Our diarist recaps his investing progress to date.
After eleven diary entries and only an index tracker to show for it, you could be forgiven for thinking that my share-investing journey is tootling along aimlessly in first gear. Progress has been slow but is now heading in the right direction.
In this article, I review where I have got to and why.
Deciding how much to put in the tank
When I started my journey, my focus was wrong. I was spending my time thinking about how much I was going to invest and worrying about the risk of losing it.
In terms of my travel analogy, those early diary entries were all about deciding how much fuel to put in the tank and getting anxious that the fuel tank would develop a leak and that I would lose my precious fuel.
At the same time, those at the side of the road were asking me where I was going and pointing out that I barely had enough fuel to get to the end of the street!
Deciding on my destination
By diary entry #5 it had dawned on me that I was not going to be travelling far and that, before I headed off in the wrong direction, I really needed to decide what my ultimate destination was going to be.
In short, the destination is to put myself in a position where I can generate an additional £10,000 a year of retirement income in the next 10 years or so. In annuity terms this would mean having a lump sum in excess of £300,000 which would come from disposing of an investment property, together with my planned share investments.
Revising the fuel strategy
Steady on Alastair -- talking in terms of "Fuel Strategy" has echoes of Formula 1 terminology and I don't think that you can pretend to be heading anywhere that fast! However, having decided on my destination, I needed to ensure that I had enough fuel for the journey.
When the investment property is sold next year, my plan is to invest £1,000 per month in equities. Between now and then I will be learning and gaining some experience with shares.
Setting off
Having filled up my tank with £6,000, my journey got underway in article #9 when I used up half the tank by investing in an index tracker. I suppose that it a bit like hiring a chauffeur and trusting that he can find his way to where you want to go, by following the person in front.
The other £3,000 remains in the tank to be invested in shares that I select myself.
Choosing the vehicle
So I still have £3,000 in the tank for the 'self-drive' part of my journey. The trouble is that I am still at a bit of a loss as to what vehicle to choose.
I have bought some books on shares so that I can educate myself on what to look for, but life gets in the way. In fact, let's be honest here. I've actually bought three books on shares and haven't finished one of them yet. It is a bit like buying What Car, Top Gear and Autotrader magazines and not getting around to reading them.
I will, though, I will.
Are we nearly there yet?
There is a long road ahead, but the index tracker has taken us a little way along the journey.
Our initial £3,000 has grown to £3,116 in less than a month which is a 3.9% increase. I'd happily take that every month! Yes, I know, one month could simply be a market fluctuation and it could head back the other way before we know it. But at least it is progress of some sort!
Now where did I put those books on shares?
Previous entry: #11
Next entry: #13
