Tuesday, 17 July 2018

Martin Lewis: What happened when a spam PPI firm tried to call me…

Like everyone else, over the years I’ve had a good number of spam texts and calls telling me I was owed “£3,728” or whatever their baloney lie is (these neither mean you aren’t or are owed PPI, they’re just random spam). And occasionally I’ve had the odd call, usually those auto-dial auto-message horrors.  

from Martin Lewis' Blog https://blog.moneysavingexpert.com/2018/07/martin-lewis--what-happened-when-the-spam-ppi-firm-tried-to-call/

Martin Lewis: A drugs bust – stop letting big pharmaceuticals rip you off!

Harry Potter’s got nowt on the pharmaceutical industry. It’s full of real wizards, both those who make drugs that help, and the marketers whose raft of tricks to persuade us there's hidden magic in their brands. Drug companies spend millions promoting 'only-use-the-name-you-know' messages... but it's often marketing baloney, balderdash and any other ‘b’ words you can think of.

from Martin Lewis' Blog https://blog.moneysavingexpert.com/2018/07/martin-lewis--a-drugs-bust-up---stop-letting-big-pharmaceuticals/

What Salary is enough for London? (not-married, no children)

Have you ever wondered what salary would be enough to live comfortably in London? Even though I live in Manchester, I’ll write about our capital, as millions of  people live there, and also, many people from all around the UK and the world might be thinking of moving to London to work or study.

In this article we’ve calculated 3 different salaries, and we’ll try to figure out whether you’ll have enough money to live in the capital as we’ll start deducting your expenses. We’ve used this online salary tax calculator to find out the exact net pay after taxes and NI is deducted. Then we’ve added your rent, car costs, food costs, leisure, and other basic costs to your monthly expenses, and we’ve calculated how you can live on that wage. Now let’s get started.

Assumptions: This article is part of “trilogy” – we’ll post 2 other articles with the same title, but assuming different personal circumstances. With this instance, we’ll assume that you are not married, you don’t have kids, and you are renting a room in a shared accomodation, or a studio flat when you earn £80k a year. This situation applies to most students, or professionals who are just getting started in life and/or in London, but it can apply to other people as well.

£20,000 annual salary

Poor neighborhood in London (that’s what you’ll afford with a £20K salary)

There is no point in going lower than £20,000 annual salary in London. Sorry to be brutal with some people, but if you are living in London and you are earning under £20K a year, then you’ll need to level up, skill up, and work on yourself to become more valuable to the marketplace. London is a place that pays big time to be great, a place that pays to be a hard working person. So if are earning less than £20K a year, you’ll have to work on yourself first.

Now let’s see how you’ll manage life with £20,000 a year. From our calculations, your monthly net pay after you’ll pay your taxes and NI will be around £1,400.

Here is what you’ll be able to afford with £1,400/month net income, in London:

    • NET INCOME: £1,400
    • Rent: £700 (an average room in a shared house)
    • Public transport (no car for this wage): £200
    • Food: £400
    • Mobile phone contract: £30
    • £70 leisure


  • TOTAL: £1,400


As you can see, with a £20K salary in London (and in most places in the UK to be honest) you’ll be living in a pure “survival” mode, barely making it through each month. That, assuming that you won’t have any unforeseen problems in life – which we all know that you’ll have. We all have. Now let’s see how well you’d live if we double your salary, to £40K a year.

£40,000 annual salary

Now even though we’ve doubled your gross yearly salary, you’ll notice below that your net earnings didn’t quite double. This is because you’ll pay tax on a larger percentage of your income, therefore more money will be deducted from your gross wage. According to the income tax calculator above, your monthly net pay will be around £2,500. Now let’s see what can you afford from this income.

    • NET INCOME: £2,500
    • Rent: £850 (a better, double room in a shared house)
    • Car leasing: £250 (you can get a Skoda Octavia or BMW 2 series for this price)
    • Car fuel: £200
    • Mobile phone contract: £50
    • Food: £500
    • Leisure: £250
    • Clothes: £200
    • Other spendings: £100
    • Saving: £50


  • TOTAL: £2,500


As you can see, with a £40K salary, you can have a normal, regular life in London, and you can even save £50 a month. You won’t be able to afford an overseas holiday though, with this wage. Now let’s double this up, and see what kind of lifestyle can we afford if we earn £80K a year.

£80,000 annual salary

Affluent neighborhood in London (you can live here if your salary is £80K a year)

A yearly wage of £80K would definitely guarantee a comfortable lifestyle in London. You can afford luxury, en-suite double rooms or studio flats, a luxury car, and luxury holidays. Let’s see the break-down:

    • NET INCOME: £4,500
    • Rent: £1,450 (very nice studio flat in an elite area, such as Knightsbridge or Chelsea)
    • Bills for the accomodation: £400 (electricity, council tax, water, Sky,  etc)
    • Car leasing: £550 (you can get a Tesla Model S)
    • Car electricity recharge cost: £100
    • Mobile phone contract: £50
    • Food: £500
    • Leisure: £450
    • Clothes: £300
    • Other spendings: £200
    • Holiday: £500 (£6K/year)


  • TOTAL: £4,500


As you can see from our calculations above, you’ll need to earn at least  £40K in London, in order to live a stable life. With £20K a year, you’ll struggle to live  worry-free, and the quality of your life will be very poor. With £80K salary, in contrast, you’ll enjoy a lavish lifestyle, living in the most elite areas of London, driving a Tesla car, and taking expensive holidays abroad. We hope that this article will motivate you to learn more and better yourself, in order to get as close as possible to the £80K a year.

In our next articles we’ll be calculating your lifestyle based on different circumstances, for example we’ll assume that you are married and live as a couple, and also, assuming that you are married and have kids. We hope that you’ve enjoyed this post about finances.

from Finance Girl http://www.financegirl.co.uk/what-salary-is-enough-for-london-not-married-no-children/

The Slow and Steady passive portfolio update: Q2 2018

The Slow & Steady portfolio is up 5.88% this quarter.

Our plucky Slow & Steady portfolio is well on the road to recovery after last quarter’s bloody nose. It’s sprung back 5.9% in three months, despite the first shots in a trade war zipping past our heads.

Once again reality defies the instinct to pounce on a pattern:

  • Last quarter’s biggest loser, Global Property, is the top performer this time. It’s up 13%!
  • The UK stock market enjoyed a nice 9.5% surge, despite the Brexit turmoil.
  • Like a golden UFO conveying cultists to paradise, the Bond Apocalypse has once again failed to materialise. Perhaps it’s timetabled by a British rail franchise?
  • Our Developed World and Global Small Cap holdings are still powering ahead as the notoriously overvalued US market defies gravity – or at least the gurus’ predictions.
  • Emerging markets are down nearly 3% this year despite being the asset class with the highest expected returns.

All of the above will change, of course, but about as predictably as a Trump press conference.

For now, here’s the blinding truth in Ultra-Dynamic-Dynamic-Dynamic Monstro-vision™:

Our portfolio is up 10.22% annualised

The Slow and Steady portfolio is Monevator’s model passive investing portfolio. It was set up at the start of 2011 with £3,000. An extra £935 is invested every quarter into a diversified set of index funds, tilted towards equities. You can read the origin story and catch up on all the previous passive portfolio posts.

Our annualised return is a that’ll-do-nicely 10.2% over seven years. I wonder how many people realize how good that is?

At that rate your money doubles every seven years. Knock off 3% for inflation and you double every decade in real terms.

Recently a good friend of mine ‘fessed that he’d been warned off investing by an ‘informed’ acquaintance who claimed low interest rates had left the stock market dead in the water. The aftershock of the Credit Crunch, an endless stream of media misery, and a decade of stagnant wages led him to believe the global economy had been clothes-lined.

How many others have missed out on double digit gains due to zero interest rate fairy tales?

The reality is we’re doing pretty well, aided and abetted by diversification. Last quarter the Slow & Steady Portfolio was down 3.1%. The FTSE All-Share was down 6.9%. We were cushioned by other markets doing less badly and our bonds bearing up.

Now our rebound is neck and neck with the FTSE despite our 30% bond safety belt. Viva global capital markets!

Before I sign off with the new transactions, my apologies for the late update this quarter. My day job got a bit out of hand these last few weeks.

New transactions

Every quarter we lay £935 at the feet of the Almighty Markets and hope they smile upon us. Our cash is divided between our seven funds according to our pre-determined asset allocation.

We use Larry Swedroe’s 5/25 rule to trigger rebalancing moves, but all’s quiet this quarter. We’re just topping up with new money as follows:

UK equity

Vanguard FTSE UK All-Share Index Trust – OCF 0.08%

Fund identifier: GB00B3X7QG63

New purchase: £56.10

Buy 0.269 units @ £208.67

Target allocation: 6%

Developed world ex-UK equities

Vanguard FTSE Developed World ex-UK Equity Index Fund – OCF 0.15%

Fund identifier: GB00B59G4Q73

New purchase: £336.60

Buy 0.972 units @ £346.27

Target allocation: 36%

Global small cap equities

Vanguard Global Small-Cap Index Fund – OCF 0.38%

Fund identifier: IE00B3X1NT05

New purchase: £65.45

Buy 0.218 units @ £300.41

Target allocation: 7%

Emerging market equities

iShares Emerging Markets Equity Index Fund D – OCF 0.24%

Fund identifier: GB00B84DY642

New purchase: £93.50

Buy 59.29 units @ £1.58

Target allocation: 10%

Global property

iShares Global Property Securities Equity Index Fund D – OCF 0.21%

Fund identifier: GB00B5BFJG71

New purchase: £65.45

Buy 31.9 units @ £2.05

Target allocation: 7%

UK gilts

Vanguard UK Government Bond Index – OCF 0.15%

Fund identifier: IE00B1S75374

New purchase: £261.80

Buy 1.599 units @ £163.74

Target allocation: 28%

UK index-linked gilts

Vanguard UK Inflation-Linked Gilt Index Fund – OCF 0.15%

Fund identifier: GB00B45Q9038

New purchase: £56.10

Buy 0.298 units @ £188.32

Target allocation: 6%

New investment = £935

Trading cost = £0

Platform fee = 0.25% per annum.

This model portfolio is notionally held with Charles Stanley Direct. You can use that company’s monthly investment option to invest from £50 per fund. Just cancel the option after you’ve traded if you don’t want to make the same investment next month.

Take a look at our online broker table or tool for other good platform options. Look at flat fee brokers if your ISA portfolio is worth substantially more than £25,000. The Slow & Steady portfolio is now worth over £41,000 but the fee saving isn’t juicy enough for us to push the button on the move yet.

Average portfolio OCF = 0.17%

If all this seems too much like hard work then you can buy a diversified portfolio using an all-in-one fund such as Vanguard’s LifeStrategy series.

Take it steady,
The Accumulator

from Monevator http://monevator.com/the-slow-and-steady-passive-portfolio-update-q2-2018/

Monday, 16 July 2018

Martin Lewis: The fight to divorce mental health and debt

Mental health and debt are a marriage made in hell. You are up to four times more likely to be in debt crisis if you or your partner has a mental health issue. The treatment time for clinical depression is said to be exacerbated by up to 18 months if you also have financial issues.

from Martin Lewis' Blog https://blog.moneysavingexpert.com/2018/07/martin-lewis--the-fight-to-divorce-mental-health-and-debt/

Friday, 13 July 2018

Weekend reading: A little money in shares is better than none at all

Weekend reading logo

What caught my eye this week.

New research from Scottish Friendly makes dispiriting reading for anyone who has spent a decade trying to teach people about investing.

(*Looks around room* “Who me? No no, I was in it for the Brexit banter.” *Shuffles away*)

It seems that having surveyed 2,000 UK savers, the life assurance giant has discovered half of us are afflicted by what it calls ‘investophobia’.

Scottish Friendly says:

  • Inflation is currently running at 2.4% yet the best easy-access cash savings rate available is 1.33%.
  • Almost two-thirds (66%) of savers are aware that interest rates on savings accounts are less than the current rate of inflation.
  • Despite that, more than half (53%) of UK savers say they wouldn’t consider investing in stocks and shares.
  • Almost half (49%) say fear of potential losses is the main reason holding them back.

A decade ago, many web explorers who wandered into Monevator Mansions had sworn off shares forever. We seldom see such people anymore.

Ten years into a bull market, we – and often many of you, in the comments – are mostly reminding visitors that bonds, cash, and property still have a place in their portfolios, let alone that it’s not a great idea to go all-in on, say, tech stocks or emerging markets.

Yet out there in the wider world, the majority still wouldn’t touch a share with a barge pole.

Small mercies

Messing about with the tools at Portfolio Charts suggests that a UK saver who kept all their money in cash would have seen an average annual real return of about 1.6% since 1970. Standard deviation was 4%.

Remember ‘real’ means these are inflation-adjusted returns. Cash can lose you money when inflation is higher than the interest rate you’re paid. The tool suggests that happened in 31% of the years.

So what happens if we take a stiff drink and put a modest 20% allocation into global shares, while still keeping the rest in cash?

Mostly good things. The average real return rises to 2.6%. Standard deviation is only modestly higher at 5.1%. And the number of money losing periods actually fall from 31% to 27%, despite the inclusion of risky shares.

That difference between a 1.6% average real return versus 2.6% isn’t much on paper, but it’s significant over time.

A compound interest calculation reveals:

  • Over 30 years, a 1.6% return turns £100,000 into £160,000 on a real money basis.1
  • A 2.6% return takes your wealth to £216,000 over the same period. That’s a significantly better result, with only a little more volatility and fewer outright losing years.

Of course you and I know that on a 30-year basis, having 80% of your money in cash is very sub-optimal.

  • For the record, a simple 60/40-style portfolio split between global equities and intermediate UK government bonds chalked up an average annual real return of 5.3%, albeit with much higher volatility. That’s good enough to turn £100,000 into £471,000 in real terms.

Adding other asset classes can tweak the return profile further.

Here’s one I did earlier

So yes, agreed, having just 20% of your money in shares is far from perfect.

But remember, we’re not look for a home run here – we’re just looking at getting people off a terrible first base with their 0% allocation to the stock market.

And here simple – if sub-optimal – strategies can make a big difference.

I’ve mentioned before that I’ve often started friends investing with a 50/50 allocation split between shares and cash. (Now I’d probably favour a Vanguard Lifestrategy 60/40, unless they really insisted on seeing and cuddling the cash).

Nobody around here is going to suggest having 50% of your investment in cash is ideal. But I’ve seen it change lives.

For instance, a friend of mine – who was running a persistent overdraft when I first met her – agreed to try something similar to this and to start investing back in 2002 or 2003.

To supplement her work pensions held elsewhere, she began direct debiting money from her paycheck every month, splitting it between savings and an ISA stuffed with index funds.

At some point around the financial crisis she meddled without telling me, diverting some equity money into more expensive self-styled ethical funds. But besides that moment of madness/enthusiasm, she basically ignored the portfolio. She only rarely increased the contributions. Most annual statements went unread into a bottom drawer.

She still enjoyed a good result. In fact a couple of years ago she called to thank me for getting her started.

This painless strategy had compounded over 15 years into a significant six-figure sum – a deposit for her first flat, in fact!

I’ve visited her new family’s home in London, and it’s lovely.

The only way is up

Perfect can be the enemy of the good, as my old dad used to tell me. I wouldn’t attempt to turn anyone into The Accumulator overnight.

Know somebody terrified of shares? Try to get them to set up a direct debit to put say £100 – or whatever is a small but meaningful sum for them – into a global tracker every month.

Chances are after a few years they’ll catch the bug and lose their fear. Then they’re off!


Note: Some links are Google search results – in PC/desktop view you can click to read the piece without being a paid subscriber. Try privacy/incognito mode to avoid cookies. Consider subscribing if you read them a lot!2

First-time buyer numbers rise as buy-to-let market falls – Guardian

Stoke is the debt capital of England and Wales, followed by Plymouth – Guardian

A global trade war could reverse the deflation of the past few decades – Bloomberg

Anti-money laundering push is steering oligarchs away from London property – ThisIsMoney

How Build-A-Bear fell into its own trap – BBC

Forecasts from widely-respected GMO look gloomy, but be aware it was similarly (excessively) pessimistic seven years ago – Pension Partners

Products and services

Banks will soon require text message confirmation for online Visa card purchase – ThisIsMoney

Hargreaves Lansdown’s power to profit from customers exposed in new report [Search result]FT

The pros and cons of Pension Increase Exchange – ThisIsMoney

Mortgage deal boost for young professionals [Search result]FT

Ratesetter’s £100 bonus effectively boosts your expected annual return on £1,000 to 13%  – Ratesetter [Affiliate link]

How smart phones are destroying hedge fund secrecy – Institutional Investor

Top places to buy a home in the sun on a budget revealed – ThisIsMoney

Comment and opinion

Simon Lambert: House prices need to fall 30% not freeze for five years – ThisIsMoney

Are you sure your investments are appropriate for you? – A Wealth of Common Sense

The big questions to ask before you retire [Search result]FT

Exploring the relationship between stocks and bonds – Vanguard blog

The rise and fall and rise of Ben Graham – Novel Investor

The nine essential conditions to commit massive fraud – The Reformed Broker

Nick Train: Value was a 20th Century phenomenon – Portfolio Advisor

A hard lesson learned about investing in cyclicals – UK Value Investor

Who are the greatest investors of all-time? – Pragmatic Capitalism

A tribute to stock picker Chuck Allman – MicroCap Club

Kindle book bargains

Alan Sugar: What you see is what you get by Alan Sugar – £0.99 on Kindle

Einstein: His Life and Universe by Walter Isaacson – £0.99 on Kindle

The Honourable Company: History of the English East India Company by John Keay – £1.99 on Kindle

Moon Over Soho: The Second Rivers of London novel by Ben Aaronovitch – £0.99 on Kindle


Soft or hard, no brand of Brexit can command a Commons majority – Guardian

How the BBC lost the plot on Brexit – New York Review of Books

The politics of Brexit have caught up with reality [Search result]FT

Boris Johnson has ruined Britain – New York Times

Off our beat

Kylie Jenner: The reality teen and almost-billionaire has founded a cosmetics empire – BBC

Fahrenheit 100: Could this be the summer Britain wakes up to climate change? – Guardian

The ‘vegetarian’ mutton curry that unites Bengalis – BBC

The killing of a blue whale reveals how disconnected we are from nature – Guardian

And finally…

“The word ‘risk’ derives from the early Italian risicare, which means ‘to dare’. In this sense, risk is a choice rather than a fate. The actions we dare to take, which depend on how free we are to make choices, are what the story of risk is all about. And that story helps define what it means to be a human being.”
– Peter L. Bernstein, Against the Gods: The Remarkable Story of Risk

Like these links? Subscribe to get them every Friday!

  1. i.e. The spending power of £1 remains the same.
  2. Note some articles can only be accessed through the search results if you’re using PC/desktop view (from mobile/tablet view they bring up the firewall/subscription page). To circumvent, switch your mobile browser to use the desktop view. On Chrome for Android: press the menu button followed by “Request Desktop Site”.

from Monevator http://monevator.com/any-money-in-shares-is-better-than-none-at-all/

Van insurance for young drivers: How to get the best deal

So you’re under 24 years old and you need to get insurance to cover you to drive a van. Well, the bad news is that, like car insurance, if you are lucky enough to be young in years you are sadly also deemed to be a bit too inexperienced to be a safe bet for many insurance companies.  As a result, your premiums are likely to be higher than those for older drivers.

The good news is that there are ways you can help to get those insurance premiums down and make insuring a van for young drivers more affordable. Here we’ll explore some tips to help you to make your van insurance premium more affordable until you reach the ripe old age of 25!

Make use of telematics

First on the list is to consider how to prove that, although young, you can drive responsibly and safely. Here’s where a bit of technology can help in the shape of a little black box, which, when fitted to your vehicle, will monitor how you drive.  

Many insurance companies offer reduced premiums to young drivers who fit a black box to their van. This allows the younger generation to step out from under the usual statistical data labelling (of being very inexperienced as a driver) and to get insurance based on how they actually drive.  

Because black box technology or Telematics, to give it its proper title, is such a new technology, there are understandably a few worries about its use, so here’s a handy guide to what it will do and, more importantly, what it won’t do for you.

However, this may still not be enough to bring down the insurance premiums to an affordable level, especially at first, and if you are a very new and inexperienced driver. So what other options can you consider to try to reduce the amount you’ll have to pay to insure a young driver for a van? If you are lucky enough to be able to choose your van then this can be an area to reduce those costly premiums.  

Choose a van from a lower insurance group

Vans, like cars, fit into groups for insurance purposes. Criteria such as their engine size, cost of parts as well as repairs, how fast they can go, their weight and how good their security is all play a part in deciding which group the vehicle belongs in. Parkers have a guide to the cheapest vans, both small and large, based on their insurance groups.

By picking a van from a lower insurance group you can reduce the cost of your insurance premiums; however you have to offset this by making sure that you get the right van for the job too. There’s no sense in buying an underpowered van if you are a delivery van driver in the hillier parts of the country or finding that you have to do twice as many trips because you can’t fit everything you need in because the van you bought is too small.

Fit additional security

You can also consider adding extra security devices to your van, such as a tracking device or immobiliser, although it is worth taking advice from your insurers on this as only some modifications are recognised and some may even increase the cost of your insurance.

In this article, Auto Express tackle the various types of security modifications you can fit to your van that will not only help to keep both your van and its contents safe but may help to reduce the cost of your insurance.

Shop around for the best insurance deal

Finally, as with all types of insurance, it’s worth shopping around for the lowest deals. Taking the time to compare van insurance through a comparison website such as Compare Van Insurance can help you to find the best insurance quote for your young van driver.

As with everything in life, there are no shortcuts and if something looks too good to be true you can bet your life that it probably is. Here’s a list of things to look out for and things that you should avoid doing to try to reduce those high premiums.

  • Don’t be tempted to under insure your van just to get a cheaper quote. It’s not worth it in the long run and might even get you in trouble with the law. If you have to make a claim in the future and all is not as it should be, you may well find that you are not actually covered at all.
  • Avoid going for a larger voluntary excess if you don’t have the means to pay this, should you need to make a claim. Voluntary excesses can be a good way to bring down your premiums as long as you have the money to back you up if you actually need to use it.
  • Under no circumstances should you use ‘fronting’ as a tactic to get lower van insurance for a young driver. Whilst it may seem like an innocent and legitimate way for an older driver, usually a parent, to act as the main driver of a vehicle for the purposes of reducing the costs, it is likely to get you into hot water since the insurance company may refuse to pay out in any claim. At worst, it could land you all with a criminal record. Take a look at this guide from the RAC on fronting.

from Finance Girl http://www.financegirl.co.uk/van-insurance-for-young-drivers-how-to-get-the-best-deal/