Scared markets, expert tips and saucy money

Lower inflation figures this week – sounds good but there is a big BUT. They disguise nasty core inflation, which is hanging around like bad smell. The interest rate ‘swaps’ market – literally nothing more complex than where people make bets on what will happen to interest rates - shows a consensus market view that rates might peak at 5.5% this Autumn before falling.

People are rattled, markets are worried that this core inflation looks bad, so mortgage rates are edging higher in anticipation of the Bank of England using its ‘higher interest rate party pooper tool’ to curb our spending and bring inflation under control. Nationwide is pushing some mortgage rates up today. But it's beneficial for savers too – just this morning, First Direct has announced a One Year Fixed Rate Savings Account paying 4.60%.

At the same time, bonds are falling. These IOUs – where we lend money to the Government in return for some interest – become less valuable as interest rates rise. Bond yields (how much interest is paid on these IOUs) are nearing levels last seen during Truss’ mini budget hoopla last year. This means that anyone with investments spread across a broad mix of stuff – including UK bonds – will probably see their pensions and ISAs dip over the very short-term at least.

You can read more on what to expect here including comments from savings, mortgages, investments and pensions experts.

A bit of light relief…

A bit of relief from the energy regulator, which has announced a lower cap on the maximum amount firms can charge per unit. This means that the AVERAGE bill will fall to £2,074 a year from July. Roughly speaking, for every £100 you’re paying today, expect to pay about £83 from the summer.

It’s really important to emphasise that this £2,074 amount bandied around in the media is average – and not a cap. If your teenager has a marijuana farm in the garage or you have a penchant for tumble dryers – for example - then you will of course pay more to heat your funny-smelling but very clean house.

Purists, avert your eyes… it’s getting hot in here

I have been unable to concentrate fully this week as the financial regulator published new research to try and get younger people interested in investing. They suggested younger folk should apply the same rigour to investing as they do to dating.

My mind of course started to go down multiple inappropriate rabbit holes. Had I invested like I dated in my 20s, I would have had a very bad portfolio, full of men high up the standard deviation scale.

Standard deviation, dear reader, is not something from 50 Shades of Grey. It is in fact trotted out every 5 minutes in Asset Manager Land – it’s used to describe risk or - more accurately - volatility. How much something jumps up and down. Vicar! For example, shares typically have a much higher standard deviation than, say, bonds (ignore this week and the ca-Truss-trophe last year).

More Saucy Money

The regulator’s wish is my command – here is why investing is like dating, love and marriage.

• A 60:40 fund is like marrying someone sensible your mother likes - with the odd flirt with a badass at the weekend – some risky stuff with a solid base

• Someone in their 20s with a low-risk fund is like a uni student going out with someone who wants to talk about DIY, perennials and kitchen utensils – time to risk up!

• Investing in an investment trust ‘at a discount’ is like marrying someone who doesn’t care about fashion but is good-looking – unless they really let themselves go, people are potentially overlooking how attractive they are

• Leaving your cash in a rubbish current account paying pathetic rates is like staying married to someone you don’t like who you should have divorced 5 years ago – time to switch?

• A pension is like an arranged marriage with a non-dom – you’re in in for the long-haul but boy are there great tax perks!

• An ISA is like an open marriage – no strings and you can come and go as you please

• Taking money from your savings account to dabble in crypto is like leaving a long-term partner to embark on a wild affair with a cage fighter with fake ID

Enough already! I did have a brilliant Viagra analogy... but I will retreat gracefully and leave it to your imagination!

A few final snippets. We have PensionBee joining us at our live Ladies Lootcamp in June – we have some tickets left for women who would like to join us for a power-packed (and fun) evening with advisers, fund managers and pension experts!

We have an interesting 5 minute video interview with the lead manager of Polar Capital’s Healthcare Trust – why have they had a rampant 1 month? (I can’t stop the innuendo… help!) What’s going on with this sector?

And anyone keen to do more research on investment trusts or look at opportunities across the healthcare or other sectors can check things out, filter and swipe right and left on the independent Association of Investment Companies website.

Over and out everyone. Have a lovely long weekend.

Holly

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