millions of them, that’s not been our experience with the local shelters.  Only one is open for visitors, the rest do it via z00m.  Because we don’t want a large dog (nor a handbag one) and screening questions (must be kept muzzled, in a quiet neighbourhood with no cats/dogs/children/deliveries/post people, no front facing windows, don’t feed after midnight, etc.) our choice is about 1/5 of the dogs currently available.

ETA - I forgot the car news.

We were going to sell MrsG car, but have instead decided to give it to her parents who need a new one.  They've been very good top us over the years, so it seemed only right. 

Stay safe,

G.

powerspowers

Well done on the diy and keeping a level head as the world lurches around you. I think your experience of rescues is typical- I’ve known people want a rescue dog and then giving up and going for a puppy/private rehoming as it’s easier. 

Debsnewbudget

If you know the breed you want then see if there is a rescue section for that particular breed.
we have had 2 wonderful Tibetan Terriers through TT rescue in the past.

MovingForwards

It's looking good as are your plans.
Keep an eye on the regular saver thread for higher interest paying accounts, it will make your life a bit easier.
Do keep an eye on the independent dog rehoming groups, there's a load on FB if you know what breeds you want. They also tend to be more relaxed than the big players.

savingholmes

Everything heading in the right direction. Well done on PB wins.

LadyWithAPlan

Yes the market movements are a bit painful for all our EOM figures. Hopefully by the end of Oct we will see a slight rebound. As with you I have gains both in terms of HMRC contributions  and also the last 18 month rally from the lows so I am not getting too stressed about it.

I have 26% of my house deposit fund in a S&S isa - but whilst it lost £330 last month and a bit more since, however it is up £2500 from when I invested on the rally last year so I am not too worried. 

Cornish_mum

Hiya Great news on the DIY and our pensions took a battering last month too. Hope you have a great weekend CM

savingholmes

It should pick back up over the long term

Grogged

Here are the DIY pictures.
I rashly decided to update DigiKam, which is the imaging software I use and the new version decided it needed to index all my photos again, and as 99% of them are "in the cloud", it had to fetch them to do that, which took ages...

The front door painted, the frame is a work in progress as the weather permits.



Exciting eh! 

I also had to replace the hinges on the living room window, which required the glass to be removed so I lift it in and out (as our living room is not on the ground floor...)




So there we have it!