Firing Line: Lord Lee

Lord (John) Lee must surely be regarded as a hero among private investors. He eschews investing in funds, preferring to make his own judgment on specific shares, based on little more than keeping up with the news and reading investor magazines.

This research has proved sufficient, however, since his personal investments have done rather well. In 2003, his Isa investments reached the value of £1m, having invested £125,000 since the launch of Peps. Now he has published a book setting out his tips, entitled How to Make a Million – Slowly: My Guiding Principles from a Lifetime of Successful Investing.

“I’m an evangelising investor,” he said. “I want to encourage investors to do more on their own and make their own decisions, backing their own judgement, rather than go through funds. But you have to have a really genuine interest and be prepared to put time aside to research, and you’re not going to do that unless you really enjoy it.

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“If you aren’t prepared to put the time in, it makes sense to let others manage your money.”

It helps that Lord Lee has a financial background. He trained as a chartered accountant, then set up his own business, an agency that acted as a broker for companies that wanted to merge or be bought out. This turned into an investment bank – Chancery Trust.

At the age of 37, he went into politics, serving as a minister in the Thatcher government. He left parliament when he lost his seat in 1992 and subsequently became a Liberal Democrat peer, mainly because the Conservative Party became “very right wing and increasingly anti-European”.

His time as a businessman and financier helped him in parliament, “not only as an extra dimension of knowledge, but also because it enables you to build up a certain degree of financial independence, which makes you less dependent on the party machine. If you lose your seat, you’re not on your uppers.”

Throughout this time, Lord Lee maintained his interest in investing. His first investment was a £45 share in a company called Aviation and Shipping, which he bought when he was 15, having inherited his father’s interest in the stockmarket. However, after a loss at sea, the company went bust, and the young man lost his money.

Over time, he built up knowledge, taking a greater interest in stockmarkets and companies, to the extent that shares in one company he bought in 2006 are about to yield a sixfold gain. Having invested in the firm at 320p a share – which dipped to 225p in 2009 – it is now being divested through a takeover at £20.75.

Throughout this time he has kept his funds protected from tax through a Pep and Isa. He said: “Tax-free is very important – it’s very important to have a wrapper to receive dividends.” It is also crucial to reinvest dividends, he said, and the compounding effect has been substantial.

He said there are two crucial elements to keep in mind when it comes to being a successful investor: firstly, common sense; secondly, patience.