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)