Investor Views: “I Want to Build a Nest Egg for my Grandson”

Private investor Cynthia Brack explains to Morningstar how a grandchild has given her a new lease of life and reinvigorated her investment plans

Emma Simon 2 December, 2015 | 9:13AM
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Cynthia Brack was wary of putting her savings into the stock market after previous poor experiences.

Back then footballers didn’t earn the salaries then that they do today, more’s the pity!

But following the birth of her first grandson earlier this year she has decided she needs to take a more long-term view to finance.

She says: “Becoming a grandmother has really changed everything. He’s been such a joy and it’s made me realise that I wanted to start a long-term savings plan to ensure Austin has the best start in life.”

Brack started a regular savings Junior ISA and hopes the monthly savings she is putting aside will grow into a nest egg to fund university or help her grandson buy his first home.

She added: “Initially, I looked at some of the children’s savings accounts offered by banks and building societies but the rates were awful. My son has used financial advisers Chelsea Financial Services before, for his own finances, and spoke highly of them, so I decided I should look at what they were offering too.”

Opting for UK Equity Income

Brack decided to put her savings into Woodford Equity Income.

She says: “I understand that as this is invested in the stock market it will go up and down. But I hope that over 18 years it will produce a reasonable return so will give Austin a nest egg that will make a difference to him as a young adult.”

She says she was particularly attracted to this fund as she did not feel comfortable with more volatile emerging market investments and the manager had a good long term track record.

Morningstar agrees that Neil Woodford has an outstanding track record when it comes to managing investors’ money. Analysts say that Woodford has proved he can manage income funds with “high conviction, patience and passion”.

It adds: “This fund offers investors exactly what they would expect from one of the UK’s most experienced equity-income managers. His stewardship of investors’ capital is not in doubt.”

As this is a relatively new fund launched in 2014 it has no star performance rating, but Morningstar analysts have awarded it a Bronze Rating reflecting Woodford’s 33-year track record of running similar equity income portfolios.

Morningstar analysts added: “The strategy of this fund is clear... generating a positive capital return over the long term, and growing the income whilst offering capital preservation.”

Long Term Approach to Maximise Gains

Brack says this long term track record gives her the confidence that the money she is investing for her grandson will be given the best chance to grow.

She added that she hasn’t always had good experiences when it comes to investing. Back in the early 2000s Brack and her husband invested a sizeable sum into a savings bond, sold by one of the former building societies.

She says: “We were told that this would be linked to the stock market, but after five years we simply got our money back. At least we didn’t lose money on it - but it didn’t seem a very wise use of our capital over this period. It did absolutely nothing at all.”

Modest Company Pension Provides

Brack is now 74 and was widowed 18 months ago. She says she is lucky to have a modest pension. She worked for the Inland Revenue, now HM Revenue & Customs, for more than a decade, although she stopped working when she had twins in her thirties.

New grandmother Cynthia Brack and her grandson AustinHer late husband had a pension from his job at the Royal Mail, although prior to that he was a professional footballer at Cardiff City.

“Back then footballers didn’t earn the salaries then that they do today, more’s the pity!,” she said.

“But at least we both had workplace pensions, so we didn’t have to think about funding our retirement. We always tried to save a little and look after out money. But now I have a new grandson to think about I want to make sure that these savings are working for his future as well as mine.”

 

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About Author

Emma Simon

Emma Simon  is a financial journalist, specialising in investment and consumer issues, writing for Morningstar.co.uk