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Holly's Blog: Choosing wine in the late night investment convenience store

11 July, 2017

A big blow for cash savers and a lack of tasty options for investors this week - but still the rules of thumb remain the same.

This week has been a bit miserable … (started the upbeat blog!) Boris made like an uncuddly Eeyore on Tuesday, reminding us with much chubby-fist-pumping that this was going to go on for another 6 months. A report out today confirms that central Government borrowing ballooned to £221 billion from April to August. And it’s even turned dark and cold too – thanks Weather Gods for rubbing it in!

Interesting interest

For our personal finances, this week’s big blow was for cash savers, as Government-backed NS&I slashed rates on their popular Income Bonds from 1.15% to 0.01%. The cash market is extremely competitive so this will have a knock-on effect – it’s worth looking around quickly if you have any decent amounts of cash. There are still some 1 year fixed bonds around paying around 1.2%. And challenger banks such as OakNorth have a decent range of options.

As an aside, many of our readers have Hargreaves Lansdown accounts. If you do, and you have any amount sitting in cash, make sure you check out their linked Active Savings option which will let you transfer any cash wasting away in a general investment account into an easy access cash account paying 0.55%. Better than a kick in the teeth.

A final note on cash. Don’t necessarily be put off by smaller brands – look to see if banks or lenders are ‘FSCS’ protected. (Financial Services Compensation Scheme). If so, the same £85,000 government deposit guarantee enjoyed by the big banks also applies to these guys.

Convenience store wine

As for the broader investment market, trying to work out what to do at the moment is a bit like finding yourself in a convenience store late at night, looking at all the £4.99 bottles of wine and wondering which one will be the least disgusting.

My NASDAQ 100 tracker remains an exciting (partially logic-defying) ride but it’s now making me feel a bit sick so it’s time to get off. (The NASDAQ 100 is a collection of the 100 biggest US firms excluding finance firms, with a heavy tech bias.)

The FTSE100 is up and down like a yo-yo. It’s tricky to reconcile what I see walking through the largely empty streets and offices in London, and what I hear on the news, with the graphs I have seen over the last 6 months. And European shares are at a 3 month low . . . although the US has perked up a bit as the Democrats make more friendly noises about negotiating a coronavirus relief plan.

So. As we stare at the Jacobs Creek, the Mateus Rose and the Bulgarian cabernet sauvignon, I’m afraid it’s very hard to know what to do. I have sold a few things this week so I have some cash in my accounts. Nothing worse than being a forced seller when and if things go south and you need some cash. I remain diversified and global. And I have progressively been investing more in sustainable funds.

Green shoots in a toxic cocktail

Nestled amongst the rather toxic cocktail of Brexit, corona and US elections is the money being allocated to the ‘green recovery’. Bringing forward the ban of sales of new petrol and diesel vehicles to 2030 from 2040 is just one example of this. There is a serious amount of money to be allocated to a net zero carbon economy over the coming decades, and in a world of uncertainty, it feels sensible to follow the known money. I’ll be writing more on this next week.

Even in these weirdest times, I think the rules remain unchanged. Make sure you have enough cash as a buffer. Get rid of expensive debt. Take advantage of any workplace pension scheme which sees your employer paying in too. Don’t go into shares if your timeframes are less than 5 years. Don’t be greedy and believe in spivvy get rich quick schemes (timber/films/bitcoin). Use your ISA allowance. Diversify. Have enough global stuff as well as UK stuff. Investigate ‘multi asset funds (’ if you’re not confident. Set up a direct debit. Drip feed in. Lose your online password. Don’t try and be a hero.

Et voila! Boring money indeed :0)


P.S. This week we closed our crowdfunding. We raised £900,000 and now have a small army of 1,000+ shareholders who have invested between £15 and £200,000. I don’t want to react with the typical fintech smiley emojis/bulging biceps/over use of the words ‘awesome’ because I know this is a hard time for many businesses and individuals. So may I just say a quiet but sincere thank you to my brilliant team and our lovely readers who have all played their part in setting the scene for the second chapter of Boring Money’s life. I hope to make you all proud. And marginally richer ;0)