Auntie Holly's Valentine's guide to the markets

It’s upon us. Next week heralds the day when we embrace shiny tat and overpriced fixed menus to mark the date on which Saint Valentinus – patron saint of epilepsy and beekeepers – was martyred.

This week, Auntie Holly is on hand to answer your pressing questions, and to share a Romantic’s Guide to Investments. If this makes you want to grunt angrily, then you could always divert to a piece I wrote yesterday looking at best-selling funds and investment trusts in January – where are we investing and why?

And now… Your romantic money dilemmas

1. Are Premium Bonds a good idea? I know this is controversial, but I think they are like flowers from a garage. They have no place in any mature relationship in 2024. The exception to this is if you are very rich and have used up your other tax-free allowances including ISAs and the Personal Savings Allowance (£1,000 of interest is tax free if you’re a basic rate taxpayer, £500 if higher). More here.

2. Should I have an ISA or open a private pension? This is the Butch Cassidy and the Sundance Kid question. Robert Redford or Paul Newman? And of course the correct answer is you want both! Who says they have to be mutually exclusive? The private pension is the longer-term commitment with benefits and Government top-ups. The ISA is the more flexible tax-free situationship which you can get out of whenever you want.

3. Are pensions sexy? My friends, they are the latest must-have accessory. Anyone still looking for GSOH or similar nonsense on Tinder needs to re-assess what is hot. A good sense of humour will not afford you decent holidays or a kitchen renovation. You need to start with someone who has all their own teeth, a defined benefit (or final salary scheme) pension which is mega hot and – failing that – their own private pension. Youngsters don’t panic – our pension comparison tables have options you can start with £100 or less.

4. I’ve been holding on to a poor performer for years, waiting for it to come good. Time to cut the ties. You might be waiting for them to get back to where they were, but think of what you are missing out on as you wait. Everyone has bad periods – that’s allowed – so it’s not just of a question of whether it’s gone down, it’s a question of how it shapes up compared to similar peers. Most investment platforms will have fund research lists, which are a bit like gameshows, where everyone tells you whether to ditch or keep! Or look at research firm Morningstar to see how your beloved is rated.

Moving on and continuing the theme, it’s my romantic’s view to asset allocation

In this fun game (which you can play at home with friends when you really want them to go home) famous people will play the part of various asset classes:

• Cash – Any BBC presenter of a wildlife or gardening program – you know precisely what you’re getting which can be lovely and rewarding but will occasionally send you to sleep.

• UK Government Bonds – John Major – grey and largely a touch boring but with potential short periods of relative raciness (younger readers – fellow MP and illicit squeeze Edwina Currie did in fact call him a ‘Sexy Beast’ which confused the nation for years).

• US Treasuries – Barack Obama – solid, largely predictable, pleasingly square with occasional flashes of gorgeousness.

• Bonds – Sir Trevor MacDonald or Kate Winslet – attractive in a very non-threatening and homely way.

• UK shares – Colin Firth or Idris Elba – lovely solid Brits, occasionally overlooked and often undervalued, hunky but not naughty.

• Defensive shares – Good at DIY and marvellous in a crisis; will look like dweebs until the age of 40 and wear bad clothes but they will pay their way on a date and they won’t go bust.

• Global Shares – Madonna – keep on performing for decades, with volatility spikes like that conical bra; undeniable star quality which will keep shining.

• Large US Tech Stocks – Premier League Footballers or Taylor Swift – flavour of the month but omnipresent and largely overpriced. The art will be sorting the Lionel Messis from the Paul Pogbas.

• Emerging Market Equities – Zsa Zsa Gabor (Dad – that one’s for you!), Warren Beatty or Harry Styles – not the marrying sort but a little cheeky 10% allocation here on a Saturday night wouldn’t hurt.

• Cryptocurrency – That teenage fumble with a hot Spanish waiter – great fun for un momentito but not to be repeated.

And now we move to my final tip. Should I be faithful? In a word – No! In the promiscuous world of investing, the golden rule is to shake it about. Do not stay faithful to any of the above. Play the field, mix and match and spread the love around!

Unlike affairs of the human heart, when it comes to money, the shorter your timeframes, the less excitement you want and you should spend more time with the calmer top half of my list. The longer your timeframes, the more scurrilous relationships should be prioritised.

Phew! It’s getting hot in here. That’s quite enough love advice for one week. Have a lovely weekend everyone and if you take nothing else from this blog, do remember the garage flowers point... No-one likes carnations. They are the (cheaper) payday loans of finance and the beginning of the end.

Holly

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