Related
news
Shares Magazine
For the past few decades, Ian’s life has been a whirl of raising two children with his wife and trekking up the corporate ladder to become a chief technology officer, while fitting in a few nice holidays along the way.
But now, he’s taking some well-deserved rest. Ian is in his late 50s and both of his children have flown the nest to start university. A few months ago, he decided to retire, at least from the hustle and bustle of senior management. When I speak to him, he’s sat in what looks like his home office in East Anglia. He’s accompanied by a steaming hot brew.
Ian is not sure exactly what his work life holds next. He’s toying with doing some consulting but is currently focusing on using his IT skills to help advise charities each week.
“I’ve got 30-plus years of experience in IT now,” Ian says. “I spent most of that time, well, pretty much all of that time, working for companies and earning them money. I suppose I’m just looking for ways to give back.”
Why did he start managing his own pension?
Ian has also taken on a different project to occupy some of his time: He’s chosen to take over some of his pension management through a SIPP. Ian originally had the money in an account with a group of advisers, who did their own stock picking. But after four years of sticking with it, his portfolio was down 10% from where he started. So, he decided it was time to take matters into his own hands.
This is not Ian’s first rodeo when it comes to investing. He had a similar situation come up with his Stocks and shares ISA years before. Ian began with a financial adviser that he had a nice relationship with, but when the adviser retired, his account was given to another group that disappointed him over time.
“I really didn’t feel like they were adding much value to the process,” Ian says.
Ian decided to test his own investing prowess. At the beginning, he kept the portfolio the same as the advisers left it and observed how the different pieces performed. After a few months, he was able to identify a group of funds that had been consistently dragging down his performance. He decided to sell these and found alternatives.
“I did some research, and decided to make changes here and there,” Ian says. “Having done that, I then saw the performance kick in. So obviously I was doing the right sort of thing, and I’ve just gone on from there.”
As Ian takes on the challenge of his pension as well, he has a slightly more established system in place. He’s decided to stick with choosing funds instead of individual stocks and chooses a variety of sectors, looks for a balance of growth and income. He also holds a mix of passive and actively managed funds.
A strict policy on fees
When it comes to selecting a fund, he is strict on fees and says that he doesn’t hold any funds with an ongoing charge fee of over 1%. Ratings from Trustnet and Morningstar also guide his research process.
Ian has decided his expertise does not lie in stock picking. He said his worst pick was a purchase of shares in XL Media, and then a second purchase after the stock fell. Eventually, he called it quits and sold the holding, for a 90% loss. The shares subsequently exited the stock market.
“I’ve always found whenever I try and pick shares myself, they go horribly wrong. So I now steer very well clear of that and mainly focus on funds,” Ian says.
It’s fair to say this focus on funds has served him much better, and he doesn’t mind looking for more niche areas of the market. He recently made a timely sale of a position in iShares Physical Gold, which secured a near 45% return in a year.
For his SIPP portfolio as a whole, it’s also been a strong start. In the past four months, he has built up a return of 7%.
Sticking to a diversified approach
“I just try to avoid putting all my eggs in one basket. The more diverse you can be, the more protected you are,” Ian says. “I’ve been through some lumps and bumps along the way. The pandemic crash is one of them. But in each of the scenarios I’ve seen the investments come back and come back better than they were before. So, I’ve gotten quite used to riding out those scenarios.”
Despite his investment success, Ian doesn’t have any big long-term plans for his money. He says one day, perhaps they could fund a move to be closer to wherever his children settle. But for now, he’s happy using his savings to continue enjoying the life he has.
Portfolio help: why and when to rebalance
There is a common misconception that rebalancing a portfolio is all about maximising returns.
While it can sometimes help with that, it is more about good risk management and maintaining adequate diversification to meet your investment goals.
There are times when personal circumstances change, such as getting married, buying a home or approaching retirement which may require a wholesale review of a portfolio.
Another reason to rebalance a portfolio is related to changes in the shape or composition of a portfolio, due to the natural ups and downs of markets.
For example, if your stocks perform exceptionally well, they might grow from say, 60% to 80% of the portfolio. Without rebalancing, you are carrying significantly more risk than originally intended.
This is referred to as threshold rebalancing, and it has the advantage of forcing you to lock-in gains during market spikes and recycling the cash into underperforming parts of the portfolio, smoothing returns.
A different approach is to apply a fixed quarterly or bi-annual review of the portfolio. This has the advantage of being lower maintenance and prevents ‘tinkering’ or obsessively checking markets.
But remember that trading activity detracts from your overall returns, so keeping costs low is a good discipline too.
The best of both approaches might be a hybrid one whereby you check your portfolio on a set schedule, say every six months, but only make changes if your allocation to different types of investment has drifted more than 10% from your target.
Hannah Williford: Content Writer
Hannah joined AJ Bell in 2025 as an investment writer. She was previously a journalist at Portfolio Adviser Magazine, reporting on multi-asset, fixed income and equity funds, as well as macroeconomic impacts and regulatory changes...
