Allison Shearsman admits that she ‘has left it late’ to start a pension. Shearsman, who is in her late 40s says she only really started saving in the last couple of years.
She says: “Neither myself, nor my husband have built up any significant pensions savings. Until fairly recently we never had the option of saving in a pension through work.”
Shearsman says she previously worked for a magazine publishing company. “For a number of years I was on fixed-term contracts so didn’t get access to their pension scheme.” Her husband works in retail, for a smaller company – which has only recently started to offer staff a pension.
The couple live in London and they have three children. She says: “Initially any spare savings we had went on trying to get on the property ladder. Then we had children and there didn’t seem to be much in the way of spare savings at all.”
Catching Up On Pension Contributions
But she adds: “In the last five years I have retrained and now work as a teacher. As part of this I get a reasonable pension and a fixed portion of my salary goes into this every month.”
As a newly qualified teacher she contributes to a career average pension. This means that the eventual pension she receives is linked to average earning in this profession.
Shearsman said that retraining helped the couple focus more on their finances — and the need to build longer-term savings. “We recently remortgaged so this has helped reduce our monthly outgoings. We are trying to save some of this.”
Any surplus money they have is split between a cash ISA and a longer-term investment ISA. She says the cash ISA is to help pay for holidays and “unexpected expenses”. She says: “We had to invest in a new boiler recently, so these funds are looking a bit thin at present.”
However, they have tried to set up a small monthly direct debit that goes into the investment ISA.
Tracker Funds Offer Simple Investment Option
She says: “It wasn’t easy deciding where to invest this money. I am very confident dealing with day-to-day finances, and regularly switch credit cards, bank account and gas and electricity deals to ensure I am on the best deal. But dealing with investments feels a bit more foreign to me.”
In the end, she says they decided to opt for two funds: a UK tracker and a global fund. They are hoping to add to this in future, as and when funds allow.
She says: “We don’t put a lot in, so these funds aren’t worth much at present but hopefully they will grow slowly over the next 10 or 20 years and give us a bit of extra money when we come to retire.”
They said they chose to invest in HSBC FTSE All Share Tracker because it had low charges, and was a name they were familiar with. This fund has a three-star rating from Morningstar, reflecting its strong performance in recent years, compared to peers. Thanks to the strong stock market performance in recent years, Shearsman says she has been happy with the returns to date. According to Morningstar the fund has risen by 8.83% over the past years, and is up by more than 12% on a five-year basis.
Shearsman says their ISA is with Hargreaves Lansdown, and they did use the brokers recommended funds lists to help chose a global fund to invest in.
They have opted for the Lindsell Train Global Equity Fund. This has a five-star rating from Morningstar reflecting its excellent performance compared to peers. Over the past year the fund is up by more than 15%, and it has delivered a 21% return over five years.
Global Fund To Boost Returns
The fund is run by the highly-rated manager Nick Train. His UK-based fund has a gold medal rating from Morningstar — as does the investment trust he runs Finsbury Growth & Income (FGT), which is Gold Rated by Morningstar analysts. He adopts a similar approach with his global fund, investing in a concentrated portfolio of companies that offer a high and sustainable return on equity, and are cash generative.
Morningstar describes Train as a “seasoned and talented equity manager” It says: “Train’s process has proved successful over a number of market cycles.”
Elsewhere, they say they hope their property will provide them with funds later in life. “We know we probably haven’t saved enough, but it is hard to do when you have fairly average incomes and live in London.
“However, we know we are more fortunate than some, and do have a property of our own. Although there’s still a relatively large mortgage on it, we have seen the value of our home increase significantly over the eight years we’ve lived here.”
She said that when they had it revalued — as part of the remortgaging process it’s value had more than doubled. “I can’t imagine leaving London at the moment, but perhaps at a later stage when the children have finished school, we may move out and use the proceeds to help fund our retirement. At least this is an option we have.”
Shearsman says she also invests for her children via Child Trust Funds. She says: “I invested through The Children’s Mutual (which is now part of Forester Life). For each of them I invested in the ethical tracker fund they ran. These have performed reasonably well.
“I tended to invest quite a bit in the early years, and where possibly have invested birthday and Christmas money. But now the children are a bit older they want to spend what their grandparents send them!”
She says she hasn’t considered switching them to a Junior ISA. “The returns have been fairly positive. If they weren’t then I might consider switching.”
