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Holly's blog: The sky is falling in?

14/09/2018

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We woke to gloomy headlines as Bank of England boss Mark 'Chicken Licken' Carney briefed the Cabinet this week, on what a no-deal chaotic Brexit could mean for the economy. Essentially a housing crash and prices which he says could fall by up to 35%. As ever, finance is a complex chain of events. 

If we crash out of the EU, then sterling will collapse as global investors beat a retreat, pull their money out of the UK and ditch their pounds in the process. If the pound becomes much weaker, then things we import cost us more. Fridges, cars, raw materials etc. And so inflation starts to rocket upwards as prices increase. As inflation rises, the Bank of England uses interest rates to try and keep this under control, effectively dishing out an economic chill pill and dampening our ability to borrow and spend.

And there you have it. As interest rates head north, mortgage rates also jump upwards and BOOM – the demand for property tails off.

 

Carney is not the only one anticipating the sky falling in.

The John Lewis Partnership may be never knowingly undersold but they’re also knowingly underperforming, reporting a fall of 99% in profits in the first 6 months of this year. The total profits including John Lewis and Waitrose (its saving grace) were a paltry £1.2 million. Despite some Brexit Blaming, I suspect it’s more the usual story about Amazon and ASOS, as the store tries to revamp its shopping experience and compete with the online onslaught.

I leave the final word this week to a partner in an insolvency practice, who is presumably one of the few people looking forward to the potential carn-ey-age ahead. Julie Palmer made me spit out my cornflakes laughing this morning as she was quoted in The Times, commenting on John Lewis. 

 

"This brand was hailed as the model to which all should follow as a commercial and customer success — make no mistake, for the high street this is as significant as the fall of the Roman empire. And much like the fall of Rome, it’s not just the empire that suffers, the infrastructure that supplies it will too. The UK industry must steel itself for dark times to rise again."

 

Blimey Joe, pass the popcorn! Never have corporate results felt so damn exciting! 

I think everyone needs to have a nice cup of tea and calm down.

Want to know more?

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Should I sell my Woodford fund? – fund expert Mark Dampier gives his view

Almost twelve months ago, our friendly fund expert Mark Dampier of Hargreaves Lansdown said investors should sit tight in Woodford funds after a run of poor performance. Is he sticking to this view?

Should Woodford funds investors sit tight or sell?

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How long do stock markets take to recover?

We look at the five most recent stock market crashes, the impact they had and how long they took to bounce back again.

How long do stock markets take to recover?

Learn the Tribal Way

What are other people doing? Learn from their experiences.

If you know your shares from your SIPPs but could still use a few tips, you might be an Intrepid Investor. Take a look at our specialised Learning Path for an ISA MOT and some fund ideas.

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  • I am 25 and starting to seriously financially plan out my future. I would really welcome a 'sense check' on my thinking as well as some help on which investment choices to make. My goals are: To invest for 15 years - my risk appetite is very high (i.e. I could afford to lose all my money). Goal 1 - More Important: To have an investment pot of £1,500,000. Goal 2 - Less Important: To be mortgage free. My plan is: 1) Open an annual Stocks and Shares ISA each of the next 15 years. 2) Open Share trading/dealing account. 3) Reduce my mortgage term to 6 years by 2025. I appreciate the above is a lot to go though, but I'd welcome any help and guidance.

    Mo | London | 15/10/2018 | 2

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    Holly Mackay's Response

  • The recent Metro article which Holly participated in has really inspired me and made me think that investing in shares is something which I would like to do. Unfortunately I am completely thrown about where to start. I would be grateful for any advice you could pass my way. Realistically, I would only have about 2k to invest, so any tips would be gratefully received.

    Sarah-Jane | London | 12/09/2018 | 3

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    Holly Mackay's Response

  • Is there a reason you don’t list Saga in your Best Buys? Additionally, I have purchased a few investment trust shares but can’t work out how the dividends are paid. Scottish Mortgage is an example. I wasn't given an option to choose how to receive the dividends. It would be useful if you could provide some clarity on how investment trusts pay their dividends.

    Carl | Buckinghamshire | 07/09/2018 | 1

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    Holly Mackay's Response

  • Any advice for two young people trying to get themselves a home? My girlfriend and I are saving for a house together. Currently house prices in our area are a ridiculous £300k. The max we can get from banks is about £220k, meaning somehow saving up a whopping £80k deposit. This would take us about 8 years (and house prices are increasing faster than we're saving!) That's not to mention solicitors fees, stamp duty, the cost of moving, furnishing the house, white goods, and any repairs or renovations. It all just seems impossible!!

    Joe | Buckinghamshire | 23/08/2018 | 0

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    Kate Fitzpatrick's Response

  • I wanted an investment trust with an income, so I put £10,000 into The Investment Company. It delivers a reliable quarterly dividend but the capital value has dropped by 10% since I invested 2 years ago. What are your favourite investment trusts?

    Fran | Greater London | 08/08/2018 | 4

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    Mark Dampier's Response

  • I'm 24 and would like to begin investing. Am I better off using a robo advisor such as Wealthify/Wealthsimple or a fund such as Vanguard LifeStrategy?

    Amanda | Greater London | 06/08/2018 | 6

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    Holly Mackay's Response

  • I have cash saved in ISAs and savings accounts - probably a 30% deposit on a property - first time buyer. I am at least 12 months away from getting a permanent job, so at least 12 months away from buying a property. What can I do with the cash in the meantime? Best just to leave it in cash for now, or invest a portion in stocks and shares ISAs?

    Malti | London | 25/07/2018 | 2

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    Holly Mackay's Response

  • I would like to open a Junior shares ISA for my Grandson for about £50/month. How do I go about it and can you recommend some reliable companies?

    Roger | Surrey | 26/04/2018 | 2

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    Founder and CEO's Response

  • Can you recommend some very basic books for a 69-year-old widow who is now having to manage her money? Thanks

    Martha | 12/04/2018 | 0

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    Helena Wardle, Chartered Financial Planner, Sterling and Law's Response

  • I just found your web site (recommended in Andy Bell's book on Do It Yourself investing). Could you say why you do not review Halifax Share Dealing in your list of ISA providers? Is there anything wrong with this ISA provider for you not to include it?

    Gerald | 11/04/2018 | 0

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    Dr Richard Bradley's Response

  • I am post-divorce with a good settlement which I have only partially invested. Are there any courses you can recommend? I have sat in a number of meetings with accountants and financial advisers feeling somewhat patronised! I am sure that there are plenty of women in a similar position to me (aged 55!).

    Ellie | 14/03/2018 | 3

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    • GIA
    Holly Mackay's Response

  • How can I find a good financial adviser?

    Byron | Greater London | 01/03/2018 | 0

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    Holly Mackay's Response

  • I am in the very lucky position of just having received a gift of £800k which I want to invest for our retirement. My husband and I are in our late 40s and aim to retire in around five years. We have 11 more years of school fees to fund, then hopefully university fees for two after that. I've put together a plan for us - can you have a look and see if it makes sense?

    Fiona | UK | 18/01/2018 | 6

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    Holly Mackay's Response

  • We have four grandchildren (2 English living in UK, and 2 Irish living in Eire). We have decided to start savings plans for their futures. Their ages are 18yrs, 11yrs, 8yrs and 4yrs respectively. My age is 75yrs, and my wife is a little older. What should we do, please?

    John | BKM | 01/01/2018 | 1

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    Martin's Response

  • How do I start investing, buy stocks, bitcoins, etc with £100.00?

    Claudette | BDF | 18/11/2017 | 1

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    Holly Mackay's Response

  • I am a 59 yr old retired lady with no income but I have reasonable equity..is it worth starting a pension or is it too late?

    LL | NFK | 10/11/2017 | 2

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    Cherry Reynard's Response

  • My mother is 84 and has around £35,000 in cash, realised when she moved to a smaller house. She would like to invest it and draw income that would be slightly higher than the natural yield - say around £2,000. What is the best vehicle for that please?

    Ed | SXE | 18/09/2017 | 4

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    Danny Cox's Response

  • I have a delightful 12 year old daughter and she has just opened her first bank account. I am dreadful with money but I would like to know what I should teach her so that she does not pick up my bad financial habits. Do you have some top tips of things to teach our children so they are wise and responsible with money please?

    Louise | Greater London | 11/09/2017 | 1

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    Lesley James's Response

  • Is it worth using a financial adviser when it comes to switching pensions funds, or should I do the research and pick the funds myself? I am no expert in stocks and shares.

    Helen | Dorset | 10/08/2018 | 4

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    Helena Wardle's Response

  • I've got £20,000 from an endowment policy (astonishing, I know), and I'm looking into how best to invest to get a reasonable return without excessive risk. Any thoughts much appreciated!!

    Penny | Peterborough | 09/08/2018 | 0

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    Danny Cox's Response

  • Should I be even thinking about the stock market?

    Lysa | Greater London | 06/09/2017 | 0

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    Holly Mackay's Response