David Bavister describes himself as a “cautious saver” who is looking to build some long-term security for himself.
But David, who works in the care sector, says the relatively low wage in his profession means it can be tricky to add greater amounts to his pension than the minimum contribution level. He says: “I am 38 now and the way things are going, the retirement age will probably be 70 by the time I get there. I’m not sure I’d be able to do this job at that age as it can be physically very demanding.”
He adds: “It’s been great to have everyone clapping on a Thursday night for people working in the NHS and care sector these past months, but to have the work we do properly recognised would be even better.”
Switch Provider for Cheaper Fees
As well as his pension, David, who lives in Bristol, has a small investment portfolio through a Stocks & Shares Isa held with AJ Bell. He switched provider from Alliance Trust Savings to save on costs: “Alliance Trust Savings had a flat fee, which didn’t really benefit smaller investors like myself.” AJ Bell, conversely, charges a percentage of the assets you invest, which can be a cheaper option for smaller pots.
David is hoping this move will benefit him over the longer term. His grandparents left him some money when he was younger, which his dad invested on his behalf and David took over the managing of 20 years ago.
He feels relatively confident choosing his own investments because of his background in finance; both his parents were accountants and he studied economics at university, working in accountancy before he moved into the care sector.
While David does research on investments and discusses ideas with his father, he doesn’t trade often. He says: “I see these as very long-term holdings. In some ways I still think of this as my grandparents’ money that I am investing for the future and I think about what they would think is sensible to do with the money.”
Steady Eddies
He’s chosen what he considers “steadier” funds, that are not necessarily taking huge risks with this money. These currently include Allianz Technology Trust (ATT) and the Bronze-rated Monks Investment Trust (MNKS). Both, he says, have been reliable investments and not as volatile as some of his other investments, including a biotech fund he previously held: “It did very well to start with but then it went down, and down again. I decided to cut my losses and switched the money elsewhere.”
Both trusts are focused on delivering long-term growth. As the name suggests Allianz Technology has a global remit and invests principally in the listed shares of tech companies. The trust, which has a five-star ratings from Morningstar, has delivered annualised returns of more than 20% over three, five and 10 years, comfortably outperforming its benchmark.
Meanwhile, Monks is a global investment trust investing in large cap stocks and has an excellent long-term track record, delivering annualised returns of 18.1% over five years and 13.6% over 10 years.
The trust is managed by an experienced team of partners from Baillie Gifford and targets companies that offer sustainable, above-average earnings and cashflow growth prospects. The managers take a “patient” approach and once they buy a stock, they tend to hold on to it for the long-term, resulting in a low turnover, according to Morningstar analyst Fatima Khizou.
While he is primarily investing for his retirement, David says these funds are also a safety net should he lose his job. He tends to take a cautious approach to his finances generally, for example, switching money into his savings account on the day he gets paid. “I have a cash Isa for rainy day savings,” he explains. “It doesn’t pay much in the way of interest but if the money is in this account I’m less likely to spend it than if it’s sitting in my current account.”
This is a money lesson he learned in his days working in accountancy in London, when he earned substantially more but spent more than he saved. Now, alongside his cash Isa, David also has some Premium Bonds and has always tried to overpay on his mortgage and avoid any debt. In fact, he recently moved to a larger house and is mortgage-free. However, he points out that with interest rates so low he may take on a small mortgage to fund the renovations he is hoping to undertake.
