After retiring from a career as a book editor, Jenny Rockwell is “working through” her ISA, and uses the money she has saved to cover day-to-day living expenses.
Jenny is still a couple of years away from her State Pension age, but also has some small pensions, plus a SIPP and a few “dwindling” National Savings Certificates. These help cover general living costs, holidays and any home improvements she needs to make.
Jenny, who is widowed and lives in West London, hopes there may be some surplus funds in her SIPP to eventually pass on to her three children.
Part of the reason she is now able to live off her savings now is that she started investing early.
“I started saving at 18. I saw some opportunities in shares and I had savings with quite a few building societies having always worked in the holidays.”
“So I guess I have always saved and invested, even when I didn’t have much. I was a part of the generation who saw the privatisations of the big public companies.
“Over the years, I have had different investment aims but steady saving has always been my habit – it’s actually a habit I find hard to change, even though I am now retired.”
Looking at her current ISA and SIPP portfolios, Jenny has a mix of direct shareholdings, alongside a range of funds and investment trusts. She says: “These days I now mainly buy funds and investment trusts rather than direct shareholdings, but I still have quite a few in my portfolio.”
Many of these shares are FTSE blue-chip companies, such Lloyds (LLOY), BP (BP.), Marks & Spencer (MKS) and Unilever (ULVR), that deliver steady dividends. She says: “I’ve had mixed result with some of these shares really.”
However, Jenny has had better returns with some of her fund holdings. Some of her best fund holdings in recent years have included the Gold-rated Fundsmith Equity and Fidelity Special Situations, as well as the investment trust Polar Capital Technology (PCT), which has a 5-star rating. She says all have delivered outstanding returns.
Fidelity Special Situations is a value-oriented fund which targets “unloved companies” that have the potential to recover.
While this fund has an all-cap strategy, Morningstar analysts point out that it has a significant allocation to small cap companies relative to the FTSE All-Share. The fund is managed by Alex Wright, who has run this strategy (via Fidelity’s linked investment trust Special Values) since 2012.
Morningstar says since then results have been strong, relatively to both the index and category average. It points out that investors have seen annualised returns of 8.31% over the past 10 years.
Fundsmith Equity, run by the veteran manager Terry Smith, has been another stellar performer, earning a Gold Analyst Rating and from Morningstar. This popular fund has delivered annualised double digit returns over three, five and 10 year periods, with investors who have held this fund for 10 years seeing annualised returns of 17.08%.
This fund is primarily a large-cap fund, but has a global remit. According to Morningstar, Smith’s investment philosophy is to buy and hold high-quality businesses that will continually compound in value.
This can lead to some sector concentration and valuation risk. However Morningstar says it remains confident that Smith “has a good handle on these risks.”
On the whole her fund holdings have performed well, though she admits that a holding in Neil Woodford’s ill-fated equity income fund was “a bit of a hiccup for my results.”
Jenny uses both AJ Bell and Hargreaves Lansdown to manage her different investments.
When it comes to selecting funds and shares, she often reads newspaper and online articles for tips and advice. “If a share or fund or trust is mentioned and it sounds interesting, then I might go off and investigate it.”
She says: “I am not madly ethical when it comes to choosing my holdings. I think the fossil fuel companies have a role to play in our lives while we transition to a more sustainable future. However, despite the profits they make, I will not invest directly in Tobacco or Gambling as sectors.”
Now she is retired, income is a big consideration. “But so is security I’ve had my losses and it teaches you not to invest too much.”
Her experience has taught her a few investment lessons along the way. “Investing can be really rewarding, but don’t invest money you will need. I have had to sell shares in a price slump just because I needed the cash.” She doesn’t recommend this as a course of action!
“I have also tried to be organised and know what is making money and what is not. Investing in shares that pay good dividends can be a good thing, but if they are too good I’ve learned to treat them with caution.”
