Ok, so I haven't been entirely open in this blog since its inception, but something has changed which means I need to.
I think I wrote earlier about opting out from the state second pension. Why? In my (little) capito-anarchist world letting government do anything is a bad idea, so if you can get money out and manage yourself you should. The ability to opt out (contract out) stopped this year, but has impacted my pension.
Basically the way it worked is this: rather than the second pension pot being managed by the Government, it went into a separate account linked to your main pension. However, Hargreaves Lansdown emailed me the other day to say the accounts no longer have to be separate - so the money has been transferred to my main account.
Wondering what I did with it? I played the passive tracker game. A passive tracker does as it sounds - it copies an index in as exact a way as possible, and because it is passive i.e. there is little human decision making, it is cheap cheap cheap from an annual management charge perspective. It is a bit crappy insofar as when a stock gets more expensive the fund buys more of it (so you have the tendency to buy on the up and sell on the down), but the cheapness plus dividends should far outweigh this.
I put all the money in my state second pension account into the cheapest FTSE All Share tracker offered by Hargreaves Lansdown, which is the SWIP FTSE All Share Index Accumulation tracker. What are its statistics, you ask? The total expense ratio is 0.11% - compared to 1.6% on active funds. To illustrate what that means, if you assume growth of 5% per annum gross, after 10 years, on £1000 the SWIP fund will equal £1612 - whereas the active fund will equal £1397 - so you are already 13.6% worse off. Extrapolate that over a 40 year working life and it's even worse - £6751 vs £3809.
Any downsides? Well, yes there is (through Hargreaves Lansdown at least) - a £2 per month "platform" fee to cover the loss of the kickback that are usually paid to brokers on active funds that aren't received on passive funds. I can honestly say I don't begrudge them that at all.
How's it performing? Well I bought into it on the 14 December last year and it's up by 8.9% since then - although that does include dividend income being reinvested. Not bad, and in line with the rest of my investment strategy - once I am in I am in - so I am sticking with it.
Monday 30 April 2012
Sunday 29 April 2012
Onwards, little men!
My mum always used to refer to my Games Workshop tryranids as "little men". My brother was into them too for a good while. Very entertaining when I was little - a bit of a school subculture, often at the "unacceptable" end of the scale.
When I played them they were primarily based in the UK, with a couple of outposts in Florida and California if I remember properly. But how times change - I have their website open in another window and the dropdown lists a bit more of a global footprint than before with 19 countries in total listed. Now I am sure that there's probably no more than one outlet in Japan, but hey - it shows global intent. Perhaps a bit worrying is that 14 of the countries listed are European, and we know that's all going t*ts in the next few months. But, interestingly I am not that worried.
Why, you ask? Well I thought Games Workshop was horrendously overpriced when I was 14 and they've increased the prices significantly since then. The target market age profile has got younger and younger since the early days of hardcore my-little-man-has-30-attributes-and-i-need-to-make-calculations-using-eight-of-them-to-fire-a-gun days - and as countries (and parents) become more affluent, every household has a potential Games Workshop salesman or woman in it.
So how does the stock look through my narrow lens? It has lots of countries that it operates in, which is good, as i have already detailed. Its is retail, which you'd have to be insane to get involved in (contrarian box anyone?), and it had dropped about 1.5% the month before I bought in. That said, it is up 26% in the previous 12 months. Let's look why now.
The dividend yield is ridiculous - with good reason. As I write it is at 11.82% because of a special present for investors from the company's board. In the 12 months prior to buying in (on the 18 April 2012) there have been three dividends paid, totalling 67p per share. The company is chucking off cash, and although the yield is not sustainable based on current cashflows the board has reason to believe it's acceptable to pay out. And look here - they are pretty confident to chuck their own money at the stock. No director has sold out of Games Workshop since September 2010, and since then there have been nine exercising of options or purchases of shares. THF Kirby spent just shy of a million quid on shares in the company on the 22 March 2012. Punchy.
Laura wasn't entirely convinced until I told her there is practically no competition on the high street anywhere in the world. What will happen to them? Probably get bought by someone like Mattel or some large toy conglomerate before I retire, but that i do not mind too much.
So where next? Well, according to my Moneyweek magazine this week Aviva's net asset value (sum of all the assets - in their case primarily investments) is around 457p as of February 2012. So according to Google Finance the FTSE all share is down about 1.43% since early February. Assuming that the value of Aviva's investments has dropped twice as far they should be worth about 443.93p at the moment. And where are they? They were 316.70p on Friday 27 April - so they are trading at a discount of 28.7% to the net asset value. Oriel Security reckons they should be doubling in price to 640p - unlikely if the market tanks - but Yahoo Finance shows strong analyst support for them. Google Finance has a 8.21% yield. All looking like it might be my next investment - but not for a few weeks.
When I played them they were primarily based in the UK, with a couple of outposts in Florida and California if I remember properly. But how times change - I have their website open in another window and the dropdown lists a bit more of a global footprint than before with 19 countries in total listed. Now I am sure that there's probably no more than one outlet in Japan, but hey - it shows global intent. Perhaps a bit worrying is that 14 of the countries listed are European, and we know that's all going t*ts in the next few months. But, interestingly I am not that worried.
Why, you ask? Well I thought Games Workshop was horrendously overpriced when I was 14 and they've increased the prices significantly since then. The target market age profile has got younger and younger since the early days of hardcore my-little-man-has-30-attributes-and-i-need-to-make-calculations-using-eight-of-them-to-fire-a-gun days - and as countries (and parents) become more affluent, every household has a potential Games Workshop salesman or woman in it.
So how does the stock look through my narrow lens? It has lots of countries that it operates in, which is good, as i have already detailed. Its is retail, which you'd have to be insane to get involved in (contrarian box anyone?), and it had dropped about 1.5% the month before I bought in. That said, it is up 26% in the previous 12 months. Let's look why now.
The dividend yield is ridiculous - with good reason. As I write it is at 11.82% because of a special present for investors from the company's board. In the 12 months prior to buying in (on the 18 April 2012) there have been three dividends paid, totalling 67p per share. The company is chucking off cash, and although the yield is not sustainable based on current cashflows the board has reason to believe it's acceptable to pay out. And look here - they are pretty confident to chuck their own money at the stock. No director has sold out of Games Workshop since September 2010, and since then there have been nine exercising of options or purchases of shares. THF Kirby spent just shy of a million quid on shares in the company on the 22 March 2012. Punchy.
Laura wasn't entirely convinced until I told her there is practically no competition on the high street anywhere in the world. What will happen to them? Probably get bought by someone like Mattel or some large toy conglomerate before I retire, but that i do not mind too much.
So where next? Well, according to my Moneyweek magazine this week Aviva's net asset value (sum of all the assets - in their case primarily investments) is around 457p as of February 2012. So according to Google Finance the FTSE all share is down about 1.43% since early February. Assuming that the value of Aviva's investments has dropped twice as far they should be worth about 443.93p at the moment. And where are they? They were 316.70p on Friday 27 April - so they are trading at a discount of 28.7% to the net asset value. Oriel Security reckons they should be doubling in price to 640p - unlikely if the market tanks - but Yahoo Finance shows strong analyst support for them. Google Finance has a 8.21% yield. All looking like it might be my next investment - but not for a few weeks.
Monday 16 April 2012
Further financial fiddling
I read an interesting article about Keynes over the weekend - famous economist and relatively successful investor (as Fellow of Kings College, Cambridge). He believed that trying to time the market was impossible - and as a true value investor, said that you should focus on identifying out of favour companies at whatever point you find yourself in the economic cycle.
I am not sure - as you will read in earlier posts, I think that the market is going to tank this year, so why pile money in if stocks will be double figures percentages lower in six months time? Thinking about it brought me to common ground in between - i am going to keep buying stocks, but I will speed up and slow down depending on what the overall FTSE performance tells me.
So, when the market's in a down phase (let's say net down by more than 3% in the ten days prior to the point I invest) I will invest 10% more than the nominal amount detailed in the previous post. And when I say market, I mean the FTSE All Share Index.
Conversely - if it's in an up phase (i.e. up by more than 3% in the ten day prior to the point I invest), i'll invest 15% less than the nominal amount.
And if it's within the +3% to -3% range - i'll just put the nominal amount into the market
Let's see how this pans out - as ever, i'll keep you updated!
I am not sure - as you will read in earlier posts, I think that the market is going to tank this year, so why pile money in if stocks will be double figures percentages lower in six months time? Thinking about it brought me to common ground in between - i am going to keep buying stocks, but I will speed up and slow down depending on what the overall FTSE performance tells me.
So, when the market's in a down phase (let's say net down by more than 3% in the ten days prior to the point I invest) I will invest 10% more than the nominal amount detailed in the previous post. And when I say market, I mean the FTSE All Share Index.
Conversely - if it's in an up phase (i.e. up by more than 3% in the ten day prior to the point I invest), i'll invest 15% less than the nominal amount.
And if it's within the +3% to -3% range - i'll just put the nominal amount into the market
Let's see how this pans out - as ever, i'll keep you updated!
Friday 6 April 2012
Changing my investment value
So something else I have decided is important is to maintain the value of my "units" at a steady rate, based on the Consumer Price Index. That means I want my buying power to remain constant.
This is fairly easy to calculate - on the 20th of each month the ONS reports the previous month's inflation figure.
If I start myself at a nominal value of "1", each quarter I add the impact of the previous three months inflation to my value of "1". I'll be doing this around the 20th April for the first time, so i'll tell you where "1" has got to. Assuming no big changes in inflation, it'll probably be around 1.0086
Ok, got to run!
This is fairly easy to calculate - on the 20th of each month the ONS reports the previous month's inflation figure.
If I start myself at a nominal value of "1", each quarter I add the impact of the previous three months inflation to my value of "1". I'll be doing this around the 20th April for the first time, so i'll tell you where "1" has got to. Assuming no big changes in inflation, it'll probably be around 1.0086
Ok, got to run!
A horrendous start!
So there's no dressing up my start to this project - it's been horrendous. I've just totalled the figures up until today, and they make grim reading!
The FTSE All Share Index is up 4.17%, whereas my portfolio (taking into account management fees, interest on cash held, and dividends) is down 5.36%.
So I've underperformed the market 9.53%. Pretty terrible, because I could have put it all in a cheap tracker, but I think there's an advantage to actively managing your pension - so I've just headed over to Trustnet to see how I have performed compared to all the clever managers out there.
Top operator this quarter has been MFM Junior Oils Trust, based out of Bolton in Lancashire (no kidding!), which is up 31.6%. Well done to them! On a TER of 1.88%, you really cannot complain.
Where do I fit? 2754 out of 2793 Open Ended Investment Companies (OEICs). So in the bottom 1.4% - awful - but without factoring in a quarter of the annual TER for the funds. Based on an average UK TER of 1.6%, i'll factor in an extra 0.4% I haven't had to pay. Any better (at -4.96%)? Nope - I'm at 2744!
So can I rationalise this project to myself at all? Well, yes actually. Have I done anything I wouldn't have done again? Probably - Tesco was another lesson in "the past is no guide to the future", and my hugely illiquid Dee Valley Water drops by whole 1.5%s at a time (and all it has done is drop!). Gold has been pretty poor too. But I still think I'd be on a par with current performance - I've got my portfolio started, and all the trading costs I have incurred over the last few months will get smoothed into the value of the stocks over time. I've also held back from diving into anything new and dropped my trades to around one per month - I am anticipating a crappy market over the next two quarters, when there will be loads more good value dividend stocks out there. Plus I am in this for the long game (30 years!)
What have I got my eye on at the moment, that I need to convince the fiance about? Well, Games Workshop is yielding 9.65% (i used to play it when I was younger and it's a great business - no serious competition at all!), and I like CareTech as I have said before (yielding 4.32%). I'll probably dive into both during the next month, should they drop by a couple of percentage points.
Until next time!
The FTSE All Share Index is up 4.17%, whereas my portfolio (taking into account management fees, interest on cash held, and dividends) is down 5.36%.
So I've underperformed the market 9.53%. Pretty terrible, because I could have put it all in a cheap tracker, but I think there's an advantage to actively managing your pension - so I've just headed over to Trustnet to see how I have performed compared to all the clever managers out there.
Top operator this quarter has been MFM Junior Oils Trust, based out of Bolton in Lancashire (no kidding!), which is up 31.6%. Well done to them! On a TER of 1.88%, you really cannot complain.
Where do I fit? 2754 out of 2793 Open Ended Investment Companies (OEICs). So in the bottom 1.4% - awful - but without factoring in a quarter of the annual TER for the funds. Based on an average UK TER of 1.6%, i'll factor in an extra 0.4% I haven't had to pay. Any better (at -4.96%)? Nope - I'm at 2744!
So can I rationalise this project to myself at all? Well, yes actually. Have I done anything I wouldn't have done again? Probably - Tesco was another lesson in "the past is no guide to the future", and my hugely illiquid Dee Valley Water drops by whole 1.5%s at a time (and all it has done is drop!). Gold has been pretty poor too. But I still think I'd be on a par with current performance - I've got my portfolio started, and all the trading costs I have incurred over the last few months will get smoothed into the value of the stocks over time. I've also held back from diving into anything new and dropped my trades to around one per month - I am anticipating a crappy market over the next two quarters, when there will be loads more good value dividend stocks out there. Plus I am in this for the long game (30 years!)
What have I got my eye on at the moment, that I need to convince the fiance about? Well, Games Workshop is yielding 9.65% (i used to play it when I was younger and it's a great business - no serious competition at all!), and I like CareTech as I have said before (yielding 4.32%). I'll probably dive into both during the next month, should they drop by a couple of percentage points.
Until next time!
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