Entrepreneur Ravi Sarkar has has been a property investor for a number of years but recently opened his first Isa.
Ravi, who runs his own digital marketing agency, says: “I recently sold a property and wanted to invest this money in the stock market rather than keeping it in the bank.
“I’ve been reading about inflation and the fact that our money is likely to be worth much less in real terms in five to 10 years if it is just kept in cash. So for now an Isa seems likes a good option, particularly as it is tax free.”
Ravi, who is in his early 30s, also likes the fact that this money can be accessed in an emergency. “Most of my other assets are tied up in property or in my own business. If I need money, for the business, or if my wife loses her job, it will be a lot easier to cash in some of this Isa than try to sell a property which can take up to six months.”
However, he is hoping that he won’t have to do this and this money is effectively being invested for the longer term.
Ravi, who lives in the West Midlands, initially bought his first property at the age of 24. “For some reason, I always wanted property first but now I’m learning more. I know it’s good to diversify. Before I opened an Isa I did a bit of reading to try to learn more about my options.”
Ready Made Portfolio
Within the Isa wrapper Ravi currently invests in two funds. One of these is the AJ Bell Balanced Fund — a fund-of-funds portfolio. Ravi opened his Isa with AJ Bell so wanted to invest in some of the ready made portfolios they offer. This fund offers good diversification and a moderate level of risk, he says.
This fund has a 4-star rating from Morningstar, reflecting its strong performance relative to its benchmark in recent years. It also has a Morningstar Quantitative Rating of Neutral. This is a global fund, with almost 40% of its assets in US funds, 23% in UK funds and 11% in Asian emerging market funds. As a balanced fund it invests in a mix of equity and fixed income funds.
This fund-of-funds invests in a number of lower cost ETF and passive funds to help keep fees to a minimum. Some of its biggest holdings include Vanguard S&P 500, Invesco GBP Corporate Bond ETF, HSBC MSCI Emerging Markets ETF and JPM Global High Yield Corporate Bond ETF.
While a relatively new fund, it has delivered annualised returns of 6.75% over the past three years.
Mix of Assets
The other fund Ravi invests in is also a global multi-asset fund, the VT Plain English Finance Fund. This fund aims to deliver capital growth over the medium to long term by investing primarily in a mix of ETFs which provide indirect exposure to a broad selection of asset classes. This includes equities, fixed income, commodities, property and infrastructure. It has a 1-star rating and a Morningstar Quantitative Rating of Neutral.
This is another relatively new fund, launched in 2017. It is managed by Roderick Collins and Andrew Craig, although investors have only seen annualised returns of 1.41% over the past three years according to Morningstar data. Ravi picked this fund after reading an investment book written by the managers.
Aside from his Isa, Ravi is in the process of setting up a pension fund for his own business.
“My wife and I both have multiple pensions from previous employers so we are keen to try to put these into one place and administer it through my company. We have full control over what we invest in.”
Elsewhere, as well as his buy-to-let properties, he also has a small investment in gold.
“I don’t invest in any individual shares and to be honest I’m not sure I ever will. The two funds we invest in are for the longer term so we will see how they perform over the next five years or so. However I think this is a good move, and over the last year it felt like it was time to diversify away from property.”
