Tuesday, 31 July 2018

How to open an online broker account and start investing

Image of two medieval traders, the pre-cursors to modern markets and brokers

The following guest post on setting up with an online broker is from up-and-coming UK personal finance blogger YoungFIGuy.

There’s a lot of talk at Monevator Towers about investing in shares to build for your financial future.

But how do you actually go about getting started?

Back in the old days, to trade investments you might pop down to the local stockbroker on your High Street or set up a telephone brokerage account.

Nowadays though, it’s all done online.

To invest in funds1 or to buy individual stocks or investment trusts, you need to open an online broker account (also known as a platform or – less commonly – as a fund supermarket.)

It can be quite intimidating to open such an account if you’ve never done it before. But once you know what to do it’s easy.

Here’s a guide on how to set up a brokerage account.

Decide what type of account you need

There are three types of broker accounts for investors:

1. Stocks and Shares Individual Savings Accounts (S&S ISAs)
2. Self-Invested Personal Pensions (SIPPs) or other types of personal pensions
3. Trading accounts

There is little practical difference in terms of the physical mechanics of operating these accounts.

There are however a few investing differences.

The first is that both S&S ISAs and SIPPs are tax-efficient wrappers. This means that they confer tax advantages over standard share trading accounts. There are annual limits as to how much you can put into them.

The second difference is that there are slightly fewer investment options in a S&S ISA compared to a SIPP and fewer again than in a trading account.

The last difference is that money invested in a SIPP is tied up until retirement age, whereas with a S&S ISA you can move money in and out with a few limitations. You’re entirely free to move your money with a trading account (but watch out for capital gains taxes!)

Which account you need then will depend on the access you’re after, what your tax situation is and what investments you intend to make.

Generally it is always best to open a S&S ISA over a standard dealing account, at least until you start running up against the ISA contribution limits. You can read more on the pros and cons of ISAs versus SIPPs at the YoungFIGuy blog.

Find the right broker / platform

In choosing your broker you want to get the broadest investment options with the best possible customer service for the cheapest price.

In practice, there are some trade-offs.

See this beginner’s guide for what to look for when choosing a broker.

Monevator has been slaving away for several years to maintain an up-to-date comparison table for UK brokers. This compares all the charges for each broker. Loyal readers chime in with their personal experiences with the various options.

If you don’t know which broker to go for, the comparison table is a good place to start your research.

Set up an account

To set up your account you’ll need:

  • Your National Insurance (NI) number
  • Address details
  • Bank account and debit card details
  • A pen and paper

You will then need to go through the following stages.

1. Select the type of account you want to open

When you go to your chosen broker’s website, they’ll offer you those three different account options we looked at: S&S ISA, Trading Account, or a SIPP.

For example, here are the options from the broker we will use to illustrate the rest of these steps.

Screenshot showing three main broker account options (Trading Account, Stocks and Shares ISA, and SIPP) We’re going to run through opening a S&S ISA. There is little difference between setting up either of the three account types though, in practice.

2. Fill out your personal details

Screenshot showing personal details required by one broker to set up new account

3. Decide how you want to fund your account

There are three ways to fund your account:

  • Invest a lump sum – You set up the account with a one-off payment, which you can top up with more money later if you want to.
  • Regular monthly savings – You create a Direct Debit to transfer a set amount each month to your account. This can often be as little as £10-£25 per month, but check with your chosen platform. It’s possible to increase the amount transferred each month after the account is set up.
  • A combination of the two – Fund the account with a lump sum and top-up with regular monthly savings.

Depending on the option you chose, you’ll need to fill out either your debit card or bank account details.

Screenshot of a typical broker direct debit capture form

4. Decide what to do with your initial money

The next step is optional at this stage. You’ll be asked if you want to immediately invest the money you’ve put into the account into a fund or shares.

The investment options available will depend on the type of account you’ve set up (ISA vs SIPP vs trading account) and what broker you have opened an account with.

If you’re not sure where to invest yet, leave it in cash for now.

Screenshot of initial investment option with new broker account

If you need some help in deciding what investments to put your money into, have a look at the Slow and Steady model portfolio for inspiration.

5. Choose what happens to your distributions

Depending on what exactly you invest in, your funds or shares may pay out distributions (dividends or interest) over time. The last step is to decide what happens to these distributions.

There are typically three options:

  • Keep the distribution as cash in your account
  • Have distributions automatically re-invested into your investments
  • Have the money paid straight into your bank account.

Screenshow showing options for where to send cash distributions you're paid from your investments

If you’re not sure what you want to do, choose to keep the cash in your account. You can always decide what to do later.

(There are rules around withdrawing money from and putting money into both ISAs and pensions. Make sure you know all about these restrictions before you take any money out of those accounts.)

Getting stared with your new broker account

At some point you’ll be given some log-in reference details and such like. Make sure you remember these, or you could be locked out before you begin!

You’ll then usually have to wait a few days to begin playing around with your shiny new account.

Your broker will send you some letters to you in the post. You should expect two or three letters. They’ll usually arrive within a couple of working days. (Brokers act quick when they want your money!)

The first letter will usually confirm your account number and other details and that you’ve set up an account. The second will give you a PIN or password to gain first-time access to your account. You may get a third letter if you’ve set up an ISA. This will be a copy of your ISA application form.

Once all that’s arrived you’ll be able to log into your account.

A few pointers

Once you’ve got your account set up, you should do a bit of admin to make sure things run smoothly.

Every broker account will have an account administration menu, labelled ‘my account’ or ‘account settings’ or similar. Here you’ll be able to view and update all the information and options we went through in setting up the account. It’s worth taking five minutes to make sure it’s all correct.

The next bit of admin is to find out where you can access all the documents for your account. Usually, it’s under ‘documents’ or ‘portfolio history’ or similar. Consider setting up a folder on your computer to save new documents as they come in. Good records can save a lot of hassle down the line, particularly when it comes to tax affairs.

You’ll usually receive a yearly or bi-yearly statement showing all your investments. There are various other documents to look out for over the year, too:

  • If you have a SIPP you’ll receive a pension illustration – a projection of your future pension pot.
  • If you have a trading account, you’ll get what’s called a Tax Certificate, which gives you the information you need for completing a Self-Assessment tax return.
  • When you buy or sell an investment you’ll receive a Contract Note which sets out exactly what you’ve bought or sold, how much you paid or received, and the settlement date of the trade.

You may want to download these documents to that desktop folder you set up for safe record keeping.

When you are ready to add or withdraw money from your account, you can usually find the option to do so under ‘cash’ or ‘add/withdraw money’. This menu will also typically let you access some sort of a cash statement showing how much cash is in your account, as well as how your money has moved around as you’ve bought or sold investments, paid charges, and received distributions.

Over to you

If you have yet to set up an online brokerage account to start investing, then hopefully this guide has given you the confidence to get going.

Of course, many of Monevator readers are grizzled investing veterans. What tips or guidance would you give to somebody looking to set up their first broker account? Please share your suggestions in the comments below.

Like what you’ve read today? You can hear much more from YoungFIGuy over on his own website, where he discusses how he achieved financial freedom before he was 30.

  1. Variously known as Unit Trusts or Mutual Funds or Open-Ended Investment Companies, which are all basically the same thing for our purposes here.


from Monevator http://monevator.com/how-to-open-an-online-broker-account/

Friday, 27 July 2018

Weekend reading: Death to the Lifetime ISA?

Weekend reading: Death to the Lifetime ISA? post image

What caught my eye this week.

I would love to start here with an analogy drawn from the film Synecdoche, New York. But I fear I’m quite possibly the only person on Earth to have ever seen it.

Allegedly others have. Reviews exist on the Internet. Some rightly hail Synecdoche a work of genius. A few fools label it pretentious twaddle. But I’ve never met these critics – I even saw the film in what seemed to be an empty cinema – so I can’t rule out those reviews coming from some weirdly highbrow Russian bot farm.

Anyway, Synecdoche, New York contains multitudes, but the bit I would like to be alluding to – which I’m going to explain in words instead, which is obviously ideal in an analogy – involves the lead character’s attempt to film a story drawn from his own life by rebuilding his life – and his house, and the surrounding city – inside an enormous film set.

Which is how I found myself proceeding when I tried to write about the Lifetime ISA.

You think I’m joking?

I’m not!

Lifetime sentence

I published a piece explaining how the Lifetime ISA worked in April 2017. This long post was what remained after I hacked out a big rant about the silliness of the product – and another multi-thousand word discussion about who should make use of one.

Instead, I just gave some vague pointers, then concluded:

In the next post we’ll see exactly who the Lifetime ISA might be good for, and who should say “no thanks”, and back away slowly.

And to this day I have never finished that follow-up.

My draft is huge, contains multitudes, and is unfinished. The knowledge of it sitting there has often given me writer’s block and stalled other articles. The thought of comment after comment pointing out this or that issue if I did publish it without chasing down every last use case makes me freeze up. Instead I kick it down the road for another week or six.

Even unfinished the article wanders widely into all kinds of areas of investing – risk, time horizons, shares versus property, taxes, early retirement versus traditional pension saving, employer pension contributions – because the Lifetime ISA forces all this onto the table.

That might sound like a good read, but it is very sub-optimal. We already have a couple of million words across more than a thousand Monevator articles trying to cover all that, and there are still holes. This Lifetime ISA draft article manages to be both insanely verbose and yet still not sufficiently comprehensive to ensure nobody is misled.

Now you might be thinking:

“Okay TI, I get that the Lifetime ISA is a bit convoluted with the pension and house buying bung combo rolled into one wrapper, but I managed to figure out that I should / should not use one.”

I believe you! It’s just about possible to figure out whether an individual should open a Lifetime ISA, if you’re there with the individual.1 After two or three hour-long conversations for example I got there with my ex.2

But you really do need everything on the table to make this decision, in a way that’s not true of any other financial product I can think of. Which means that while it might have been straightforward-ish for you to decide what you should do, generalizing advice for even broad groups is very difficult.

Seriously, the Lifetime ISA is like some kind of beneficial yet malevolent magical goblet in a Greek legend. One minute it’s refilling itself with ambrosia. The next minute it’s chomped your arm off.

I believe this complexity is why even today only around half a dozen financial service providers are offering Lifetime ISAs (and only a couple the cash version). The others may fear a mis-selling scandal. Or, like me, they were hoping it would be killed off sooner rather than later.

Which brings me finally to this exciting news from Treasury Select Committee3 as reported by ThisIsMoney:

The Treasury Committee has today called for [Lifetime ISAs] to be scrapped due to their ‘perverse incentives and complexity.’

My heart just skipped a beat.

To throw out a spoiler for a film you’ll never watch, Synecdoche, New York ends on a gloomy note. The director’s project proves fatal. Don’t fire this one up for Netflix and chilling.

But could my own half-finished epic have a happier ending?

MPs might throw me a lifeline – if they can stop bickering for five minutes about when to start stockpiling prosecco – and give the Lifetime ISA the unceremonious death it deserves.

From Monevator

Our updated guide to help you find the cheapest broker for you – Monevator

From the archive-ator: Wealth preservation strategies of the rich – Monevator

News

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!4

Household debt ‘worse than at any time on record’, reports ONS – Guardian

Trump just called off his trade war with EU. Score one for the globalists – Slate

F.I.R.V.L.? 75-year old investing legend doesn’t want to spend “the rest of my life” chasing the S&P 500 – Bloomberg

UK pensioners’ income growth outstrips wage rises, figures suggest – Guardian

MPs call for huge pensions overhaul [Search result]FT

Warnings growing ‘down valuations’ may be a red flag for house prices – ThisIsMoney

Leasehold prisoners press government for release [Search result]FT

Products and services

Clydesdale offering some first-time buyers loans of 5.5-times income, with just a 5% deposit – Guardian

Banks could be forced to set a minimum interest rate on savings accounts – BBC

FCA proposes changes to rules for crowdfunding platforms – FCA

Thousands of expat Barclaycard customers to have their accounts closed – ThisIsMoney

Got £1,000 spare? Ratesetter will pay you £100 [and me a cash bonus] if you invest it with them for a year – Ratesetter

The cheapest way to watch the Premier League football – ThisIsMoney

Lloyds Bank tells student using his ‘free’ overdraft for three months would cost him £1.3 BILLION – ThisIsMoney

Comment and opinion

Profiting from investment regret – Morningstar

The $20 swim – Mr Money Mustache

When bond yields throw you a curve [Canadian data but relevant]Canadian Couch Potato

The robo-advisers aiming to help you budget for a mid-life sabbatical – Bloomberg

There’s no such thing as mosquito week – A Wealth of Common Sense

The right place at the right time – Of Dollars and Data

Passive investing is improving governance and profitability, studies show – T.E.B.I.

Three keys to retirement happiness – Vanguard Blog

How to invest a windfall [Some US-specific advice, but relevant]Portfolio Charts

Modelling what happened if you retired just before the last big crash – Retirement Investing Today

Bethany McLean: Business gone bad and the art of persistence [Podcast]Invest Like The Best

Swedroe: The size factor was not dead – sometimes you have to grin and bear it! – ETF.com

Are Smart Beta funds premised on faulty beliefs about investing ‘rules’? – Abnormal Returns

Five ways to measure your active investing performance – UK Value Investor

Investing biases are not natural laws. We are not all the same – Behavioral Scientist

Kindle book bargains

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

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

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

Brexit

Barnier rules out key UK customs proposal – BBC

The idea we can hoard food for Brexit is just another fantasy – Guardian

British food stores ridicule Brexit stock piling plan [Search result]FT and [snarkier] FT

The dire consequences of a No Deal Brexit [Search result]FT

A humiliating Brexit deal risks a descent into Weimar Britain – Guardian

It’s getting hot in here…

Why is it so hot? [Video]Guardian

Productivity plunges when temperatures soar – NPR

How does the 2018 heatwave compare to that of 1976? – BBC

Preliminary findings point to a climate change contribution, say scientists – Guardian

The science of why heatwaves are so dangerous to human health – Wired

Off our beat

Britain’s largest gold nugget found on Scottish riverbed – Guardian

Mesut Özil on the conflicts he’s endured in representing his country at football – Twitter

We Rate Dogs‘ reconciliation: Peace can break out on the Internet! – Vox

Ban fat-shaming show Insatiable, its critics cry. But none of them have seen it – Guardian

And finally…

“You can no more learn to invest through reading a book than you can read a book about heart surgery and perform a triple bypass.”
– Michael Batnick, Big Mistakes: The Best Investors and Their Worst Investments

Like these links? Subscribe to get them every Friday!

  1. More precisely, whether they should USE one. I’ve said anyone under the 40-year old age limit should open one with £50, simply to ensure they have the future optionality.
  2. Yes, I’m a thrill a minute of a boyfriend. Perhaps that’s why I am now an ex…
  3. Yes, I said ‘exciting’. Again, form a queue ladies.
  4. 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/death-to-the-lifetime-isa/

Thursday, 26 July 2018

Top money-making tips for millennials

There is no doubt that millennials are one of the more important groups within society. With a desire to not only work hard but also to help people and enjoy their lives, millennials have made quite an impact. If you count yourself as part of this generation, you may well be looking at how to make money but without the dull, run-of-the mill type of job of generations past.

If so, then the tips below should give you some great ways to make some extra cash!

Millennial money-making ideas

Any millennial will want to make their own money to enjoy life but may not want a standard job to do so. After all, how can you travel when you feel like it when you have to be at work at 9am every day? Check out the list below for tips on different ways to make money:

  • Stock trading a great way for any millennial to make money is by investing in stocks and shares. This is not only gives you total freedom to work when you like but also an intellectual buzz as you look into what shares to invest in or where the market might head next. Of course, it is also pretty good for making money – if you get it right! If you do decide on this, be sure to always get the latest trading analysis so you can make decisions based on the latest news and facts.
  • Casino sites many millennials love to play slot or table games at one of the many online casinos. If this applies to you, this is a simple and easily accessible way to make some cash. It is also fun and uses the latest technology, which is great for any millennial! Just be sure to gamble responsibly and always stop when it is not fun any more.
  • Freelance writer / blogger another great money-maker for any millennial is writing. You could opt to become a full-time freelance writer and write articles for other people. Alternatively, you could write your own blog and monetize that to generate income. Both can be done anywhere in the world, with just an internet connection and laptop, so are great for travel-loving millennials.
  • Video content marketing sharing video content on YouTube is a way in which millennials are making extra money. If you set up your own channel and post content that people find useful, you can make some serious cash on sponsorship or advertising space.
  • Rent your home out if you have your own place in a popular town or city, why not use a site such as Airbnb to make some money off it? Make sure that it is clean and tidy for when guests arrive, then sit back and watch the money roll in.

Lots of ways to make some extra cash

As you can see, there are many fabulous and quite simple ways for any millennial to make money. Even better – they all let you do it in a creative, unique way that doesn’t include working in an office, and lets you redefine the usual workplace rules. This kind of freedom is amazing and opens up life to be enjoyed to the full.

 



from Finance Girl http://www.financegirl.co.uk/top-money-making-tips-for-millennials/

Wednesday, 25 July 2018

How to find the right finance course for you

If you’ve decided that you’d like to enter the finance space, then there are plenty of diverse career options available in this industry – so you’ve got a lot of choosing to do ahead of you. From a career as an accountant to a job as an investment banker, this industry has a lot of different businesses, branches and specialisms – so there’s a lot to be thinking about. Whether you want to study in Manchester or go somewhere else, there are many location options on offer.

Decide on study levels

Some finance industry careers are much more study-heavy than others, so you’ll need to incorporate consideration of this into your decisions. If you want to become a chartered accountant, for example, then you’ll probably need to study one of the major qualifications in this field, such as the ACCA (Association of Chartered Certified Accountants) or the CIMA (Chartered Institute of Management Accountants). Some professions in the finance industry, though, don’t require a financial qualification, at least at the outset: investment banking graduate schemes usually only require education to degree level in order to complete, though it’s possible that you’ll need to study for qualifications later.

Think about location

Studying finance in the UK is a common choice, so you’ll be spoiled for options when it comes to picking a city in which to learn. Some people choose to focus on the capital, and it’s easy to see why: with London enjoying the presence of a number of major firms such as Deutsche Bank and Royal Bank of Scotland, there are plenty of opportunities for work placements and internships here. However, other vibrant UK cities also have educational institutions that are equally as good. In Manchester, for example, the London School of Business and Finance (LSBF) provides everything from MBAs to investment qualifications. The LSBF offers free foundation certificate in the AAT Level 2 for new accountants, which gives it a real edge.

Consider duration

Finance courses come in all shapes and sizes – and durations. A typical Bachelor of Arts degree in a subject such as finance, for example, will probably take three years to complete. However, from there on in, it gets trickier: an MBA at Birkbeck takes 18 months part-time, while a CIMA qualification usually takes about four years in total, though this can vary. Before committing to a course, you should work out exactly how you’d manage it practically. If you have family or work commitments, for example, then agreeing to a full-on three-year course may not be the wisest move, unless you can work out a compromise of some sort.

Finding a finance course that suits your needs is essential. There are a whole host of qualifications to choose from, and there are plenty of different locations in which your study can take place – all of which means that there’s a big decision ahead. By carrying out research and looking into everything from duration to course type, though, you’ll be able to narrow down the list and embark on the ideal financial career of your dreams.

 



from Finance Girl http://www.financegirl.co.uk/how-to-find-the-right-finance-course-for-you/

Tuesday, 24 July 2018

Using plastic overseas? Always PAY IN EUROS (even if it says 0% commission)

Update 24 July 2018: Martin wrote this blog back in 2013 and while the rates have changed, all the logic is still correct.

I couldn’t believe my ears. While filming in southern Spain for the new series of my show, the producer told me he’d found a cash machine offering 0% commission if you chose to withdraw in pounds. In theory, that’d mean PERFECT exchange rates.



from Martin Lewis' Blog https://blog.moneysavingexpert.com/2013/03/using-plastic-overseas-always-pay-in-euros-even-if-it-says-0-commission/

Sunday, 22 July 2018

Guarantor Loans for Young People

Making your way into the real world isn’t cheap. Luckily, there’s some great lending options out there for those starting adult life. Read this post to find out your options.

Garnered affection for guarantor loans?

Summer Solstice is behind us, Love Island nears its finale and Brexit is well… Brexit. Despite the sun setting on the UK’s favourite jamboree of adult blather (we’re not talking about the latter), for a lot of people, reality looms hard as we approach Summer’s twilight. While for most folk under the age of 16 this means a fresh pair of school shoes and a new timetable, for many young persons who have just finished their degrees and are about to set sail into the unchartered waters of adult life, financial burdens weigh heavy.

‘There is a decisive difference between the loans supplied by private lenders and the loans supplied by a government agency’ once wrote Henry Hazlitt. ‘Each private lender risks his own funds.’ One wonders what Hazlitt would make of the financial predicaments which face so many young people today.

Whether they’re graduates, starting a family or simply wanting to make their own way in the world, the route into *ahem* real adult life can be difficult to navigate without imbursement from the bank of mum and dad. Consequences may follow. Bad credit ratings lay waiting for those who pay back their loans late, default on payments and a plethora of other reasons. Yet, with so many high street lenders willing to take advantage by offering loans with nauseating APR rates and demand for property as an indemnity against the loan, where and what can we turn to?

What loans should young people take out?

The repercussions of a bad credit rating are often heavy. This may often mean that many young people needing to take out a loan to pay rent arrears or any existing debts have their options slashed for what loans they can take out. But which ones should they go for? Payday loans are seen as dangerous due to the interest rates thrust upon those who are usually in a precarious financial state. While they may be a useful means of covering any existing short-term debts, high APR rates imposed by lenders are commonplace and are masked by the ease at which they can be taken out.

What is the best option for young people?

Rejoice! I give you the more the desirable guarantor loan. These are essentially loans that operate on a trust basis where any existing credit history from the recipient is unnecessary.  As a result, guarantor loans can seem a very attractive proposition for those with a poor credit score, with young people often integrated into that category. This can be an ideal medium for people who need mid to long-term loans that may not normally qualify for loans due to a bad credit score.

Further to this, the interest rates on guarantor loans are much lower than other bad credit loans such as payday loans. A study by the BBC in December 2013 found that Payday loans are typically 1000% to 6000% APR. It’s important to stress that with guarantor loans it is highly unlikely that there will be any concealed charges by the guarantor, thus providing the recipient with another layer of security that may lay hidden with the T&Cs of another loan application.

Who can be a guarantor for a loan?

You may be wondering who can be a guarantor for a loan? Most loan providers will require these criteria for someone to be an eligible guarantor:

  • A UK resident and homeowner
  • Between the ages of 18-78
  • Have good credit
  • Have a UK based bank account and debit card
  • Be in receipt of an income
  • Be financially independent of the borrower (i.e. of independent financial means and with own bank account)

To summarise, this means that any person who meets these criteria can be your guarantor. This can take the form of a friend, relative or partner so long as they are NOT your husband or wife.  This can offer a great deal of flexibility for those seeking guarantor loans, as the recipient will be in a position to find a guarantor who will be willing to meet one’s loan commitments if ever the need arises.

Though for this to work well it is important to consider the financial position and personal circumstances of the guarantor and if they will be able to offer the support that you may need should the situation ever arise. This should involve taking into account their financial suitability, meaning that for your application to be accepted your guarantor will need a good credit history. This should also involve ascertaining that the guarantor understands their responsibilities towards the recipient and any potential financial risks that may fall upon them should you be unable to make a payment.

Also, you must ensure that your guarantor is employed in the UK and earning over £400 a month. So that means you can’t have any supposed alibis who may have drunkenly said to you that they’d give you helping hand if ever you needed it. Though this may strike fear into the hearts of many a young borrower this requirement is a positive as it goes some way to ensuring that whoever you decide on being you guarantor can provide an adequate safety net.

However, fear not guarantors. Though this may come across as a hefty burden all is not as it seems. First and foremost, it’s important to realise that your credit rating will not be jeopardised if you are suddenly hampered with the borrower’s loan repayments. This is because the role of a guarantor is simply to make the payments that the borrower cannot pay in full. Therefore, it is unlikely that a guarantor will have to repay a loan in full, as their responsibility will be to pay up to enough to complete the sum that the borrower cannot.

If you’re looking for a loan, and don’t have the credit score to match, a guarantor loan may be the ideal lending form for you.



from Finance Girl http://www.financegirl.co.uk/guarantor-loans-for-young-people/

Friday, 20 July 2018

Weekend reading: One more year, justified

Weekend reading logo

What caught my eye this week.

The rebooted US financial blog Get Rich Slowly posted some interesting data this week about the benefits of working the dreaded One More Year – or even a few more – before retiring.

It’s interesting to see the results recast as ‘standard of living’ rather than just dollars banked:

Note that the last time I highlighted similar US data, a wise comment pointed out the US retirement benefits system is different to ours. That may limit the read-across for UK readers.

Also, I feel Get Rich Slowly skips over a big reason why standard of living increases – which is that the years left living in retirement decrease, so the money doesn’t have to stretch so far! We’re not playing with an infinite resource here.

Still, I do feel that the benefits of working just a little longer to get a little more spending money forever are often too quickly dismissed – especially by the heads down and head for the exits FIRE crowd.

Retirement Investing: In 12 month’s time

Consider the case of Retirement Investing Today. He revealed this week that working an extra year or so has given him a £300,000 buffer above his £1 million retirement target. That could be an extra £12,000 a year to spend on fun things – for life.

Of course that stupendous excess achieved in a short period of time is a massive extra lump of cash in anyone’s books. If you’re working on your local council golf course at £9 an hour it may seem pie in the sky.

But remember firstly that RIT put himself in this position through ten years of hard graft. He concentrated on working hard, as well as saving and investing – on climbing the corporate ladder, but saving rather than spending away the proceeds.

Indeed one reason why I applauded his decision to work an extra year was because it seemed to me worth harvesting the prime position he had put himself in. RIT will probably never be in such a position to sock away cash again.

And once you know you are financial free, the desire to actually deploy the F.U. fund diminishes. I’d bet his last year at work has been the least desperate.

The second thing? It’s all relative. If you’re looking to retire early and you’re on a lower wage, then you must have cut your cloth accordingly. (If you’re an ex-Cityboy sitting on a mega-nut and earning £9 an hour, feel free to call it quits yesterday).

The world is full of wonderful places, things, and experiences, but not all of them are free. I’m as big a fan of quietly reading a novel alone in a park on a Tuesday afternoon as you’ll find – I wrote the guide to living like a billionaire for next to nothing – but there are limits.

It’s also why I think those who do quit work should consider trying to find something they don’t mind doing for a day a week for money. Each to their own, but I feel some are too dogmatic about this.

A little more spending money goes a long way. We don’t have to be fanatics about this stuff.

From Monevator

The Slow and Steady passive portfolio update: Q2 2018 – Monevator

From the archive-ator: Find out when you’ll make your million – Monevator

News

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!1

Government borrowing is at an 11-year low… – BBC

…but weak UK growth and tax revenues could put the squeeze on Hammond – Guardian

Councils are introducing landlord licence schemes costing up to £1,000 – ThisIsMoney

Radical proposals to end the huge cost of buying a leasehold – Guardian

Work less, get more: Four-day work week trial was an ‘unmitigated success’ – Guardian

Prices of flats stay unchanged for a year, says ONS – BBC

US dollar is overvalued 30% against the pound, according to Big Mac index – ThisIsMoney

Cullen Roche: How the biggest perceived risk to the bull market has shifted – via Twitter

Products and services

Birmingham Midshires launches three table-topping savings deals – ThisIsMoney

Fears of UK cashpoint ‘deserts’ lead to scaling back of ATM fee cuts – Guardian

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

Commuter chaos: Know your rights to rail compensation [Search result]FT

As prices rise, here’s how you can cut your energy bills by £400 – ThisIsMoney

Larry Swedroe: Hedge funds are still trailing – ETF.com

Comment and opinion

Bonds behaving badly [Canadian, but relevant]Canadian Couch Potato

Barry Ritholtz: Inflows to passive funds have slowed. No problem. – Bloomberg

Merryn S-W: Hit the switch for profiting investment platforms [Search result]FT

Understanding the yield curve: A prescient economic indicator – Financial Samurai

1962: “The market is rolling because the market is rolling”A Wealth of Common Sense

Also: It’s always a remix – The Reformed Broker

Gold bugs Vs stock market bulls – Charlie Bilello

The bottom and the top – The Irrelevant Investor

Priced out of parenthood – Guardian

Things to remember when selecting an active fund manager – Behavioural Investment

When will ‘socially responsible investing’ become just ‘investing’? – Quartz

Why mutual funds can’t be hedge funds – Morningstar

Four rules for selling shares – UK Value Investor

Five lessons learned from super-investor Howard Marks – The Value Perspective

Don’t write off factor investing just yet – Bloomberg

It was you, Charley [Deep dive, for investing nerds like me]Epsilon Theory

Kindle book bargains

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

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

Brexit

From Anxiety to Zuckerberg: An A-Z of Brexit – Guardian

Brexit fudge – DIY Investor

Fruit ‘left to rot’ due to labour shortages – BBC

PM of 65-million strong UK tells 508-million strong EU2 it ‘must’ evolve Brexit position – BBC

Tory MP Anna Soubry attacks “wealthy” Brexiteers [Video]BBC

Off our beat

Time is your most important asset – Of Dollars and Data

Do these 13 things every day – Ryan Holliday

Always go to the funeral [Missed this from last August, excellent]Epsilon Theory

The age of floating transport – Citymapper via Medium

What was the full story behind Elon Musk’s Thai cave rescue effort? – Quora

And finally…

“Basically, CEOs have five essential choices for deploying capital – investing in existing operations, acquiring other businesses, issuing dividends, paying down debt, or repurchasing stock – and three alternatives for raising it – tapping internal cash flow, issuing debt, or raising equity. Think of these options collectively as a tool kit. Over the long term, returns for shareholders will be determined largely by the decisions a CEO makes in choosing which tools to use (and which to avoid) among these various options. Stated simply, two companies with identical operating results and different approaches to allocating capital will derive two very different long-term outcomes for shareholders.”
– William Thorndike, The Outsiders

Like these links? Subscribe to get them every Friday!

  1. 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”.
  2. Or 450 million if you back out Britain


from Monevator http://monevator.com/weekend-reading-one-more-year-justified/

Thursday, 19 July 2018

Disclosure in divorce: What to do when it’s neither full nor frank

Disclosure is a fundamental requirement to deal with the financial aspects of divorce or separation. Both parties have a duty to be ‘full and frank’ in laying open all aspects of their finances to their spouse and, of course, the Court.

This includes income (earned and investment), bank accounts and credit cards, the marital home and other property (both here and abroad), pensions, mortgages and insurance policies, stocks and shares, and any other capital assets or valuable possessions.

The importance of providing comprehensive financial disclosure on both sides cannot be overstated. Without full disclosure, it is impossible to achieve a fair financial settlement. The law says that where there is fraud or material non-disclosure, the Court reserves the power to make an Order of Agreement at a later date, based on the missing information.

Once you have instructed a trusted divorce lawyer to represent your case, one of the first things he will do is to advise you accordingly, as should your ex-partner’s legal representative, to make sure everyone behaves impeccably, and wholly within the law. George Ide offer a wealth of advice on divorce, see their family law blog for more information.

The trouble with incomplete disclosure…

That said, money is of course one of the most contentious issues in every divorce case. What if you don’t trust your ex to have revealed the complete extent of his/her assets? What if s/he has understated their income in order to reduce the level of child or spousal maintenance payments? What if assets have been hidden to protect them from a ‘greedy ex partner’? It wouldn’t be the first time that a divorcing spouse tried to hide some of their wealth in an effort to ‘limit the damage’.

In a high profile case a few years ago, the founder of IT company AppSense was taken to Court by his former wife who claimed that he had failed to disclose talks about a possible stock market flotation at the time when their financial settlement was being decided.

In a similar case, Mrs Gohil from North London who had accepted a financial settlement from her former spouse, went to Court because he had failed to disclose his true wealth during their divorce; he was later jailed for 10 years for money laundering.

In many marriages, one of the partners assumes the role of financial manager, which can result in the other partner being disadvantages when it comes to knowing about the couple’s assets and overall financial health. The spouse whose job it is/was to look after the family finances may be tempted to use this knowledge to secure a favourable settlement.

Forensic accounting

Of course, for couples with significant assets, complex financial arrangements or complicated investment structures, it can be very difficult to keep track of what’s what. If you’re worried that your former partner is being economical with the truth and has stashed some of his cash where you can’t find it, you may wish to consult with a forensic accountant.

These are experts that use their formidable accounting knowledge and techniques to investigate legal issues including fraud – not just in divorce cases but in any area of commercial activity where the numbers don’t add up.

For divorcing couples, the main role of a forensic accountant is to locate hidden assets. From reviewing tax returns (direct from HMRC if necessary), checking and analysing financial account statements (eg. savings accounts, money market funds) to closely observing any relevant business transactions, they will examine every detail in an effort to uncover assets or income that have been hidden from view, or suspiciously transferred. Their findings can then be used as evidence should you decide to go to Court.

What should you do?

Divorces can get messy, especially when emotions run high (don’t they always?) and there’s disagreement between you and your former spouses about what is a fair financial settlement. Thankfully, it’s rare for one ex-partner to want to go to extremes and take the risk to defraud the other.

But if you feel that your ex is not being honest, you owe it to yourself to investigate the situation, so that you don’t leave the marriage with less than you deserve. Of course, this applies doubly when there are children involved.

Discuss your suspicions with your solicitor and ask him to apply pressure to achieve full financial disclosure from the other side. If you don’t get a satisfactory outcome, seek advice about involving a forensic accountant and discover the truth of the matter.



from Finance Girl http://www.financegirl.co.uk/disclosure-in-divorce-what-to-do-when-its-neither-full-nor-frank/

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!

News

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

Brexit

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/