Aaron from North Somerset is investing to achieve three goals
Thursday 24 Jan 2019 Author: Daniel Coatsworth

New dad Aaron has a clear plan which he hopes will result in a comfortable life for his family.

He wants to buy a house in around five years’ time, retire aged 60 and have sufficient money invested so that, based on projections, he and his partner won’t have to contribute any more cash into long-term savings by the time they are 50.

Engaged to be married and recently celebrating the birth of his first child, Aaron is in his early thirties and invests in shares, funds and investment trusts.

He puts money into three main wrappers: half of his assets are held in a SIPP (self-invested personal pension) and the rest split equally among a stocks and shares ISA for retirement or as back-up rainy day money, and a Lifetime ISA for helping to fund his first property.

The Lifetime ISA only contains cash because Aaron and his partner are worried about shares and funds losing value in the short-term, so they don’t want to risk their savings reducing in value just at the
point at which they need the money to buy a house.

A fourth account has just been opened, namely a Junior ISA which is primarily for his daughter’s grandparents to use as a savings vehicle for her. Aaron hopes he can also gift some of his own money to her later in life for a big event such as a wedding or a house purchase. ‘My SIPP (tax-free) lump sum should be available right around then!’ he remarks.

INTERESTED IN TECHNOLOGY

Aaron self-funded a career move in the early 2000s by retraining as a data scientist, during which time he had limited disposable income to start investing. It wasn’t until afterwards that he became serious about investing.

Technology has subsequently become a big theme in his investment portfolio with current holdings including Google’s parent company Alphabet, retail giant Amazon, telecoms group BT (BT.A), Ocado
(OCDO)
which has developed software and systems to
power online grocery retail platforms, and electric vehicles expert Tesla.

‘Alphabet, Amazon, Ocado and Tesla all understood the importance of robotics and machine learning ahead of many other companies in my opinion,’ says Aaron. ‘As well as the desire, they have successfully implemented the infrastructure required to collect, analyse and exploit that data.

‘I bought these shares several years ago and they make up the majority of my gains. I was reading about BT and how much digital infrastructure the company owns, took a look at the share price and thought it was massively undervalued so bought the shares to hold.’

The investment in Tesla was spurred by a conversation with a friend from university who piqued Aaron’s interest in the business. ‘My friend and I often chat about investing. I’ve recommended peer-to-peer lending to him after having some good experience and so
he gave it a go.’

UNDERSTANDING THE RISKS

Aaron says he likes to own shares in individual companies if he understands the ‘value proposition’ and envisages that they will do well. ‘I’m happy to take the extra risk of holding these directly as these companies are built on foundations related to my profession, software engineering and data science, and I feel I’m convinced of their value.’

However, the recent birth of his child has prompted a slight change in strategy whereby he intends to focus more on funds and investment trusts, albeit keeping his existing stocks.

This strategy is an attempt to reduce volatility in the portfolio and gain exposure to sectors which he doesn’t understand ‘and would therefore benefit from the expertise of a fund manager or just track an index’, he adds.

So far his foray into the funds world has included investments in Jupiter Asian Income (BZ2YMT7) and AJ Bell Passive Balanced (BYW8RX1).

DISCLAIMER - AJ Bell referenced in this article as a fund provider is the owner and publisher of Shares. The author of this article owns shares in AJ Bell.


WOULD YOU LIKE TO FEATURE AS A CASE STUDY IN SHARES?

We are looking for individuals or couples who can discuss their experience with investing and some details about their portfolios.

Anyone interested should email editorial@sharesmagazine.co.uk with ‘case study’ in the subject line.

Please note, we do not provide financial advice and we are unable to comment on the suitability of any investments you have made. If you’re unsure please consult a suitably qualified financial adviser.


DISCLAIMER - AJ Bell referenced in this article as a fund provider is the owner and publisher of Shares. The author of this article owns shares in AJ Bell.

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