How can you retire with $1 million in assets? Discover seven ways that can help you formulate a plan for retiring as a millionaire.
Source CBNNews.com http://bit.ly/2VDc0xe
الأربعاء، 15 مايو 2019
Some Thoughts on the Cost of Eating Out
A few weeks ago, I found myself in a situation where I was really hungry but there weren’t many food options around. I decided to keep my costs as low as possible, so I went into the only restaurant I could find, a nice little diner. I want to be clear during this article that I am not picking on this diner. It was a nice place to eat, the service was good, the food was good, and I was happy with it.
At the diner, I ordered an extremely simple breakfast. I had a cup of coffee, some scrambled eggs, some fried potatoes, and two pieces of toast. The total bill was about $10 – really, not that bad – and then I left a $2 tip, so the cost was $12.
During the meal, though, I couldn’t help but calculate the costs in the back of my head. I was served roughly three scrambled eggs with a little bit of cheese on them, probably a single potato’s worth of fried potatoes, two cups of coffee, and two pieces of toast with maybe a teaspoon of butter between them.
So, let’s look at the ingredient list of that meal:
+ three eggs
+ 1/4 cup shredded cheese
+ 1/2 potato
+ a small amount of onion in with the potatoes
+ two slices of bread
+ roughly a tablespoon of butter
+ two cups of black coffee
+ a negligible amount of salt and pepper
I could assemble those ingredients into a breakfast at home in about the same time it took them to get breakfast out to me at that restaurant, and then I’d have a few items that would go in the dishwasher afterwards.
So, what would the ingredients have cost me?
+ I can get a dozen eggs for $1.99, so three eggs cost $0.50.
+ I can get eight cups of shredded cheese at the local grocery store for $5, so 1/4 cup of shredded cheese would cost $0.16.
+ A typical potato weighs about 12 ounces and I’d estimate that I had half of a potato on my plate, and a pound of potatoes these days comes in around $1, so the potatoes cost about $0.38.
+ The small amount of onion was probably $0.05.
+ I can get a loaf of 20 slices of bread for about $2.50, so two slices cost $0.25.
+ I can get a stick of butter for about $0.75 and that contains 8 tablespoons, so a tablespoon of butter costs about $0.09.
+ I can make two cups of coffee at home for about $0.70 using my usual coffee making technique.
+ We’ll add on another $0.10 for seasonings like salt and pepper.
The total cost of those ingredients is $2.23. Even if you might quibble with the cost of each item and think that it would be more than I stated, you’d be hard pressed to get this over $3 unless you went very high end with each item.
As I noted earlier, I think my time investment would have been similar if I prepared and ate this meal at home, though I would have been busy in the kitchen for 15 minutes instead of reading the menu, ordering, and staring at my phone for 15 minutes waiting on the food. However, that effort would have saved me about $10.
The meal quality probably would have been pretty similar, but I’m pretty sure I would have at least liked my coffee at home better. I’m kind of picky about coffee and I really like my home brew recipe.
This experience reminded me of a few key principles of food frugality (and taught me a few things as well).
Eating out consistently is a very expensive endeavor. When you compare a meal prepared at home and a meal eaten out of similar quality, the meal eaten out will always be more expensive. When you eat out, you’re not only paying someone to prepare it for you and someone to serve it to you and often someone to clean up for you and someone to manage those folks, you’re also paying for the facilities to make and serve the food, the taxes, and some profit for the person who invested all the money to pay for all of these things.
Sure, you can sometimes find a decent meal at a restaurant that’s less expensive than a great meal at home, or a low quality meal at a restaurant that’s less expensive than a good meal at home, but you’re taking a serious cut in quality, and if you apply any sort of frugal planning and use low cost food staples at home, a restaurant is never going to consistently beat – or even come close to – the low cost of preparing food at home.
I was really paying for convenience, not the food. When I went to that restaurant, my focus was on getting a decent meal relatively quickly. It seemed to be the fastest option available to me at the moment, and thus I was really paying for convenience rather than the food itself.
That’s often a big consideration when people eat out. They do so because they’re hungry and they’re not near any options for preparing food themselves or to acquire low cost and quick to eat items. There are many places in America where the only convenient options for food are convenience stores and fast food restaurants, even in places where you might not expect this to be true.
Situations where you need to spend for the sake of convenience are often prevented by better preparation. Whenever you find yourself in a situation where you’re turning to a restaurant or a convenience store not because you want a nice meal on a special occasion, but because you need to do so out of convenience, it’s usually because either you didn’t plan ahead at all or you’re in a crisis moment.
An emergency is understandable, but many meals that people eat out do so solely because they didn’t plan ahead when they knew that there was a good chance that they might need to eat a quick meal or a hearty snack in a convenient way.
There are a lot of ways to prepare for those kinds of situations, where you need a quick, convenient meal. You can make a lot of meals at home in advance so that you have items that can be popped in the microwave or oven at your convenience. You can use a slow cooker for a lot of meals. You can mostly prepare meals in advance, leaving only final assembly for busy evenings. You can prepare sack lunches to take with you.
Or you can do this:
I could have prepared better by keeping more food items in my bag. My favorite technique for keeping hunger at bay when I’m out and about is to have a few food items in my backpack, which is pretty much always with me when I leave the house for more than a few minutes. It’s because I didn’t do this that I wound up in that “I’m hungry, there’s no other food options, time to go to a restaurant” situation.
My routine should be that if I know I’m going out and about soon, I make sure that my bag has some food items in it, just in case. Toss in an apple, some granola bars, a water bottle, a bag of nuts, maybe some crackers or something. The key is to just have something that’s low cost and easy to eat in my bag.
In fact, I usually have several granola bars and/or protein bars in my bag all the time for situations just like this one, but I’d consumed them all over the previous few weeks and there was nothing in my bag.
Eating out should be an experience you can’t recreate at home. The meal I ate was perfectly fine, but it was one that I ate solely for convenience. It wasn’t a special experience or a memorable experience. In fact, I probably would have forgotten about it had I not planned on writing this post. It would have become a forgotten $10 expense, the kind of “lost” $10 that ends up paving the road to financial struggles.
The best financial approach to food that I’ve found is to eat meals mostly prepared at home and mostly made out of low-cost staples and only eat out (or have treats) on genuinely special occasions. It’s easy to learn how to cook a ton of great meals with low cost staples, especially if you have a reasonably well stocked pantry.
On the other hand, special occasions are usually best when they’re really meaningful – you’re eating with someone special or it’s a truly special occasion – and when they’re planned in advance so you can anticipate it. I have far more financial concern about a $15 meal from a restaurant three or four times a week than a $75 meal at a restaurant once every month or two.
If that’s the financial path you’re on, it’s time to rethink the costs of eating out.
The post Some Thoughts on the Cost of Eating Out appeared first on The Simple Dollar.
Source The Simple Dollar http://bit.ly/2YvyInI
Adjustable-Rate Mortgages Are Making a Comeback – Is That a Good or Bad Thing?
Years after their fall from grace amid the subprime mortgage crisis, adjustable-rate mortgages (ARMs) are making a steady march back toward the mainstream.
According to a December 2018 report from Ellie Mae, a software company that process mortgages, the percentage of home purchases that used adjustable-rate mortgages ticked up to 9.2%. Not only was that the highest level in 2018, it was also an all-time high since Ellie Mae began tracking such data back in 2011.
While many personal finance and industry experts view this resurgence with concern, warning consumers to continue avoiding ARMs like the plague, that’s not the sentiment in all quarters.
ARMs do have their supporters, despite their involvement in the housing market crash that triggered the Great Recession. Here’s a closer look at the pros and cons of using an ARM to purchase a home.
What Are ARMs, and Why Are They Coming Back?
For those who are unfamiliar, ARMs are mortgages with an adjustable interest rate. They offer borrowers a lower initial interest for a fixed period of time, typically three, five, or seven years. After that, the rate fluctuates based on the market. A 5/1 ARM, for example, will have a fixed interest rate for the first five years, then reset to a new rate every year thereafter based on market conditions.
ARMs have been getting a boost in popularity as rates on 15- and 30-year fixed-rate mortgages climbed throughout 2018. The average rate on a 30-year, fixed-rate mortgage is back down to 4.14%, according to Freddie Mac, after hitting a high of 4.94% in November. However, average rates in the mid-3% range are probably long gone, and most experts expect rates to inch upward in coming years.
In general, when the economy improves, borrowing gets more expensive. ARM mortgage rates, however, often start out about 0.5% lower than fixed-rate loans.
In such an environment, borrowers looking for lower mortgage payments and interest rates are increasingly opting for ARMs.
“I’m not surprised to see ARMs making a comeback. As housing prices continue to rise, many potential homeowners are simply getting priced out,” said James Stefurak, CFA and founder of Florida-based Monarch Financial Research.
The Difference Between Present Day and the Run-Up to the Great Recession
For those who may now be considering an adjustable-rate mortgage thinking the lower interest rate will help them qualify for more home, think again, says Mike Ferraro, area manager for Bank of England Mortgage.
“One of the popular reasons people did an ARM prior to 2008 was to qualify for more of a house. At that time, lenders qualified borrowers at the initial lower rates with no consideration of any future rate increases,” explained Ferraro. “This led to many consumers taking adjustable-rate mortgages that per today’s standards would have actually been qualified for much less.”
Today, however, lenders qualify borrowers for ARMs based on a higher interest rate calculation, rather than the initial rate that’s offered, Ferraro said.
And overall, mortgage underwriting is far, far stricter now, said James McGrath, co-founder of the New York City real estate brokerage Yoreevo.
“Coming out of the downturn, ARMs got a bad reputation for good reason but the problem was more about underwriting rather than the product itself,” explained McGrath. “If you can’t afford a loan, you’re going to default, it’s as simple as that, and during the housing bubble, borrowers were able to lie about their income and banks didn’t care if they did.”
The Drawbacks of Adjustable-Rate Mortgages
Not having control over fluctuating interest rates can be a challenging experience, one that can sometimes end in disaster for the homeowner, as evidenced by the aforementioned housing crisis.
Borrowers who opt for this type of mortgage need to be prepared for, and comfortable with, a potential rollercoaster ride.
“Borrowers must realize that it is possible that their monthly mortgage payment could increase significantly depending on changes in the economy, interest rates, the money rate, or the housing market,” explained Patricia Russell, a certified financial planner and creator of the site FinanceMarvel. “Choosing an ARM with restrictions could also prevent a buyer from being able to switch to a fixed rate within a certain period of time.”
More specifically, when ARM fluctuations occur, it could translate into significantly higher mortgage payments almost overnight, which can be troublesome for low-income borrowers in particular.
“If rates move up quickly the borrower could spend hundreds in additional interest payment dollars in as little as one year,” said Matt Seu, principal at the financial services firm Actualize Consulting. “This increases the borrower’s chance of default significantly.”
If all of that’s not clear enough or doesn’t give you pause, spend a moment chatting about the topic with money expert Dave Ramsey.
The renowned financial advisor expresses his disdain for such mortgages in no uncertain terms, urging home buyers to avoid ARMs at all costs.
“I would never under any circumstances take an adjustable-rate mortgage,” said Ramsey. “Ask yourself this: Which way do you think the rates will ‘adjust?” If you said up, you’re right.”
“This isn’t rocket science,” Ramsey added. “The bank offers you a lower interest rate to get you in, and when rates adjust, they almost never adjust down… Make sure a house is a blessing and not a curse. Save for a down payment and get a 15-year fixed-rate mortgage and pay it off as soon as you can.”
The Benefits of Adjustable-Rate Mortgages
Still, there are plenty of industry experts who insist that there are plenty of benefits to using ARMs.
Depending on a borrower’s overall financial situation, an ARM may make sense, suggests Russell. The lower rates at the front of the loan make it possible for some new homebuyers to purchase a home and still have enough money available for other needs or renovations in their new home.
“An ARM now could allow someone to purchase a home they want with an affordable payment,” added Russell.
In addition, for high net worth borrowers, ARMs offer a lower interest payment allowing them to invest the difference, said Seu. When rates rise, this type of borrower can quickly refinance into a fixed-rate loan or simply pay off the note entirely.
How to Decide if an ARM Makes Sense for You
So how to decide if an ARM might be a good choice for you? Proceed with a good deal of caution, do your homework, and understand all of the possible outcomes.
In particular, analyze what the payment difference would be in today’s interest rate environment between an ARM and a fixed-rate mortgage.
“In certain interest rate environments, buyers should choose ARMs,” said McGrath. “In particular, when short-term interest rates are significantly lower than long-term interest rates, they make a ton of sense. Please note, that is not the case today as short-term interest rates are fairly close to longer term interest.”
Yet another factor to consider is how long you intend to be in the home. If you plan to sell the home before the introductory fixed rate expires, an ARM could make sense (though plans do change). If the answer is the rest of your life, however, then an ARM is not likely to be a good choice for you.
“If a consumer plans to be in a home their entire life, then they should not do these loans just for the initial lower rate, as it will surely adjust higher in the long run,” said Ferraro.
However, ARMs can be a good choice for people who know with some degree of certainty that their income is going to be higher in the future.
“If home loan rates rise and the monthly mortgage payment goes up, they know they can afford the higher payment,” explained James Stewart, a mortgage originator with national lender and servicer Planet Home Lending.
Examples of such situations might include:
- You are finishing school and going into a high paying career with solid job prospects.
- A stay-at-home partner or spouse will be going back to work when children start kindergarten.
- Your secure job has predictable pay raises based on years on the job.
In addition to those situations, there are a few other instances in which an ARM might make sense, added Stewart.
These include buyers who are planning to pay off the home loan before the ARM adjusts, because they plan to move up to a new home or location, and buyers who intend to religiously pay extra principal each month on their mortgage.
“When an ARM gets adjusted, the new payment is based on the amount still owed,” said Stewart. “Reducing what you owe may give you lower payments.”
The bottom line, however, is this: When agreeing to an ARM, you’re taking on the risk that the monthly payment will rise, and it may rise quickly and significantly.
If that added risk is going to cause you to feel overly stressed, an ARM may not be for you, said Stewart.
Mia Taylor is an award-winning journalist with more than two decades of experience. She has worked for some of the nation’s best-known news organizations, including the Atlanta Journal-Constitution and the San Diego Union-Tribune.
Read more:
- How to Find the Best Mortgage Rates
- The Surprising Figure That Can Torpedo Your Chances of Getting a Mortgage
- The Best Home Insurance Companies
The post Adjustable-Rate Mortgages Are Making a Comeback – Is That a Good or Bad Thing? appeared first on The Simple Dollar.
Source The Simple Dollar http://bit.ly/2W3V4iK
Here’s How to Start Investing When You Only Have $50 to Spare
Investing in the stock market might sound like something that only rich people do. But you can start with only $50 — and immediately double your money with a $50 match.
Swell Investing makes this super easy. You can get started online or through its app with $50 — the cost of a dinner for two at Olive Garden. Plus, when you invest $50, Swell will immediately match that with a $50 bonus! Just use the code PENNY after making your initial investment.
This is a much lower minimum than traditional investment companies will require for you to start investing — so you don’t have to be Warren Buffett or Thurston Howell III to become an investor with Swell.
Invest in Causes You Care About
If you’d like to be a socially conscious investor, Swell lets you support companies that share your values. Swell is an SEC-registered investment adviser with a socially responsible philosophy. It only invests in sustainable companies that are committed to solving global challenges.
With Swell, you can invest in any of seven portfolios of stocks that align with the United Nations Sustainable Development Goals: Clean Water, Disease Eradication, Green Tech, Healthy Living, Renewable Energy, Zero Waste or Swell’s Impact 400.
Each thematic portfolio includes 40 to 70 companies making a positive impact in these areas. Additionally, the Impact 400 portfolio features 400 companies across multiple sectors.
You can choose a custom blend of portfolios to invest. Or, to make things even simpler, Swell has created predetermined mixes of multiple stock portfolios. The mixes have names like the Environmentalist, the Generalist and the Tech Optimist. This way, you don’t have to choose yourself how to allocate your investment from scratch.
Now, just because you’d like to save the Earth, that doesn’t mean you can’t make some money at the same time.
Swell’s website and its iOS app make it easy to track each portfolio’s performance and change in value over the past week, month, six months, year — or all the way back to Swell’s launch in 2016.
No one can ever guarantee you a certain rate of return. But historically, investing in the stock market has shown to grow your money faster than keeping it in a savings account. If you want to start saving for retirement — or just save for the future — it’s best to start growing your money as quickly as possible.
Save Money by Avoiding Sneaky Fees
Through Swell, you get to invest in companies that share your morals. You probably wouldn’t want to invest in a company that’s destroying our oceans or cheating the system. With traditional investing you might be. For example, the top five retirement funds in the U.S. support oil companies.
Swell’s fee structure is simple. It won’t change depending on the product you use or the portfolio you invest in.
For example, Swell doesn’t charge any trading fees, there are no price tiers or expense ratios, and you won’t find any other obscure fees that might catch new investors by surprise. To save you from these hassles, it simply charges a 0.75% annual fee. For example, if you invest $500, that’s about the cost of one latte ($3.75) per year.
Depending on how much you invest, you could ultimately save hundreds of dollars this way. A traditional brick-and-mortar investment firm will charge you fees based on how much stock you own, how often you trade stocks and other factors.
So, got $50? Bingo! Just like that, you’re a member of the investor class.
Disclosure: We have a financial relationship with Swell Investing LLC and will be compensated if consumers apply for an account and/or fund an account with Swell through links in our content. However, the analysis and opinions expressed here are our own.
Mike Brassfield (mike@thepennyhoarder.com) is a senior writer at The Penny Hoarder.
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.
source The Penny Hoarder http://bit.ly/2w2k1wd
Can I cancel my annuity and take a lump sum?
Question
I have a small pension through an annuity, which I am advised is worth £28,500. Under the government scheme, I would like to take this as a trivial commutation lump sum [ie, cash in the lump sum].
However, I have another small annuity which is £113 a year, which takes me over the £30,000 threshold.
I am told I cannot cancel the annuity. Is there any way that I can cancel it in order to access the lump sum?
From
AS/Swadlincote
Unfortunately, the decision to purchase an annuity is, in the vast majority of cases, irreversible so you would be unable to cancel it. At one point the government did announce that it was looking at plans that would allow people to cash in their annuities – the so-called secondary annuity market – but these were dropped in 2016.
In terms of your other small pot, you do not mention if it is a defined contribution (DC) or defined benefit (DB) pension but you do have options. If the pension is a DC one, then under the pension freedoms that came in in 2015, you would be able to take it as a cash lump sum less any tax due if you are over the age of 55.
If you have a DB plan, then you would need to do a DB to DC transfer if you wanted to be able to take your money as outlined above. Under current rules, you would not have to pay for regulated financial advice to make this switch as your pension is worth less than £30,000.
However, you may find that many providers will refuse to do a non-advised transfer so you may have to shop around.
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Source Moneywise http://bit.ly/2HlBExH
Not a happy bunny when insurers mess up
Insurance is a vital part of our financial armoury. It’s our backstop in case something goes wrong in our lives, be it a burglary, car crash or an illness that means time off work.
It’s not always mandatory, often voluntary, and yes it can sometimes feel as if you are pouring money down a big, black hole. But, in theory, it’s there to come riding to our rescue when the unexpected happens.
In recent weeks, I have drawn comfort from a couple of the insurance policies I hold.
The first was via the Axa PPP private medical insurance I pay for through my employer (Daily Mail and General Trust). A recent routine medical – arranged through work – showed a marked jump in my PSA score, an indicator of prostate cancer. I was advised to see a specialist as soon as possible.
My private medical insurance meant I was able to see Dr Christopher Ogden, a lovely individual and a pioneering urological surgeon, within days. Following an examination (not particularly pleasant) and an MRI scan, I now await a biopsy and Dr Ogden’s verdict. Thank goodness for my insurance – it could prove a life saver.
The second was through my dental policy. In the past couple of weeks, I have had the ‘pleasure’ of visiting my dental hygienist, an experience probably more daunting than Dr Ogden and his probes. The only blessing I could draw from the painful visit was that the cost (not the pain) of the cleaning process was slightly defrayed by the dental insurance I have with BUPA.
So no complaints? Well, not exactly. Take my medical insurance. Just after Dr Ogden had told me a biopsy would be required, I received a letter from Axa PPP stating in stark black and white: “We have been unable to pay this claim in full because of the benefit limitation on the scheme.”
Insurers could do much better if they put the customer first
Feeling a little emotional, it sent me into a tailspin, thinking the ‘prostate pathway’ I had been put on would have to be abandoned and I would be left in limbo.
It was only after a hurried phone call to the insurer that the letter’s contents were properly explained. Everything was fine, I was told. The letter was triggered by the £100 excess – the sum I must pay to make a claim – which meant a £100 ‘shortfall’ showed up between the treatment costs and the money paid over by the insurer to the medics.
Given that I had already paid the excess over the phone by credit card, there was actually no ‘action you need to take’ (the insurer’s words in its letter) and no shortfall. Indeed, there was no need for the letter. Correspondence, presumably, sent out automatically by computer without anyone at the insurance company checking whether it was appropriate or not. Simply not good enough.
For all the reassurance that most insurance brings, many providers still seem incapable of communicating with customers in language that can be instantly understood. They make everything so difficult.
My mother’s recent ‘spat’ with British Gas is further proof of this disconnect between insurer and customer. My mother has had HomeCare insurance with British Gas for donkey’s years. It provides her with a comfort blanket for when the heating packs up or the plumbing springs a leak. She rarely claims on it, but it is there just in case.
This year, British Gas tried to increase her premiums at renewal by 20%, a price hike my mother could ill-afford. After all, she’s a pensioner, lives alone (my younger son lives close by to keep an eye on her) and gets by on a state pension and a small annuity. So I urged her to complain by giving them a call.
Not one to overlook an argument, she gave the British Gas employee at the end of the phone an almighty ear bashing. The net result was a ‘new’ annual premium of £477.30 – instead of the £596.64 she had been quoted initially. Indeed, a premium lower than the one she had paid for the previous 12 months (£499.39).
Yes, a fantastic result, but it shouldn’t be this way. It should not have to take a phone call for her to get the deal she should have been given right from the word go.
It is great that insurance companies provide peace of mind every day of the year to millions of households and businesses across the country. Yet they could do so much better if only they became more consumer-friendly. It’s a Holy Grail they should strive to achieve soonest. Me and Mum would be happier bunnies, that’s for sure.
JEFF PRESTRIDGE is the personal finance editor of The Mail on Sunday. Email him at columnists@moneywise.co.uk.
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Franklin UK Rising Dividends Fund's Colin Morton
Colin Morton is the lead manager of Franklin UK Rising Dividends Fund. Edmund Greaves learns how the fund looks for companies that are reinvesting in their own business but also growing their dividends
What is Franklin UK Rising Dividends trying to do?
The fund is trying to invest in companies that have a proven track record in growing their dividends for a reasonably long period of time.
Franklin UK Rising Dividend Fund aims to provide a growing level of income, together with capital growth.
What do you look for in companies you buy?
We start with the FTSE All-Share index. We then screen down by identifying companies that have increased their dividend in at least eight out of the past 10 years.
We’re also looking for companies that pay around two-thirds or less of their earnings as dividends. We want companies that are reinvesting a reasonable amount of money back in the growth of the business.
We don’t want a portfolio full of companies that are paying out all their earnings as dividends because then they’re not reinvesting in the business.
What have you bought recently?
The one thing we have bought in the past few months is Victrex, a UK-based manufacturer of a product called Peek, which is a compound used in a wide range of industries from automotive to aerospace and medical.
This company has been around for 20 or 30 years and has a phenomenal track record. It generates lots of cash and has grown its dividend every year for the past 15 or 20 years.
The stock had a bit of a sell-off amid fears of global growth. We got a chance to buy 30% below where it was trading in the middle of last year.
We think this is a really good-quality, long-term UK manufacturing business, and we bought it on an attractive dividend yield of close to 4%.
What have you sold?
Last summer company Greggs had a couple of profit warnings and the stock fell from around £14 to about £10, so we bought stocks planning on holding it for the next three to five years if we could, but the valuation in our opinion got far too expensive, the stock rose from £10 to £18 when we sold it.
It’s had a lot of publicity on the back of the vegan sausage roll. That sounds a ridiculous comment to make, but it certainly helped. We decided to sell the position and take an incredibly attractive profit in a very short period of time. That’s very unusual for us.
“Greggs’ vegan sausage roll got a lot of PR. That helped”
What has been your best investment decision?
Dunelm has been an absolute stunning performer for us. We had an unbelievable opportunity to buy that last summer, while everyone was so negative on the UK high street and the retail environment generally, and obviously all the Brexit worries.
If you’re brave enough to be patient with those opportunities that come along, the best decisions for the fund tend to be buying things that have got very good, long-term track records but are out of favour in the market.
And the worst investment decisions with the fund?
The one that we got wrong recently has been IG Group, the financial derivatives trading firm.
The company has got a great long-term track record. It’s grown its dividend; it’s very well financed; and it’s very well run.
But in Spring 2017, the regulator really started getting its teeth into financial derivatives trading firms.
In December 2019 the FCA proposed permanent measures that banned the sale of binary options to retail consumers and restricted the sale of contracts for difference (CFDs)]. It’s probably going to make something like 30% less money than last year.
What’s the first thing you ever personally invested in?
I made my first personal investment around 1984, when I was about 18 years old.
I was working for a stockbroking company and was investing in small companies, so-called ‘penny stocks’. I was investing small sums of £100 to £200.
Once I started managing money myself, I invested in my own funds because it makes it much easier to align your own interests with the interests of the people you’re investing for.
What’s your top tip for a beginner investor?
Invest in something you know. And if you haven’t got enough money to have a spread and diversification of individual companies, you should be looking at investing in a fund.
Because just to pick up on one or two companies, however great you might think those businesses are, is quite a dangerous thing to do.
Franklin UK Rising Dividends key stats:
Launched: October 2011
Fund size: £85.48 million
Ongoing charge
(OCF): 0.55%
Yield: 3.44%
Source: FE Trustnet, 28 March 2019
The manager behind the fund
Colin Morton is a vice president and lead manager of the Franklin UK Equity Income Fund and Franklin UK Rising Dividends Fund, specialising in large-cap UK equity analysis and investment.
Mr Morton began his career in 1983 as a trainee stockbroker with Wise Speke & Co. He joined Rensburg in 1988 as a private client executive, becoming an investment manager in 1991.
In January 2011 he joined Franklin Templeton Investments when it acquired Rensburg Fund Management (now Franklin Templeton Fund Management).
Five-year discrete performance of Franklin UK Rising Dividends
| Year | 0-12 months | 12-24 months | 24-36 months | 36-48 months | 48-60 months |
|---|---|---|---|---|---|
| Franklin UK Rising Dividends W Acc | 8.4 | -0.9 | 20.7 | 0.3 | 14.2 |
| IA UK All Companies | 3.1 | 2.3 | 18.4 | -3.8 | 6.8 |
Source: FE Trustnet March 2019
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Source Moneywise http://bit.ly/2JH8IS8
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