I always start a new year full of good financial intention. Overpay on the mortgage, put more money aside for the future and cut down on some of my frivolous spending – a stream of coffees from Pret a Manger and naughty visits to Wasabi in search of healthy sushi.
OK, the resolutions do not always last the full calendar year but at least I give them a go for as long as I can.
2018 is no different. Indeed, I go into this new wonderful year in pretty good financial shape. This is because I have just paid off a chunk of the mortgage on the family home. I feel much richer as a result, less indebted.
It means that provided I stay in employment for the next two years – not guaranteed given the considerable financial pressures newspapers face – I have every good chance of being mortgage-free in the next two to three years. A great financial millstone will then be lifted from my shoulders. For the first time in many years, I will feel financially liberated – I will celebrate by dancing around a totem pole put up in the family home’s garden just for the occasion.
I have always believed that in order to build wealth, you need fi rst to keep your debts under control. My mortgage, thankfully, is the only debt I possess. I’ve no car or home improvement loans to worry about.
As for my investments, I will continue to contribute to my work pension – a no-brainer given the tax relief I receive on my contributions and the payment boost I get from my employer (thank you, Daily Mail and General Trust (DMGT)). The pension fund is ticking along very nicely (thank you) and remains broadly invested. It is the linchpin of my retirement plans, although I have no intention of retiring until I can write no more. Most journalists die writing.
I will also continue to buy a few shares each month in my employer through an employee share save scheme. Provided I hold them for long enough (five years), any proceeds will be tax-free. I see the shares as providing me with a nice little nest egg (not life changing), which I may use to pay for a trip of a lifetime – Australia or New Zealand – to see with my own eyes the magical scenery that formed the backdrop to the trilogy of films based on JRR Tolkien’s Lord of the Rings. Being a keen walker, I really fancy a haul up Mount Ngauruhoe – Mount Doom, the ultimate destination for Frodo as he sought to destroy the One Ring.
But my main ‘get rich’ plan in 2018 is based on my tax-friendly Individual Savings Account (Isa). I hope to utilise as much of my annual £20,000 allowance as I can (something I have rarely done in the past). A reduction in my mortgage payments will give me scope to carry out this action plan. I plan to do the following:
- I will invest monthly rather than throwing money into my Isa ad hoc. It means I will not have to worry about market timing.
- I will only put my money into investment funds or trusts – not direct shares, such as DMGT. I will get diversification as a result.
- I will spread my contributions across three or four funds. Although I have yet to hone my selection process down to specific funds, I will definitely be looking for emerging markets exposure. Some of these markets – the likes of China and India – should provide strong returns as their underlying economies continue to grow at a faster rate than anywhere else in the world.
Having recently met Carlos Hardenberg, manager of Templeton Emerging Markets Investment Trust, in London and been mightily impressed, I would not be surprised if some of my money ended up in his fund. He is meticulous in the way he goes about his work, constantly scouring the globe for investment opportunities.
I will also probably opt for a couple of global investment trusts – spread across the world’s main stock markets. The likes of Scottish Mortgage* and Edinburgh, managed by Baillie Gifford and Invesco Perpetual respectively – trusts that I already hold in my Isa.
Of course, stock markets could plunge at some stage, which will undermine my get rich strategy. But I am prepared to take that risk.
You might wonder why I have not mentioned Bitcoin in my 2018 plans. Well, I do not invest in something I do not fully understand. So I will be keeping well away.
Wishing you all the best in your quest for financial security in 2018. If you pay down debt and invest wisely, you will not go too far wrong.
Jeff Prestridge is the personal finance editor of The Mail on Sunday. He won the Contribution to Personal Finance Education category at the Santander Media Awards 2016. Email him at firstname.lastname@example.org
* Denotes a Moneywise First 50 fund for beginner investors.