Investor Views: “Market Falls Have Made Me Rethink My Pension”

Private investor Richard Whitehead tells Morningstar how a ‘trickle down approach’ has helped him amass a reasonable savings plan

Emma Simon 17 March, 2016 | 9:49AM
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Richard Whitehead, a part-time book-keeper, says he is something of a ‘secret-squirrel’ when it comes to building his investments.

“I call it a ‘trickle’ approach. I’ve always tried to put away small amounts on a month by month basis. And it never ceases to amaze me how quickly this can add up,” he said.

Whitehead started investing when he was in his 20s, putting money into a pension and various 10-year savings plans, often run by insurance companies. “In retrospect I may not have got the best return on some of these plans, but that didn’t really matter,” he says. “I got some return on my money, and after 10 years the money I’d put aside built into quite a tidy sum. To start with I was just putting £20 or £50 aside a month: money that I would otherwise have just frittered away.”

Whitehead has continued this approach over thirty years, and although there have been time when his income has been more stretched - particularly after getting married and starting a family, he’s always tried to put at some money aside each month.

Giving the Next Generation a Helping Hand

Currently he is saving around £500 a month into an ISA, which he hopes will be able to give his children a helping hand as they start their working lives.

“I am in my 50s now, with three children, the eldest of whom is at university. It can be difficult starting out these days, so hopefully this will give them a bit of a financial cushion.”

He says he is not using Junior ISAs for his children; “I’ve looked at them, and I don’t think the charging structures, or fund choice, is always as competitive as adult ISAs.”

Instead Whitehead has taken out a regular ISA in his own name as this offers more flexibility.

“You never know what’s round the corner,” he said. “So I think it makes sense to keep your options open, but in my head these funds are earmarked for the kids.”

At the moment, his ISA allowance is invested in four different funds: Fidelity MoneyBuilder Balanced, Invesco Perpetual Distribution fund and two tracker funds – one investing in the FTSE All-Share and the other in the US market.

The Moneybuilder Balanced fund, which invests in a portfolio of high quality equities and bonds, has a four star rating from Morningstar. The portfolio is 65% invested in equities, which are managed by Michael Clark, with Ian Spreadbury managing the 35% bond split.

Analyst Randal Goldsmith says: “This fund is a strong choice for investors seeking a regular monthly income and stable growth from a high-quality portfolio of equities and bonds.”

The two managers work independently, but meet monthly to discuss views and overall positioning. Morningstar gives them a Bronze-medal rating.

Invesco Perpetual’s Distribution fund has a four-star rating. This is another fund that invests in a spread of bonds and equities – although no more than 40% of the fund will be in higher-risk equities at any time.

The bond portfolio – and overall allocation – is managed by a Paul Causer and Paul Read. These veteran fixed income investors have a Bronze-medal rating from Morningstar. The equity portfolio within this fund is now run by Ciaran Mallon who took over in October 2013, when Neil Woodford, the previous manager, left. Mallon too has a Bronze-medal rating from Morningstar.

Reducing Equity Exposure in Retirement

Whitehead also invests in a SIPP through Fidelity Personal Investing. He says through much of his 30s and 40s he didn’t really look at where his pension was invested: “I set up a direct debit, the money went out, and basically looked after itself.” Again he said he was surprised at how his pension grew over a couple of decades of investing.

But now he is getting closer to his own retirement he says he started to keep a closer eye on his investments. “I do review it regularly. It can be quite agonising trying to decide what to buy and sell.” He says he regularly looks at fund reports from websites like Morningstar to him make decisions.

Recently, he has started to reduce his exposure to equities. “I’ve invested instead in a range of multi-asset funds, which I hope may be able to cope with the current market volatility. I think as I get nearer to retirement it makes sense to reduce my exposure to higher-risk equities.”

Whitehead has invested money in various multi-asset portfolios, where the equity holding is between 20% and 40%. As well as the distribution fund, run by Invesco Perpetual, he also has money in multi-asset funds run by Fidelity and Royal London.

He adds: “With hindsight, it would have been better to do this last summer, when the market was considerable higher. But I feel happier that I’ve de-risked now and hold a broader spread of assets. I’ve just got step back and see how they perform. It’s no good looking at valuations every time the market falls. I’ll review again in a year.”

However he said he hasn’t made the same move with his ISA holdings. “These can be held for 10 years or more if needed and will hopefully be able to ride out future peaks and troughs.”

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Fidelity MoneyBuilder Balanced42.76 GBP-0.46Rating
Invesco Distribution UK Acc148.54 GBP-0.11Rating

About Author

Emma Simon

Emma Simon  is a financial journalist, specialising in investment and consumer issues, writing for

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