Phil Brown credits an “old fashioned” approach to money for helping him accumulate enough spare cash to start investing. “I hate being in debt; I hate the cost of it,” he says, explaining his determination to pay off the mortgage on his family’s 18th-century Yorkshire home ahead of schedule.
The property, near Bingley, forms part of a grade II*-listed farmhouse, he says, which was built around 1700 and later divided into cottages. Phil and his wife, Sue, bought one of the rear-facing cottages in 1993 and later an adjacent cottage, reinstating the original connecting doorways, which had been bricked up and plastered over.
It took years of overpaying by £500 per month, plus saving £500 a month towards a lump sum, for the Browns to clear their £80,000 mortgage, 14 years ago. He says their saving habit took root as they both had full-time jobs and didn’t have children at that point.
Sue was eight months pregnant when the Browns made their final mortgage payment. The combination of baby Ted’s arrival and an entrenched saving regime prompted Phil, a former marketing manager at a building society, to take a closer look at the rest of the family’s finances, specifically his pensions, as he didn’t want his money to have to go into annuities.
“Having Ted, who is now 13 years old, made me more determined to not lose all that money when I died. Even if I spent too much, or the investments weren’t successful, at least there would be something for him to inherit as opposed to nothing,” says Phil, 57. He decided to redeem his separate pension plans from various employer schemes and combine them in a self-invested personal pension (Sipp). “You’d think it would be quite straightforward to get access to what is essentially your money but I had to take independent financial advice and the transfer process was really quite stressful,” he says.
In 2021, Phil moved his Sipp to Interactive Investor, a subscription-based online investment service (there’s a £9.99 monthly charge for investment Isas and an extra £10 per month to add a Sipp account – though customers who only want a pension plan can choose the standalone Pension Builder at £12.99 per month).
Phil spends around four hours every day researching his investments
Phil describes how his interest in investing was piqued around 22 years ago when he began dabbling with penny stocks – common shares of smaller companies traded for less than £1. He’d also started saving in cash Isas when interest rates were high but soon hit the upper contribution limits – which were lower back then – so he switched to investing in funds (collective investments run by managers). “I started increasing the amounts as I got more confident, until I was investing £2,000 a month from our savings.”
In 2020, he negotiated a redundancy package to leave his job. And today the family lives off a Sipp worth £500,000 and savings in an Isa. But Phil says he wasn’t always so confident in handling the risks associated with investing large sums of money. “As I gained experience, I gained perspective. I learned to ride the waves and the troughs.” Last year, he was significantly down from the peak. “But you also learn not to measure from the peak because it’s always galling,” he says.
Sue, 49, who was a senior buyer at a utilities company until she retired two years ago, still has a part defined benefit and part defined contribution pension.
The couple, who volunteer with a local homeless charity each week, now have years of saving and investment experience under their belts. Day to day they’re quite thrifty with what they spend their money on, enjoying camping holidays in the UK, making homemade wine, and running, which is “dead cheap”. “We are fairly frugal,” says Phil.
But is son Ted learning from their money-saving habits? Like many 13-year-olds, Ted isn’t really that interested in money, says Phil. “But he’s had a Junior Isa and a Sipp from when he was a few months old and he listens patiently whenever Dad occasionally waffles on about how these are invested. We save into these each month for him.”
Phil says he spends around four hours every weekday researching his investments, which include holdings in around 30 companies and investment trusts. “I scour forums. It’s dead easy to track any level of performance.” He keeps notes online and in notebooks and uses a paper calendar to keep track of dividends.
“Over the past year, I’ve been trading quite often because everything is much more volatile. I’d get giddy if something went up by 5% so I’d flog it. I’ve started buying more individual company shares to keep fees down.”
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The value of your investments may go down as well as up. You may not get back all your money or end up with a fund at retirement that is less than you invested. The Interactive Investor Sipp is aimed at clients who have sufficient knowledge and experience of investing to make their own investment decisions. You can normally only access the money from age 55. If you are unsure about the suitability of an investment product or service, please seek advice from an authorised financial advisor. Tax treatment depends on your individual circumstances and may be subject to change in the future.
