Joanne Elland, a university lecturer in London, is rebuilding her savings and investments, after purchasing a house three years ago.
She says: “I used all of my savings and investments buying and renovating a property, so was completely wiped out.”
“I have been investor since I finished my undergraduate degree, some 14 years ago. While I was doing my PhD I was started investing around £50 a month into a Stocks and Share Isas. Initially this was just to tuck money away somewhere that was not readily available. But it has delivered decent returns.”
Joanne, who is in her mid 30s, says: “I am very pleased I started saving early. Buying a property in London is not easy, but this has enabled me to put down a deposit and get on the property ladder. Had I not invested I would not have had this chance and would still be renting.”
Nest Egg and Premium Bonds
Since the purchase and spending money on home improvements Joanne has been trying to rebuild her investments. She doesn’t have a specific goal in mind, but says these are intended to be a nest-egg for the future.
“I currently put around £200 a month into an ISA which I hold with Chelsea Financial Services. I split the money between a number of funds and have been really happy with the performance of these investments to date. I only wish I could afford to put in a bit more each month!”
Alongside this ISA, Joanne also has £200 in Premium Bonds. She says: “I’ve help these since I was 18. It was the insurance excess on my first car, so we called it the ‘crash fund’.” She hasn’t (yet) won the million jackpot, but it has provided a good buffer and is a source of cash should she need it in an emergency.
Joanne says it is never easy deciding which funds to invest in, as there are a confusing array of options out there. She says the funds she is currently invested in were picked with the help of recommendations from Chelsea Financial Services.
She adds: “Performance is the most important aspect for me. Also I try to have a balance of medium- and higher-risk investments, because I am savings for the future.
“I think it is important to try and spread my investments across different regions of the globe. I would also like to improve my consideration of ethical and environmental aspects, but I haven’t really had time to focus on this much at present. It is something I want to look at more closely in future though.”
Joanne also likes the idea of investing in technology companies. But adds: “I imagine this would increase the overall risk I am taking so might not be such a good idea.”
Portfolio of Three Funds
Currently the monthly deposit into her Isa is split between three funds: Fundsmith Equity, Evenlode Income and Marlborough UK Micro-Cap Growth.
The first two have 5 Star Ratings from Morningstar, while the Marlborough fund has a 4 Star Ratings – all of which reflect the strong performance of these funds versus both peers and their benchmark in recent years.
Fundsmith Equity has a Gold Analyst Rating from Morningstar. This global fund offers a “highly structured and disciplined investment approach” according to Morningstar analysts which has delivered exceptional returns to investors in recent years. Over 10 years it has delivered annualised returns of 17.91%.
The fund is managed by Terrry Smith whose investment philosophy is to buy and hold high-quality businesses that he hopes will continue to compound in value.
Morningstar analysts says: “The resultant portfolio is highly focused, which can also lead to sector concentration and valuation risk. Returns may therefore look at odds with its broad MSCI World reference benchmark over the short term and may be out of favour in the periods where the market prefers lower-quality, cyclical stocks. We, however, believe Smith has a good handle on the risks.”
Evenlode Income is a primarily a UK-based fund, with 80% of assets going into UK dividend-paying companies. Morningstar gives the fund a Neutral Analyst Rating but analysts praise its “experience corps of managers” including lead manager Hugh Yarrow, who has been at the helm of this fund for over a decade. Over five years the fund has delivered annualised returns of 9.45% to investors.
As the name suggests Marlborough UK Microcap invests in smaller companies and is again predominantly UK-based. The fund says it aims to deliver higher returns than the FTSE 100, after charges have been taken into account. It has delivered on these aims admirably in recent years, delivered annualised returns of 17.94% over five years for investors, and annualised returns of around 15% over both three and 10 years according to Morningstar data. This fund has a Morningstar Quantitative Rating of Neutral under the new fund rating methodology.
Elsewhere Joanne now stays clear of individual shareholdings after a bad experience. “I invested in a high risk mining company at a time when I knew I would need money back in the short term as we were planning to buy a house in the next six to 12 months.
“This was exciting for a while but a mistake, as the share price fell unexpectedly. I had to leave the money in there and it’s still there several years later! Hopefully it will recover in the next year, and I will sell and put some of this straight into my ISA in a lump sum. But never again.”
