A change in personal circumstances following a few years of being down on his luck gave Peter the chance of a fresh start and to consider taking control of his financial future.

The sale of a canal boat allowed Peter to settle things with his partner and provide a lump sum to invest. He considered consolidating five of seven private pensions into a single pot with a view to opening a SIPP (self-invested personal pension).

TAKING THE FIRST STEPS

Before setting that wheel in motion Peter wanted to be sure managing his own investments was the right decision. He opened a Stocks & Shares ISA with an initial goal of getting a better understanding of how buying and selling stocks worked.

As a complete novice Peter admits the whole thing was a bit of an experiment. But he hatched a plan to invest in a retail bank, a mining company, a high street retailer and an entertainment company.

OFF TO A FLYING START

Peter set about trying to identify the cheapest companies in each of his chosen sectors. Lady luck smiled on Peter and one of his first investments, mining group BHP (BHP) got off to a flying start.

At the time in early 2021 BHP moved its primary listing from the London Stock Exchange (LSEG) to the Australian stock market. Later in the year BHP spun-off its oil services business after merging oil and gas assets with Woodside Energy Group (WDS:ASX) which meant Peter received shares in specie. Peter has since added to his holding in Woodside Energy.

The luck didn’t last however after Peter decided to invest in global cinema group Cineworld as part of his entertainment exposure.

Unfortunately, the company filed for administration this year. There is some semblance of a silver lining though in that having lost 90% of his initial investment in Cineworld, Peter didn’t add to his position.

LEARNING LESSONS FROM FAILURE

Researching further into why the shares had fallen Peter discovered the business had taken on a lot of debt which ultimately was a key factor in its demise.

Peter says: ‘That was my first big fundamental lesson, research all ideas fully before pressing the buy button.’ That experience also led him to take a closer look at a company’s balance sheet.

After a few months investing for himself, Peter who drives heavy goods vehicles for a living, decided to go ahead and consolidate his pensions and open a SIPP, funding it with a small lump sum.

Some of the pension transfers took weeks while others dragged on for months which Peter said was hard to fathom. If he had to do it again, with hindsight Peter said transferring one at a time would save confusion when chasing up paperwork.

Peter also believes that spreading out the transfers means he could have benefitted from averaging the initial cost of his investments which mitigates the risk of sudden drop in shares prices immediately after purchase.

A BLENDED APPROACH TO RISK

Peter told Shares that he sees his SIPP as the core of his investments where he takes little risk and focuses on blue-chip UK-based companies which pay steady dividends.

He said he is willing to take on more risk in the ISA and does occasionally stray into overseas territories.

As a self-confessed ‘petrolhead’ it is perhaps not a surprise to discover Peter owns shares in Liberty Media (FWONA:NASDAQ) which owns the broadcasting rights to Formula One.

Another sign of different risk approaches to the ISA and SIPP can be seen in Peter’s choice of funds. The ISA holds the AJ Bell Adventurous Fund (BYW8VG2) which is designed for investors willing to take more risk.

It allocates 85% of the portfolio to shares which are riskier than bonds and cash. By contrast Peter owns the AJ Bell Moderately Adventurous Fund (BYW8VL7) in his SIPP.

Peter is very conscious of spreading his investments across several companies to create as much diversity in the portfolio as possible. Where possible he aims to equal weight each holding.

Keeping fees as low as possible is also a priority for Peter. He prefers to invest once a month and has set-up a regular investment plan.

FINDING INVESTMENT IDEAS

Given most of his outgoings are in the first week of the month Peter has a good idea how much spare cash he has available to invest each month.

He generally adds to holdings which have been weak, believing in the long-term growth and income potential of his share picks.

Peter finds investment ideas by reading Shares magazine and scouring the internet for the latest company news.

Forty-one-year-old Peter is hoping to build a nest egg which allows him to retire before he reaches 60, although he doesn’t envisage stopping entirely. He has paid-off around half of his mortgage.

Reflecting on the past couple of years Peter said investing has become a very enjoyable hobby.

In terms of retirement, he says rather modestly: ‘I guess it’s worth adding, I have no lavish plans for retirement. If I could live at home producing my own fruit and veg, maybe with a few chickens, along with a motorhome to tour the UK I’d be perfectly happy.’

DISCLAIMER: Please note, we do not provide financial advice in case study articles, and we are unable to comment on the suitability of the subject’s investments. Individuals who are unsure about the suitability of investments should consult a suitably qualified financial adviser. Past performance is not a guide to future performance and some investments need to be held for the long term. Tax treatment depends on your individual circumstances and rules may change. ISA and pension rules apply.  Financial services company AJ Bell referenced in the article owns Shares magazine. The author of the article (Martin Gamble) and the editor of the article (Tom Sieber) own shares in AJ Bell.

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