On 9 April 2024, the Board of VPC Specialty Lending Investments plc (the “Company“) announced an initial distribution to shareholders of $15 million, equivalent to approximately £11.9 million as at the date of release, through the issue and redemption of B Shares.
Pursuant to the authority received from shareholders at the General Meeting on 5 April 2024, B Shares of 1 penny each will be issued to all Shareholders on 19 April 2024 by way of a bonus issue at a ratio of 4.26159039 new B shares for each Ordinary Share held at the Record Date of 6:00 p.m. on 18 April 2024. The Redemption Date in respect of this initial return of capital is 25 April 2024. The B Shares will be redeemed at 1 penny per B Share. The Company will not allot any fractions of B Shares and entitlements will be rounded down to the nearest whole B Share. The proceeds from the redemption will be sent to uncertificated Shareholders through CREST or via cheque to certificated Shareholders on or around 10 May 2024.
Warren Buffett is among the most successful investors of all time. He’s amassed a fortune worth in excess of $120bn.
I could never hope to amass a fortune that large. However, I can certainly use his teachings to help me build my wealth over time.
We all have very different ideas of what it means to be rich. But for me, it would probably revolve around the notion of earning a passive income.
So maybe I could aim for a portfolio that could deliver double the average UK income in the form of passive income.
If I was starting from nothing, that could also certainly be considered ‘getting rich’. But is it possible? Absolutely, but it wouldn’t happen over night.
Here’s how Buffett can help me achieve it.
The power of compounding
“My wealth has come from a combination of living in America, some lucky genes, and compound interest“, Buffett has said.
And he’s been investing for a long time. In fact, he’s had nearly 70 years to help his portfolio grow.
But we can all benefit from compound returns because It’s not reserved for the wealthy or financial experts.
Warren Buffett Says, ‘The Poor Are Most Definitely Not Poor Because The Rich Are Rich
By starting early, investing wisely, and staying consistent, anyone can unlock the remarkable potential of compounding just by reinvesting year after year.
Over time, even small contributions can grow into substantial wealth, thanks to the snowball effect of earning returns on both the initial investment and its accumulated earnings.
Don’t lose money
Buffett’s “Rule 1: Never lose money. Rule 2: Never forget Rule 1” reflects his emphasis on capital preservation.
For him, avoiding losses is paramount because recovering from a financial setback demands disproportionately larger gains. For example, if I lose 50%, I’ve got to gain 100% to back to where I was.
This principle underscores the importance of thorough investment research, risk management, and a focus on the long term. It’s also why we see Buffett looking for a margin of safety on his investments.
He wants to invest in stocks that are undervalued because they may not have far to fall, but they could gain quicker than the index average.
How could I do it?
So what do I need to do? Well, bringing it all together, I need to do my research, use resources to help me make wise investment decisions, and reinvest my returns. But, of course, if I’m starting from nothing, I need to be making regular contributions.
Currently, the average income in the UK is around £30,000. And I’m going to assume it grows at 2% annually. So how much passive income would I need to earn to get double the average UK income.
Well, here’s how I think I can come pretty close to earnings twice the UK’s average income, at least according to my forecast.
The chart below shows wealth accumulation when contributing £250 a month — increasing at 5% annually — reinvesting, and achieving an annualised return of 12%.
After 30 years, I’d have £1.32m. And with that invested in stocks paying an 8% dividend yield (which is achievable today but maybe not in 30 years), I’d receive £105,600. That’s not bad.
The AIC dividend heroes are the investment companies that have consistently increased their dividends for 20 or more years in a row.
Company AIC sector Number of consecutive years dividend increased
City of London Investment Trust UK Equity Income 57 Bankers Investment Trust Global 57 Alliance Trust Global 57 Caledonia Investments Flexible Investment 56 The Global Smaller Companies Trust Global Smaller Companies 53 F&C Investment Trust Global 53 Brunner Investment Trust Global 52 JPMorgan Claverhouse UK Equity Income 51 Murray Income Trust UK Equity Income 50 Scottish American Global Equity Income 50 Witan Investment Trust Global 49 Merchants Trust UK Equity Income 41 Scottish Mortgage Investment Trust Global 41 Value and Indexed Property Income Property – UK Commercial 36 CT UK Capital & Income UK Equity Income 30 Schroder Income Growth Fund UK Equity Income 28 abrdn Equity Income Trust UK Equity Income 23 Athelney Trust UK Smaller Companies 21 BlackRock Smaller Companies UK Smaller Companies 20 Henderson Smaller Companies UK Smaller Companies 20
At the arrow, a bear trap. The market pushes higher before suddenly reversing. If u fail to act u have a big losing position or u have gave back a good part of any profit.
The best ways to monitor your investment portfolio Investing is a great way to build wealth so you can save towards major expenses such as a mortgage, or for your retirement.
It is important to check on your investment portfolio occasionally, explained Hargreaves Lansdown, when your investment objectives change “or if there have been some big changes in the markets”.
This is particularly true in the current climate as economic uncertainty such as high inflation, rising interest rates and war in Ukraine have been causing “turbulence” on the financial markets, said MoneyWeek, “potentially denting the returns enjoyed from certain funds”. Here is how to keep an eye on your investment portfolio.
Performance figures All investment funds will provide documents such as fund factsheets and value-assessment reports that outline their performance over a set period.
Historical returns “shouldn’t be a guide” to future performance, said The Times Money Mentor, but can be an “important gauge of whether a manager has delivered or not”.
Websites such as Trustnet and Morningstar also show how funds have performed compared with their own sector or benchmark.
Keep an eye on the commentaries accompanying this data, said Investors’ Chronicle, as “big moves in and out of different investments” may indicate problems while a change in style may mean the fund “no longer serves its chosen purpose”.
Some financial firms also produce regular reports that highlight good and bad performing funds.
One of the best known is investment platform Bestinvest’s Spot the Dog report, which “lists the bad mutts of the fund management industry”.
The report highlights funds or “dogs” that have failed to beat their own benchmark over three consecutive years by 5% or more.
Its latest report showed the number of dog funds rose from 44 to 56 and, the assets in those “misbehaving mutts” increased to £46.2 billion from £19.1 billion.
Similarly, Chelsea Financial Services publishes a regular RedZone report that “names and shames” the funds that have underperformed their sector average for three years in a row.
It’s generally seen as a “bad idea” to sell a fund based on poor performance alone, said interactive investor. But it “may make sense” if the fund manager shows no sign of taking action.
Do your research You can’t rely only on performance tables, said MoneyToTheMasses, as “no fund manager outperforms in every market condition”, but investors need to find the best funds to invest in “for the current environment”.
Different fund managers perform well in different circumstances, explained Willis Owen, and as time goes on, “your position and those of your investments will change”.
That makes it all the more important to understand how a fund is managed, said Charles Stanley, as well as knowing the reasons why it has performed the way it has and “what conditions it will likely perform best in going forward”.
Be careful about too many changes though. People invest for the long term, said Hargreaves Lansdown, so you shouldn’t be worried about what happens to the share or bond price “today or tomorrow”.
If investors stick to their long-term plan, they can avoid making decisions regarding their investments simply as a result of what is happening in the present.
As a “rule of thumb”, said MoneySavingExpert, five years typically gives “enough time to ride out any bumps in the market”.
Also, keep an eye on fund charges, said Which?, as while fund performance can vary, you’ll have to pay the charges “come rain or shine”, which can make a “huge difference” to your returns.
Marc Shoffman is an award-winning freelance journalist, specialising in business, property and personal finance. He has a master’s degree in financial journalism from City University and has previously written for FTAdviser, ThisIsMoney, The Mail on Sunday and MoneyWeek.
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5 years is a long time to wait to find out your IT has performed badly.
Investing over many years eventually reaches a ‘tipping point’ where your returns double what you’ve put in to date, highlights new research from Interactive Investor.
In a powerful argument for investing long term, compound growth can account for an ever larger share of your portfolio or pension fund over the years.
Putting £250 per month into investments returning 5 per cent a year would see a gain of £83 on your £3,000 total contributions, or 3 per cent, in year one.
This means that your returns after that year would represent just a small percentage of the total pot.
But by year 10, the power of compounding would mean the portion delivered by investment growth would make up 30 per cent of the overall portfolio, and by year 20 it would be 72 per cent.
At year 26 it would hit 105 per cent – with a pot containing £78,000 worth of your monthly contributions over the period now worth £160,229.
Then you’ve reached the tipping point where your returns double what you’ve put in.
If you paid in the same amount but achieved an annual investment return of 7 per cent, it would take 18 years to reach the investment ‘tipping point’, calculates ii.
‘This varies for each individual’s investment strategy and market conditions.
‘In our scenario, the investment tipping point is 26 years, but the reality is many investors will hit their financial goal, be it investing to buy a home or for retirement, a lot sooner.’
Jobson explains: ‘The nature of investing means the annual rate of return isn’t fixed, meaning you can earn more or less in a given year, depending on the market environment.
Jobson adds that for pension savers, retirement investments are turbocharged by the tax relief and employer cash that are added to your own contributions.
‘This dual advantage not only amplifies the initial investment but also leverages compounding over time, accelerating the growth of the pension fund.’
Pensions are possibly the longest-term investment you will ever have, which makes them particularly fertile ground for compounding to work its magic.
Think of your own and your employer’s pension contributions as the seeds, tax relief as the water, your investment plan as the soil and compound growth as the sunshine, helping to grow what eventually becomes a mature pension pot for when you retire.
One of the beauties of pensions is that if you start paying into them early, as so many workers now do thanks to auto-enrolment kicking in at age 22 (set to come down to 18), you will benefit from around 45 years of compound growth from the investments within that pension.
In fact, assuming roughly similar average annual investment returns, the impact of compound growth for younger pension savers who maximise their workplace pension contributions in their early career rather than starting with lower contributions or even foregoing a pension altogether for more immediate priorities, can be really astonishing.
Someone who makes the same annual contribution of £2,000 a year for their whole working life, but misses five years of pension contributions in their twenties would have a pot £22,000 lower at retirement, at £121,450 rather than £143,215.
“Compounding can work against you too, in that percentage fees on investment products can add up the wrong way, magnifying the reduction in your investment pot over time”
However, if they choose to keep paying in when they are young and instead miss those five years of contributions when they are older, from 60 to 65, the impact on their pension pot is much smaller – with a pot size around £11,000 lower, at £131,895, highlighting the greater importance of contributions made early on to eventual pot size.
Unfortunately, compounding can work against you too, in that percentage fees on investment products can add up the wrong way, magnifying the reduction in your investment pot over time.
Of course if your investment grows by significantly more than the fee, the impact of this is reduced, but it’s worth keeping an eye on and making sure you aren’t being charged over the odds for an investment that isn’t delivering.
How to get the most out of long-term investing
Myron Jobson of Interactive Investor offers the following tips.
1. Take advantage of Isa allowances
The shrinking capital gains and dividend tax allowances provide the impetus for investors to invest through a tax-efficient wrapper if they haven’t already done so.
The transfer, however, will involve selling and buying back shares, which could trigger a capital gains tax bill.
Over the long term Bed & Isa is likely to outweigh the charges that might apply.
2. Consider using your partner’s Isa allowance
You can also help reduce your taxable income by transferring assets between spouses or civil partners.
Each year you can shelter £20,000 from tax in an Isa – so £40,000 between two.
Only married couples and civil partners can transfer assets tax-free, meaning those who aren’t could potentially trigger a tax liability.
Money expert Becky O’Connor of PensionBee reveals the most useful – and profitable – real world sums.
Compound growth, which generates massive gains the longer you save and invest, is lesson number one… so what are the others?
3. Understand your risk profile
Risk is an inherent part of investing, but it’s a tough balance. Take too much risk, and you might find yourself racking up some painful investing lessons.
But taking too little (or no risk in the case of cash) is a risky strategy in itself. It could have a hugely detrimental effect on your finances in the future because you might not reach your goals.
And our risk appetite isn’t static. It can change as our circumstances change so needs reviewing regularly.
4. Diversify your investments
This reduces the risk of any one stock in the portfolio hurting the overall performance.
But diversification doesn’t just mean investing in different stocks. It also means having exposure to different sectors, assets, and regions.
5. Rebalance your investments
Trimming the excesses and redirecting funds into underperforming assets ensures that your risk-return equilibrium remains intact.
This calculated approach of buying low and selling high has the potential to bolster long-term returns.
Whether nearing retirement or sprinting towards a shorter investment horizon, rebalancing grants the opportunity to recalibrate allocations to achieve the desired financial destination.
6. Review costs and fees
Investors cannot control the market, but they can control how much they pay to invest. Understand the costs associated with your investments – not least the platform charge.
7. Drip feed your investments
A good and proven way of lowering your investment risk is by investing small amounts regularly. Most often, investors do this by drip-feeding investments monthly to help smooth out the inevitable bumps in the market.
The advantage is that you also buy fewer shares when prices are high and more when prices are low – a process known as pound-cost averaging.
8. Set clear goals
Define your financial goals and time horizon before making investment decisions. Avoid making impulsive decisions based on short-term market fluctuations. Stick to your investment strategy.
Potential acquisition by Refuels of non-controlling assets of CNG portfolio
JLEN notes the announcement this morning by ReFuels N.V. (“ReFuels“) regarding discussions it has held with the Foresight Group (“Foresight“) relating to the potential acquisition by ReFuels of the remaining part of the CNG station portfolio it does not control (“CNG Portfolio“), and an equity and debt capital raise it is planning to fund the transaction.
JLEN holds an interest in the CNG Portfolio (representing approximately 3% of the Company’s portfolio) and confirms that Foresight has held discussions with ReFuels regarding the potential acquisition of Foresight’s interests in the CNG Portfolio (including JLEN’s interest). Any transaction remains subject to the agreement of terms acceptable to Foresight and JLEN and there is no certainty that the Refuels fundraising or the sale of the CNG Portfolio will proceed.”
IF I owned I would take my profits today, the worst that can happen is the price goes back up and I have to buyback but with dealing costs having fell that’s not now a problem.
