Investment plan

“Here is my post-divorce investment plan”

When you get divorced, it’s not uncommon to focus on your finances again. This is the case of the private investor Laura Cleaver.

Laura, who is in her 40s and lives in Kent with her two teenagers, says the divorce has forced her to reconsider some of her financial goals.

“I am completely dependent on myself now, for my retirement, and [for] to be able to buy a house or buy our house back from my ex-partner when my youngest child leaves school full time. And I’m responsible for all the other miscellaneous expenses that come up, like the leaky ceiling I had recently!

“As for my pension, fortunately, I have already started contributing to various employer pension plans over the years. Laura works in the charity sector and says every job she’s had has paid a small pension “so at least that’s accumulated for the [past] 25 years”.

Other than that, she says she feels like she’s kickstarting her when it comes to her finances. To try to build short and long-term savings, she launched a cash ISA with Virgin. “It pays around 2%, which doesn’t sound too bad.”

Laura also has an older investment ISA, opened about 10 years ago, in which she started saving again. She also has junior ISAs that she opened for her children.

Initially, she only contributed small lump sums when she had the money, but after the divorce she now takes a more proactive approach.

A global orientation

Currently, Laura invests in a few funds through her ISA – which she holds with Chelsea Financial Services.

It invests in Schroder Asian Alpha Plus and Lazard Global Equity Franchise. She says the Lazard fund has done particularly well. “I have made money from this fund, even though the stock markets have fallen over the past year.

“The Schroder fund has been down a bit lately, but overall I’ve still made money from this investment.”

This Schroder fund has a Morningstar Bronze analyst rating. Analyst Lena Tsymbaluk notes that despite the retirement of this fund’s former manager, it retains a number of attractive qualities for investors, including strong analyst resources and a solid underlying framework, the new manager with considerable experience in managing funds in this sector.

The fund has had a strong long-term performance, generating annualized returns of 9.76% over the past 10 years and 8.68% over a three-year period, according to Morningstar data.

As Laura points out, Lazard Global Equity Franchise is up year-to-date, up 9.9% according to Morningstar figures. This fund seeks long-term defensive returns, investing across the world in various franchise companies, which it believes provide investors with predictable income and a competitive advantage over competing businesses.

The defensive approach has helped the fund hold its own in the more volatile stock markets seen this year. But that doesn’t mean it underperformed before, when stock markets were more buoyant. In fact, the Lazard vehicle generated annualized returns of 11.92% over three years and 9.14% over five years.

Investing for children

Both Junior ISAs are invested in Rathbone Global Opportunities. Laura says: “It worked very well for a long time, but has dropped off a bit this year. But I’m happy to stick with it for now.

Rathbone Global Opportunities has a Silver and 5-star rating, reflecting its strong performance against its peers and benchmark over recent years.

According to analyst Bhavik Parekh, this fund is “a great option for investors seeking exposure to high-growth mid- to large-cap stocks.” The team maintains a strong belief in fund managers and their ability to create value for investors.

Although down 20% overall in 2022, the fund has generated annualized returns of 13.35% over the past decade and 8.82% over the past three years.

Laura says she might consider adding a few more funds to this ISA next year, but says it’s not easy to know what to invest in. “There’s so much choice and a lot of jargon and being a single mom with two kids doesn’t leave a lot of extra time to review things like my investments.”

However, she says she watches Chelsea magazine, which has fundraising ideas and has also started listening to the ‘Investing on the Go’ podcast. “It was really interesting. I like to hear how they make money and sometimes they mention companies I know or things I know so it all feels a bit more real.

The cost of living barrier

When it comes to choosing funds and investments, Laura says she looks at fund fees and charges, but also considers performance. “I’m more concerned about how well my investments perform than how much I’m paying for them. I don’t need to double my money every year, although that would be nice! – but I need them to constantly bring me some money.

“I am starting a new job soon with a better salary, so I will be able to save a little more in my ISA each month. However, if bills go up again in October, as expected, it could limit what I can save.

“I’m hoping to invest £300 a month in the ISA in cash so I can build up an emergency fund and hopefully have an extra £300 to invest in the ISA for the future. Stock markets are kinda scary right now – like the world in general – but hopefully if I invest a little each month and don’t watch it, I should be fine.

“I’m realistic enough to know that my retirement plans will have been postponed for a few years because I have to sort out the savings for the kids and the house first. But I hope that starting to save more regularly will help me get my finances back on track.