Kim Marshall started saving more seriously over the past 10 years after she realised she “wasn’t getting any younger”. A well-timed promotion allowed her to start putting extra money towards a securing a comfortable retirement.
She says: “I’ve always been fairly sensible and have saved into a pension at the various companies I’ve worked for. I’ve also always been more of a saver than a spender.
“I make sure I pay off my credit card bills in full each month to avoid interest charges, and we have taken advantage of low interest rates to make regular overpayments on our mortgage.”
Marshall, who lives in Sussex with her husband, says: “Paying off debt seems a good foundation to our finances. But I have wanted to build a more adventurous investment strategy, with a view to perhaps retiring early.”
Marshall says her company pension gives a her “bit of leeway” when it comes to choosing where her money is invested. But she has chosen to stay in the default portfolio; a mix of UK and overseas shares.
“I’ve been quite lucky, most of these pension schemes have had fairly low charges, but they do seem to be quite conservatively-managed. Returns have been steady but not spectacular,” she says.
Risk On DIY Investing
As well as maximising her workplace pension contributions in recent years, she has also started to invest more into an ISA, which she holds with Charles Stanley Direct.
Here she takes a higher risk approach with a significant amount of her money going into emerging markets.
One of her first holdings was the JP Morgan Emerging Markets (JMG) investment trust. The trust has a Morningstar analyst rating of Silver, as well as a five-star performance rating. It has been managed by Austin Forey since 1994.
Morningstar analyst Simon Dorricott describes this trust as a “high-quality offering”. He says: “Forey’s process is tried and tested, taking a long-term approach and focusing on businesses that exhibit the following characteristics: attractive earnings, strong balance sheets, excess returns on capital, sustainable competitive advantage, an ability to grow market share and potential to generate significant shareholder value.”
This means the trust tends to have a bias towards financial and consumer staples. According to Morningstar data this trust has delivered annualised returns of 17.59% over the past three years. It has comfortably beaten its benchmark over a three, five and 10 year period.
Marshall says: “I’ve been pleased with the performance of this trust and it has encouraged me to invest other more specialist emerging market funds.”
Latin America Proves Volatile
These includes an investment in BlackRock Latin American investment trust (BRLA). She says: “This has been a more volatile investment. There have been periods when valuations have increased significantly, but there have also been some dramatic downturns too.”
However, she appreciates that this is “what you have to expect” with emerging market investments.
She concludes: “Overall I have seen a small but positive return on my money, so am sticking with this for the longer term. There certainly seems to be long-term opportunities in these areas.”
According to Morningstar data this trust has produced annualised returns of 15.34% over the past three years, but the benchmark index is up 17.13%.
Bronze Rated Income Fund
Marshall also invests in JP Morgan’s Emerging Markets Income fund. She says: “This is a more recent investment. There seems to be quite a crop of emerging market income funds. I have been happy with my other JP Morgan holdings so decided to stick with the same asset manager.”
This fund has a Bronze Rating from Morningstar analysts. Dorricott says: “Strong resources and a robust process makes this an attractive option for investors seeking income-orientated exposure to emerging markets.”
According to Morningstar data the fund has produced annualised returns of 14.51% over the past three years.
Marshall says: “My other finances are pretty steady, so I can afford to take a bit more risk with my ISA. I view these as long-term investments; I am hoping if I keep drip feeding money into emerging markets this will help produce a decent nest egg, allowing me a bit more flexibility over when I retire.”
