Michael Elvin, 48, is investing with the aim of having more flexibility around when he can retire.
Michael, who teaches in a secondary school in Northampton, says his pension offers a degree of security but he won't be able to access it until age 67. But Michael admits he "really doesn't want to still be in the classroom at that age", so is also building his own investment portfolio.
"I'd like to be able to work more flexibly and have more retirement options in my late 50s," he adds. Michael has been encouraged by his father to invest in a self-investment personal pension, not least because of the tax relief.
Michael has been investing in the stock market for 15 years, having started because he was fed up with the paltry interest rates being paid on his savings account. At the time he was trying to build a deposit for a house and after two years of diligently saving into a bank account was still a long way off his goal. He decided to take a higher risk approach instead.
"I did quite well investing in online gambling comapnies and debt insolvency firms and I was able to put down a deposit on a property after only seven months investing," says Michael.
Now he puts money in a Sipp as well as a "rainy day" stocks and shares Isa, both of which are held with fund supermarket AJ Bell. Within both portfolios he now mainly invests in funds rather than individual stocks because of the greater diversity they offer.
Ready-Made Portfolios
This decision was also, in part, due to a costly experience investing in a small pharmaceuticals company, Phytopharm. "I bought on the way up, just before the price peaked and then lost 99% of my money," says Michael. "As a smaller investor, I realised it's not wise to invest in such as a volatile sector, even if it is potentially very profitable. Putting all your eggs in one basket is a foolhardy strategy."
But the setback has not curbed Michael's appetite for risk. Although he now spreads his investments across funds, he chooses ones with a more adventurous outlook.
Currently he holds ready-made porfolios which invest in passive funds - these offer diversification at a relatively low cost, he says. He holds AJ Bell's Passive Adventurous and Passive Balanced funds.
"It is relatively early days, but I have been quite happy with these holdings to date. The Passive Balanced fund has returned around 12% in the first year and the Adventurous portfolio has delivered 7.5% in recent months," says Michael.
Both funds were launched in 2017 so do not have the requisite three-year track record to be rated by Morningstar. However, Morningstar data shows the Passive Balanced fund has returned 14.95% year to date, and the Passive Adventurous fund 17.2%.
Michael has since turned his first home into a buy-to-let property and puts any profits he earns from that into his Sipp. He also has an AVC (additional voluntary contributions) plan alongside his main teachers' pension, which he still contributes to.
He says: "Again, I have tried to be adventurous with these and stick with equities but I only invest what I can afford to lose. Hopefully over the next 15 years these various investmentswill continue to grow and will help pay for a few holidays when I come to cash them in."
