Yes I realise we are in the teeth of an early Winter, but
the principle of a “spring clean” on investments holds good at any
time of the year. Several years ago I decided to take
control of my own private pension built up during my time in the
private sector. I opened a Self Invested Personal Pension
(SIPP) which enabled me to transfer my pension and to take control
of the investing. I also took the opportunity as I was
over 50 to extract 25% tax free and also to draw down a small
annual pension.
My investment strategy was based on picking blue chip companies who paid regular dividendsthat increased year on year. All this was done before the
financial meltdown and some of the companies paying the best
dividends included Royal Bank of Scotland and Lloyds TSB.
Of course we all know what happened and basically I got burned on
those investments along with Dixons Stores Group. Also,
the dividends went out of the window. Fortunately, I did
follow the principles of diversification and purchased shares in
such companies as Vodafone and British American Tobacco (the latter
is not very ethical but the share prices has increased 50% and it
pays a stonking dividend). The final principle in the
strategy was to buy and forget!
Well the economic recession should have put paid to the last principle but I
have to admit that I did buy and forget until recently. I
dismissed the forlorn hope that RBS and Lloyds would return to
their former glory in terms of share price and dividends and took
the plunge to sell. I reckoned that I could identify
other companies that will recover faster and are continuing to pay
dividends. Having sold my laggards, I needed to find some
alternatives.
I decided to try and maintain some semblance of diversification looking to replace shares sold with better performing ones from the same or similar sector, still focusing on dividend investing. Having sold the banking
shares I bought AVIVA, I sold BT shares and bought some more
Vodafone, I sold Dixons and bought Tesco. In addition I
bought Imperial Tobacco to go with BATS and Scottish and Southern
Energy as a utility to go with United Utilities.
So now I feel a whole lot better having taken control of my
pension again. I think I will abandon the buy and forget
strategy but avoid the trap of continually buying and selling
shares – the only people who win with that strategy are the dealers
and stock brokers. I will keep a watching brief on all
the shares in my pension, and hope I can spot any future RBS or
Lloyds debacles.
KPW
