Barney Britten started investing three years ago after hearing about the Lifetime Isa (Lisa) which offers a government-based 25% top up on contributions – up to a maximum of £4,000 a year.
This savings account can be used towards a deposit on a first home, which is Barney’s top priority at the moment.
But he is also looking to build longer term savings too. “I have learned more about investing through online research and forums. I have become interested in the FIRE (Financial Independence, Retire Early) movement.”
While his original intention was to try to get on the property ladder, he has become more motivated by the idea of achieving financial independence. To this end he also invests in a Stock and Shares ISA, both of which are held with AJ Bell Youinvest.
As he is currently in his mid-20s, even an early retirement is still decades away. He adds: “I am an officer in the military and love my job. But it would be good to have this as an option in future.”
Barney, who currently lives in Shropshire with his partner, says that within each of these tax-efficient account he invests in low-cost passive funds.
He says: “When selecting different funds I try to choose ones that have low fees and have tended to focus on global index tracking funds. I’ve used these to try and build a diversified portfolio.
“Most are accumulation funds and I’m investing with the intention of holding onto these funds for a few years.”
New ESG Focus
More recently he has also taken an active interest in ethical and ESG-focused funds, which take environmental, social and governance factors into account in their stock selection, alongside standard financial metrics.
Barney plans to add to his portfolio with a number of passive ESG funds, which follow, for example, the Morningstar UK Sustainability index.
He says: “I intend to manage them alongside my existing portfolio which I will continue to add to, hopefully helping grow these investments over time.”
As Barney points out, adopting a passive strategy does not just mean following the main indices such as the FTSE 100 or the S&P 500.
To that effect he invests in a wide range of funds. These include Legal & General Global 100 Index Trust, Schroder Small Cap Discovery, Vanguard Emerging Markets, Vanguard Global Small-Cap and iShares Global Property.
Both of these Vanguard funds are highly rated by Morningstar: with a Silver Analyst Rating for the Global Small-Cap fund and a Bronze Rating for the Emerging Markets fund. The iShares property fund has a Morningstar Analyst Rating of Gold and analyst Kenneth Lamont says: “This fund represents one of the very best passive options in a category in which active funds have struggled to outperform.”
Strong Conviction
Morningstar analyst Dimitar Boyadzhiev says: “Vanguard Global Small Cap Index offers a cheap and highly efficient way to gain access to the global small-cap segment. We have a strong conviction that this fund’s consistent approach increases its odds for outperformance over the full market cycle.”
Morningstar is also positive about Vanguard’s emerging market tracker, describing it as an attractive, low-cost option for those seeking exposure to this sector.
Alongside these equity funds Barney is also invested in Legal & General Global Inflation Linked Bond Index fund and Vanguard Global Bond Index fund, both of which track bond indices.
Barney says that he is focused on his longer-term aims and does try to worry too much about day-to-day fluctuations.
He says: “I try to just regularly invest money into these funds and ignore what the returns are looking like. Checking today I can see that on average I’m up across the portfolio by between 5 to 10% most months, so I am pleased with that.
“But my intention is to hold onto these accounts for quite a long time period. Market fluctuations are not really my concern and I am not active enough to attempt to capitalise off them anyway.”
