One year on, a Fool reports on his progress.
A year ago, I related how I'd abandoned my poorly-performing Equitable Life pension, and put the whole lot into a SIPP in early 2009. In a few short months, my fund then grew 21% -- a stark contrast to the decade long gloom that I endured as it staggered on under Equitable.
Simply put, a starting investment of £65,400 in my new SIPP had grown to £79,230 -- a healthy increase of some £13,830, or 21%. I was, I thought, well on course to achieving my modest goal of doubling the size of my pension pot in the fifteen years or so before retirement -- a doubling that would require an annual growth rate of just under 5%.
The article attracted lots of comments, and is still being read today. A number of readers asked for regular updates. Today, I want to provide an annual update, and also respond to some of the points raised in readers' comments.
How I got there
Briefly, though, let's review what I did, and why.
By late November 2008, a window of opportunity had opened that was too good to miss. Having just 4% or so exposure to the stock market, Equitable's with-profits fund had been protected from the fall in the FTSE that had seen the index slump from 6,716 in July 2007 to the level of around 4,000 it had reached when I made the decision.
But equally, Equitable's fund wouldn't benefit from the eventual upturn, when it came. I could leave the money in the Equitable -- or put it somewhere where it would grow in line with the FTSE's own recovery: an index tracker within a low‑cost SIPP, in other words.
As I described, I initially invested £30,000 in a low‑cost HSBC FTSE All‑Share index tracker. As recovery gathered, I invested a further £30,000: £20,000 went into the same HSBC FTSE All-Share tracker, while £10,000 was placed into Legal & General's Pacific Index tracker, which invests in a basket of Asian shares.
I subsequently invested the final £5,000 in HSBC's FTSE 250 tracker, and during early June sold some FTSE All-Share units -- locking in a gain of 10% -- and invested £2,500 in each of two investment funds I'd written about here and here on The Fool: JP Morgan's Natural Resources fund, and the CF Junior Oils Trust, which invests solely in smaller oil and gas exploration and production companies.
The remaining £5,000 went into buying more FTSE 250 units, the logic here being one that I'd also written about on The Fool: historically, in a bull market, the FTSE 250 comfortably outperforms the All‑Share index.
I made no other trades, and on 14 August 2009 my SIPP stood at £79,230 -- which, as I've said, was a gain of 21%.
Reader feedback
By and large, the comments on what I'd done were very favourable, and -- indeed -- a number of you had similar experiences to recount. Judging from the comments, though, it's worth clarifying a few quick points.
First, a poster asked why I was focusing on capital values, and not income. What had happened to the income from my investments? So, Luniversal, if you're reading this, the answer is that all the funds were 'accumulation' units, where income is rolled-up into the unit value.
Another poster, Judaas, extolled the virtues of ISAs, pointing out that -- in his or her opinion -- what I'd achieved would have been even better in an ISA. Maybe so (although I'm dubious, given the funds I'd invested in), but don't forget that you can't transfer pensions into an ISA. You can only transfer them into other pension products. So an ISA was never a runner, in other words.
Poster max22222 kindly corrected my understanding of Jim Slater's famous quote: thank you! Likewise, woodberry100 kindly shared some doubtless hard-won wisdom on the practicalities of managing a SIPP.
So how have I done?
During the year, I've made just one trade. As reported here, I sold £2,500 worth of FTSE All-Share units, and bought into Anthony Bolton's Fidelity China Special Situations (LSE: FCSS).
It's up 3% since, and has certainly outperformed the subsequent fall in the FTSE, but of course, what matters is what happens over a timescale of years, not months.
Speaking of which, my pension pot -- being largely linked to the fortunes of the FTSE -- has naturally suffered from that fall in recent months. It's healthily up again over the year, of course, and has grown as of this morning's valuation to £92,034 -- a respectable increase from the level of £79,230 of a year ago. A rise of 16%, to be exact.
That said, we live in troubled times. Earlier this week, the value stood at well over £95,000. And back at the market's peak in April, it was almost touching £100,000.
Finally, as last year, the star performer continues to be my Pacific Index tracker, which has doubled the size of the original investment.
Where next?
This is a real money portfolio, don't forget, and not a fictional construct. More to the point, it's my money. And my pension. So I'm not aiming for adventure.
But while the bulk of the portfolio is tied to the FTSE All-Share and FTSE 250 indices, nevertheless, as you'll have seen, I have been making a few side bets.
And in the coming months, it's my firm intention to make a few more of those.
- A week ago, for instance, I wrote about investing in India. I've now decided what to do.
- I've also recently written about the merits of the FTSE 250 vs. the FTSE All-Share. So expect to see a little more exposure to the FTSE 250.
- At present, America doesn't feature at all. If -- as I hope -- the fortunes of the FTSE All-Share and the S&P 500 diverge, and especially so if the pound continues to appreciate, I'll be buying into the S&P 500.
- I'm also tempted to modestly increase my exposure to Fidelity China Special Situations.
- Among the BRIC nations, I'm aware I've no exposure to Brazil -- or indeed, Latin America at all.
- I'm also tempted to increase my natural resources exposure.
So, in short, let's see how I get on in the coming year.
And finally.....
This pension isn't my only pension pot. In addition to an old employer's defined benefit scheme, I mentioned last year that I had a second pension fund, a stakeholder pension worth some £25,000 that was attracting charges of £14 or so every month.
No longer. It's now on another fund platform, invested solely in Vanguard trackers. And, of course, there's a decent slug locked away in ISAs -- trackers, funds, and individual shares.
In short, I'm doing everything I can, within reason, to ensure a comfortable retirement.
Nevertheless, if you have any suggestions to make, they're very welcome. So comments in the box below, please. And I'll report back next year.
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