My Investor Policy Statement

Objectives

  • Be in a position to pay off my mortgage by 2030

  • Work part time by age 52, with the option to retire early by 57

  • Create the best future that I can for my family

Philosophy

  • Only make an investment if I believe there is a reasonable prospect of seeing a 3x-5x return in 5 to 7 years

  • Run a focused portfolio of less than 20 companies, probably closer to 12-15

  • Invest in the very best high growth companies around the world

  • Only invest more in my best ideas at opportune times to maintain a margin of safety

  • Try to identify the best 3-5 ideas I can find for my ISA every year

  • Invest primarily in tranches of up to £2500 at a time, and no more that £6667 towards a single new stock idea (1/3 of an annual ISA allowance). Typical position sizes are £3000-£6500

  • Maximum £2000 of follow on money for a previous full position (~£8666 is the absolute maximum investment I’ll put towards an idea, and only then in exceptional circumstances)

  • Stocks should not be bought at a premium over 15% more than I consider a fair price

  • Let winners run and let my portfolio concentrate for me

  • Be comfortable averaging up if the thesis is confirmed and the idea is de-risked

  • Consider rebalancing if a single stock represents more than 20% of the portfolio

  • Buy a position with the intention of holding it indefinitely

  • Read and analyse the quarterly earnings reports of companies I track

  • Don’t be afraid to change my mind if the facts behind my original investment thesis change

  • Accept that this strategy will carry a lot of volatility

  • Strive to minimise the effects of taxes, trading fees and expenses on investment returns

Asset Allocation and Holding Philosophy

  • The primary investment vehicle for individual stocks is my ISA

  • Look globally

  • No bonds

  • N̶o̶ ̶c̶r̶y̶p̶t̶o̶c̶u̶r̶r̶e̶n̶c̶y̶ Max £1000 allocated to crypto until I understand it better

  • No options

  • No short positions

  • No funds

  • No ETFs

  • Hold developing ideas/try out positions in a low cost general account like Degiro

  • Transfer a position from Degiro to my ISA when appropriate

  • Consider shorter term positions around ISA long term holds via Degiro

  • Open a shares LISA and consider contributing to it when funds allow

  • Track the performance of my investments via a Google Sheets and Sharesight

  • Subscribe to no more than 2 stock research services and keep the costs less than £45 monthly

  • Aim for a CAGR exceeding 25% over the next 15 years – accept that this willl be uneven

  • I won’t try to time the market and will not panic sell shares due to market corrections

Screening Criteria for a Company to Invest in

  • Leadership position in a new important emerging market

  • Gross margins that exceed 50%

  • Growing revenue at a minimum of 40% per year

  • Recurring revenue model

  • Growing Total Addressable Market

  • Modified Rule of 40 score +ve

  • Primarily US listed companies, but global markets all considered

  • Founder led

  • Secular tailwinds

  • Trading at a reasonable valuation at the time of purchase

  • Clear path to profitability

Debt Management Plan

  • No further personal loans to be taken

  • Aim to be free of personal loan debt in 5 years

  • Track the percentage of personal loans outstanding

  • Track the loan to value of my personal loan outstanding to my portfolio size

  • Consider using trading from Degiro account profits to pay off debt faster where appropriate

Spending and Expenses

  • Use personal finance apps to track monthly spending

  • Avoid unnecessary consumerism

  • Aim for a yearly family holiday

Home Ownership

  • We will strive to own our home whenever possible

  • We will not spend more than 25% of our income on mortgage payments

  • Avoid moving house

  • We will consider a remortgage increase only for a loft conversion and other home improvements

  • The mortgage on the home we are living in will be paid off at the time of retirement

Other Considerations:

  • Keep NHS pension contributions at 12.5%

  • Keep £10,000 emergency fund

  • Avoid capital gains taxes from Degiro account whenever possible

  • Monthly loan repayments of £517

  • Occasionally add to investment account or debt repayment depending on situation (market volatility etc)