Tag Archives: finance

May Monies

Coming to the end of May and my big cap portfolio is coming along okay.

It’s up a little over 2.5% for the proverbial Mad Month of May. However as nice as that sounds it has underperformed compared to the FTSE 100 (up around 4%). The main problem here for this portfolio was a sudden fall by Tate & Lyle. Despite announcing a healthy increase in pre-tax profits there was only a small increase in sales.This sales performance appears to have disappointed the market so it has punished Tate with an 8% fall over the last few days.It could well be time to say goodbye to them, also possibly to Ashtead which since a peak in April seems to be starting a downward trend.

Looking at the others, Burberry seems to have recovered from its nasty fall in April with the rest generally coming along nicely.

As for replacing Tate and / or Ashtead, then the investment company 3i (III) and the digital payment company Paysafe (PAYS) are on the short-list. Much depends on what happens when the market opens tomorrow.

My income portfolio (up 2.6%) has slightly outperformed my big cap portfolio in capital growth while also providing dividends at an equivalent annual rate of over 3.3%. No plans here to make any changes to this. It is targeting long term income rather than capital growth with a holdings review probably not till December.

End of April finance

End of month finance review time.

What’s happened on the finance and investment side of things? Redrow has done rather nicely but star performer has been JD sports, up neatly 15% over the last month. On the downside, Burberry recently announced a reduction in sales and so suffered a sudden fall in price but looks to be recovering a little. Rio Tinto seems to be on a bit of a downer, but it’s GlaxoSmithKline that’s going to be sold out of the portfolio. So on Tuesday (Monday being a bank holiday) Glaxo will go and be replaced with Persimmon (PSN).
Overall the portfolio is up over 2% and is nicely outperforming the FTSE 100 index. It is generally targeting capital growth, any dividends will be seen as a bonus.

Income.

As for setting up an income virtual portfolio I’m doing something a little non-standard. I’ve sorted out 10 high income type investment trusts (Brunner (BUT), City of London (CTY), F&C Capital and Income (FCI), JPMorgan Claverhouse(JCH), Merchants (MRCH), Murray Income (MUT), Schroder Income Growth (SCF), Scottish American (SCAM), Temple Bar (TMPL), Value & Income (VIN)), and have, in my simulation, bought £1,000 of each of them.

The slightly non-standard thing is that having decided on what to buy (based on long term dividend stability / growth) I back-dated the purchase to the start of last December. This does immediately give me an idea of how the income side is performing in respect to dividend generation. The start of December is also an important date regarding some pension stuff I have, so having this income portfolio running parallel to my pension stuff will be useful to me. This straight away lets me see that it’s currently paying out dividends at an equivalent interest rate of 3.5% a year, but if I add this to overall capital growth then since December it’s showing a 10% gain. This compares to an 8% gain in the FTSE100 Total Return Index over the same period.

I’m happy enough with things at the moment. It is a learning experience and will be useful later in life when I’m no longer having a wage as an income but am relying on other investment sources.

financial ups and downs

Time to kick this blog back into life, so let’s try by occasionally talking about some financial ups and downs type stuff.

As part of my Master Plan to become stinking rich and rule the World – or perhaps at least become financially stable – I thought I’d experiment a bit with some virtual stock-market trading. So (using the financial BullBearings.co.uk web site). I have, as of 6th March, ‘virtually bought’ 10 of the leading UK stocks. And as this virtual portfolio moves up and down (I hope far more of the ‘ups’ than ‘downs’) I’ll report back here.

The current virtual portfolio is split across Ashtead (AHT), Burberry (BRBY), Carnival (CCL), CRH (CRH), Electrocomponents (ECM), GlaxoSmithKline (GSK), JD sports (JD.), Redrow (RDW), Rio Tinto (RIO) and Tate & Lyle (TATE).

Various financial targets, looking at things over say 6 months or a year. First, and perhaps the most obvious – not to make a loss! Moving up in scale, to beat a high interest bank account. To outperform the FTSE 100 index (surprisingly few ‘professional advisers’ can actually achieve this over the long term). To learn a bit about the financial world of how to sensibly save money.  Also, and perhaps most importantly, to have a bit of fun.

So now we are almost a month in, time for some first thoughts.

These are all big-cap companies varying in market capitalisation size from Carnival at around £680 million up to Glaxo at £1200 million. With these sort of sizes I would not be expecting too many sudden large jumps in value. Six (AHT, BRBY, CRH, ECM,GSK, RIO) are showing small losses, that leaves CCL, JD., RDW and TATE into profit. However despite the majority in loss, overall things are into positive territory through JD Sports increasing by around 8%.

Even as I am writing this there is something I might try. If I have a reason to sell something then it will obviously get sold. However, on a monthly basis, assuming there was the usual mix of ups and downs, then look to see which was the worst performing and if it has fallen by more than 5% then sell it. I must think about this over the weekend (this is being written on a Saturday). Assuming I decide to go with this, then Rio Tinto (down nearly 6% and below its 50 day moving average) will go and probably replaced by Smiths Group (SMIT).

Oh decisions, decisions!

Money and Things.

Money and things finance related.

An unexpected thing happened recently. Without warning or giving reason my credit card company lowered my credit limit by about 80%. I’ve not been near my limit in ages, so in that respect it was not a problem. Where it was a problem was that suddenly, and without warning, I’d lost an important source of instantly available emergency money. That ‘comfort blanket’ where you know that if something happened and you needed money *right now*, not in a few days, not tomorrow, but instantly (and if it is that sort of situation, then it probably is instantly), that supply had gone. Oh crap.

I suppose the proverbial silver lining to it was that got me looking at my whole money position, and especially to my pension situation. I’m sure most people are aware of all the fuss there has been in the press over the last few years over pension deficits and how a large proportion of the population are going to have very limited income when they retire. At the moment the basic state pension is just under £100 a week, or a bit below £5,500 a year. Not a lot to live off!

I do have a bit of money put to one side for my old age, but this did highlight that I do need to increase this, however I don’t have a great deal of free income coming in to add to this fund, so I must make it grow by itself.

So off to see a pension / financial advisor and see what he had to say. To cut a long story short, the final outcome was that we would put the money into a SIPP (Self Invested Personal Pension) and within that SIPP he would look after half and I would control the other half.
So I have put my half into a range of Investment Trust. Investment trusts are companies who invest their money in other companies! This is not as silly as it sounds. Let’s say you think that the countries of S. E. Asia or perhaps of Eastern Europe show growth potential. You could go off to their individual stock markets and buy into specific companies based in S. E. Asia or Eastern Europe (not always very easy to do), or you could find a U.K. based company listed on the London stock exchange which does just that, invest in these places, and then buy the shares of that U.K. based company (quite easy). So that’s what I’ve done; a selection of investment trust funds that look to S. E. Asia, to Europe, and to mining companies.

My advisor has gone in to European based Unit Trusts. Unit trusts perform a similar function to investment trusts, are often run by the same people, are far more popular, but are set up in quite a different manner. (Do an internet search yourself on something like ‘difference between investment and unit trusts’ if you want to know more about them.)

I’m quite happy with the idea that at times the stock market will go up, but it will also have it’s down periods. We had a down period with the recent banking crisis though the stock market has done a considerable recovery since then. There have been other fall periods in the past, there will be other fall periods in the future (tough, that’s the way things go). However what I’m looking for is say, if I average out the ups and downs over a period of 10 years, to grow by an equivalent of at least 10% a year. That is my minimum personal target. In good years this will not be too difficult to do, however the bad years will pull this figure down. So in reality I must look to at least 20% ‘good year’ growth to balance the bad years out.

What I’m also expecting is that my advisor should out-perform me. Professional advice does not come cheap, they have the financial training, knowledge of the market and access to far more financial information than me. So if I do out-perform him I may feel clever at having out done the professional, but also disappointed in that I will not have got value for money for the fees that I have paid.

Only time will tell.