As a qualified chartered accountant, Leah Rimini is all too aware how tax can eat into the value of people’s savings and investments – here she spoke to DIY Investor’s Jemima Reeves

‘When it comes to my own money, I want to make sure it is invested as tax-efficiently as possible, and this was one of the reasons she opened a SIPP’.

‘With a SIPP, I can choose exactly what shares or funds to buy… I had done this with my ISA previously and it had certainly done a lot better than my workplace pension!’

Leah, who is 47 and lives in Richmond, London says: ‘I had a company pension with my previous employer. But when I left to pursue a freelance career I wanted to make sure I was still saving for my retirement, as well as getting the appropriate tax relief on these contributions.’

The tax breaks are definitely worth having, she adds. After having children Leah didn’t work for a number of years. But she was still able to invest up to £2,880 a year into a SIPP, and claim basic rate tax relief on top. This effectively boosts the contribution to £3,600. As she points out what other kind of investment gives you that kind of uplift on day one?

However, she says the realities of being a parent means there is less money to invest, and she hasn’t always been able to maximise payments each year. But she adds: ‘The children are slightly older now, so I am working a bit more and looking to boost the contributions into my SIPP.’

Choosing to take control

As Leah already had an ISA with interactive investor, she decided to open a SIPP with them as well. Holding both investments on the same platform makes it easier to keep track of what these accounts are worth, and where the underlying assets are invested, she says.

‘with a SIPP, I can choose exactly what shares or funds to buy’

Leah explains that one of the advantages of a SIPP is that she gets to take control over where her money is invested. This wasn’t always the case with a workplace pension. ‘Here the choice was far more limited. But with a SIPP, I can choose exactly what shares or funds to buy. I had done this with my ISA previously, so felt confident making these decisions about my pension investments. My ISA had certainly done a lot better than my workplace pension!’

Being comfortable with risk

When it comes to both her SIPP and her ISA, Leah invests in individual shares, rather than funds. ‘I have never been as keen to invest in funds, as charges can be higher. Also I want to make the decision on where my money is invested, not hand this over to a fund manager.’

However, Leah says she follows quite diverse strategies when it comes to investing via her SIPP and ISA.

‘With a SIPP this is clearly a longer-term savings plan. But it is a core part of my savings and investments. I am hoping it will help fund my retirement, so I don’t want to take too much risk with this money.’

‘I feel more comfortable taking more of a gamble with some of my ISA’

To this end, she adds that her SIPP is mainly invested in larger blue chip companies that have a solid track record of paying decent dividends.

In contrast, she has invested in some smaller companies through her ISA, including some which are listed on the Alternative Investment Market (AIM).

‘These are a bit more risky,’ she comments, ‘but I feel more comfortable taking more of a gamble with some of my ISA, as this isn’t my retirement money.’

Dividend boost

So what shares does she invest in? Leah says that within her SIPP she invests in the telecommunications giant BT, and also has holdings in Lloyds Banking Group and the food services company, Compass Group.

All of these are well established companies that have historically paid regular dividends to their shareholders. Leah reinvests the dividends to help boost returns over the long term.

‘BT and Lloyds have been a reliable source of dividend income for me over the years; albeit at a lower level, Compass Group has consistently delivered, with the added bonus of strong share price growth over the past decade.’

‘However, the best laid plans, and all that, when the Covid-19 pandemic came along, markets tanked and dividends dried up over night. Obviously none of us had ‘done’ a pandemic before, so didn’t really know how to respond’.

‘Watching the value of the portfolio I had spent so long building plummet was really horrible, but I figured that those ‘losses’ were only real if I sold my shares, so I decided to sit tight; fortunately markets recovered and dividends seem to be returning’

‘I’m looking to add good quality stocks that I can hold for the long term’

Leah aims to have a ‘buy and hold’ approach: ‘There are costs to buying and selling stocks, and it is difficult to get the timing right. This is another difference between my SIPP and ISA. With the ISA, particularly when I first took it out, I did chop and change holdings more regularly. With my SIPP, I’m looking to add good quality stocks that I can hold for the long term.’

Leah says she tries to research stocks thoroughly before buying, to check a company’s dividend record, its cash balance and how its share price has moved over the longer term: ‘I’ll look at the financial section of newspapers for tips, as well as online sites’ she adds.

When it comes to her ISA, Leah surmises she has taken more risk and will invest in smaller shares: ‘I’ve owned a number of oil and gas and mining companies companies over the years with mixed results – one thing’s for sure, it’s never boring! I tend to only take relatively small holdings so that not too much damage is done when that ‘gusher’ dries up. Having said that I also hold some larger FTSE stocks, such as Lloyds and Vodafone, for a bit of balance.’

‘To me, the best thing about managing my own money is the feeling of freedom and control that it gives me. Even when things were seemingly crumbling around me, I felt calm, because the decision to stick with my investments was mine. Now that we have apparently come through, I feel vindicated in that decision.’

‘Having said that, it seems that we have emerged from the pandemic only to be plunged into an energy crisis, rampant inflation, a cost-of-living squeeze and a destabilising war in Ukraine, so there are plenty of challenges.

‘I find myself watching the news in a different way now, trying to interpret the effect the various events such as supply chain issues and energy prices will have on investments. I’ve recently become interested in some of the ‘thematic’ ETFs that give access to things such as medicinal cannabis, space exploration or energy transformation.’

‘To me, this is not like doing research, it is just being aware and taking an interest in what goes on around me and interpreting it in terms of my own investments. One thing it is impossible to ignore is the worsening  climate emergency, and now that ‘sustainable’ investments deliver returns that are every bit as good, if not better, than ‘traditional’ investments, ESG investing will be core to my long-term investment plans.’

Thank you for sharing so much with us Leah, and hopefully we can keep in contact to see how things are going.

‘That would be my pleasure, and it will make me concentrate even harder on the decisions I make; one thing’s for sure, I’d recommend DIY investing to anybody, for the sense of control and it brings and once you have got a grip of the basics, there’s nothing to fear and everything to gain’.

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