You Need To Know This About Money BEFORE You Turn 30

Among the countless stereotypes about young people is the belief that they manage money poorly. How to manage money well is not something that is ever taught in school or University, but if you take the time to master the money game you will have it in abundance.

In this post, we’re discussing the 6 things you should know about money before you turn 30. The more of it you can earn and invest from as young an age as possible the better. You need to make sure you’re on top of all the points in before it’s too late. Now, let’s check it out…

FYI: Stake are giving away a free US stock to new UK investors, worth up to $150, to everyone who signs up via this offer link. More info on the Offers Page.

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Multiple Streams Of Income Is (Usually) Much Better Than One

Most people’s job income is their lifeline. If this is you and your wage income suddenly stops, you could be in serious trouble because you have bills to pay and responsibilities. In the event of losing that single source of income, the likely best case is you are forced to spend your savings, which means either your retirement will get pushed back or you’ll have to forgo whatever you were saving for.

But for many the outcome is far worse, with the loss of your home a real possibility and/or racking up a load of expensive debt. Most people have one job and depend on it like a new-born baby depends on its mum. They are totally reliant.

It’s common to think that a salary is a reliable source of income but ask anyone who’s been fired or made redundant, and they will tell you the exact opposite.

This powerful chart shows how many people were made redundant in the UK by month since 1995. The typical monthly figure is between 100,000 to 200,000 people. And during the bad times it has been 300,000 and even 400,000 people per month. Essentially, no job is safe, so you need a backup plan.

The wealthy very rarely rely on one source of income. Take a professional football player for example. They make millions from their day job and yet they still earn money on the side through sponsorships.

1.1 million people in the UK have a second job but as many as 25% claim to have a side hustle. We’re not proposing that anyone gets a second job on top of a full-time job but you may want to consider a side hustle.

One source of additional income that everyone should work on obtaining is investment income but realistically this is not going to be achieved overnight. Having multiple sources of income from your work is more easily achievable if you’re self-employed or a business owner.

Consider a website like Amazon which might be the ultimate example of income diversification. They are not reliant on any one customer, any one product, any one country, nor any one industry. What once was an online bookstore expanded into other physical products, and then into all manner of services, including music and video streaming, cloud services, financial services, logistics, and everything else.

On a much smaller scale, and so perhaps a little more relatable, a plumber will likely serve thousands of people in a small local area. No single customer will materially damage the plumber’s income if they choose to go elsewhere the next time their drain is blocked.

Multiple income streams are one of many advantages of being a self-employed plumber over being an employed office worker (other advantages being increased freedom, and greater control over their hourly rate). But the job with the single income stream is the one that the education system herds you towards.

You Need A Game Plan

A lot of people drift through life without a destination. They have no goals and therefore no plan. It’s little wonder why they don’t achieve much.

But if you want to accomplish great things – no matter how big or small – you need a game plan. You need to know how you’re going to cover your immediate living expenses, and simultaneously you need to have a long-term plan for achieving comfortable wealth, with a clear roadmap to how you are going to get there. Without a game plan, it’s just a pipe dream.

First things first, you need to draw up that budget. A lot of people find budgeting tedious but more times than not it’s because they don’t have a long-term game plan. Once you know what you’re striving towards budgeting becomes, dare we say it, fun.

People budget in different ways, but what we’ve found is if you overcomplicate it, you stop doing it. This is our tried and tested budgeting master plan:

  • The day you get paid, transfer a pre-determined amount into a separate account, which will cover all your fixed bills for the month.
  • Also on the day you get paid, transfer a pre-determined amount into a separate account, which is for irregular or non-monthly expenses. Christmas comes about once a year but from now on you budget for it monthly. Some excellent banking apps like Starling allow you to have separate pots all within the app. This budgeting method is often known as savings pots or the jam jar technique.
  • Again, on the day you get paid, you transfer another sum of money to your investment platform. From your budgeting calculation you’ve already determined what you can afford or what is required to achieve your long-term plan. We call this pot our freedom fund and it’s so satisfying to watch it grow.
  • Whatever’s remaining in your bank account is what you have to left spend during the month. If you find it’s not enough you need to go back and adjust your budget.

Only 30% of Americans, so presumably a similar number of Britons, have a long-term financial plan – no wonder most people are skint!

Insurance Matters – You Are Not Invincible

We reckon this could be one of the most overlooked parts of financial planning and we’ll admit it’s not something we even thought about until more recent years. I was always put off because the only time it was ever mentioned was when a seemingly dodgy financial broker was trying to push it, cos he clearly got some huge commission.

But as you go through your twenties you start noticing that nobody is invincible and sadly some people start falling ill; some even don’t make it. If you have loved ones that depend on you, you have a responsibility to ensure that in the case of your premature death they are financially taken care of. You do this by taking out life insurance.

The second type of insurance you should take out is Income Protection Insurance. This insurance product is designed to pay you an income if you are unable to work. Some policies will pay out for a few months, while others will pay out until you reach retirement age.

Unless you can somehow fund your lifestyle without income protection insurance, such as with investment income, we strongly urge you to take out a policy that pays out until retirement, which is exactly what we both did.

Because we feel so strongly about this, we’ve teamed up with the same broker that we both used, and if you visit our lifestyle insurance page you can read a little more and get a quote.

The System Isn’t Rigged

Some people who struggle financially blame the financial system, claiming that it’s rigged. But the fact of the matter is, just because they haven’t become financially successful doesn’t make it impossible. There are thousands of examples where normal people have become not just wealthy but insanely rich.

One such example is the rags to riches story of J.K. Rowling. You will know her as a best-selling author who has sold more than 500 million books and became a billionaire. But prior to her success she was desperately poor, jobless, and with a young child to provide for. She described her economic status as “poor as it is possible to be in modern Britain, without being homeless.”

Becoming a best-selling author might be difficult to relate to, so how about an incredible story about a janitor who secretly amassed an $8 million fortune by the time he died. He achieved this through smart spending and good investing habits, reports CNBC.

His family was “tremendously surprised” upon finding out about his hidden wealth. “He was a hard worker, but I don’t think anybody had an idea that he was a multimillionaire,” his stepson said.

There is no secret to becoming wealthy. It’s simply a case of adding value that other people are willing to pay for, spending less than you earn, and investing the rest. The more value you add, the more you will earn, and the more you can invest. Sooner or later, your invested money will be making more than you do. You can make as much money as you want if you are willing to put in the necessary work.

You Must Seek Out Pay Rises – They Won’t Come To You

Too many people moan that their employer doesn’t pay them enough, and yet they never seek out a pay rise. Your employer is running a business and their goal is to maximise profits for the shareholders, not to be handing out pay rises if they don’t need to. Pay rises aren’t given for nothing and certainly aren’t given to those who don’t reach out to take them.

Most employers will expect you to work a job for at least a few years before being eligible for a proper pay rise of more than a derisory 1 or 2 percent. So, to climb the career ladder at breakneck speed, the best thing you can do is to job-hop between companies. You’ll earn a promotion each and every time.

If you want to be paid more and stay at your current employer, you need to effectively tell your boss what the craic is, but this only works if you’re well-liked by the entire management chain. You’ll be amazed at how high up the chain your measly pay rise request goes to be authorised.

Your boss and your boss’s boss are unlikely to give you a promotion without first doing more than what you are already paid to do. You should literally ask your boss what you need to do to earn a promotion and then deliver that. At the very least, you make your boss aware of your desires and this will give you an idea of whether a promotion is even possible.

Start Investing For Your Future NOW

When it comes to investing, the earlier you start the better because compounding takes a very long time to make a serious impact! The longer you put it off the more you have to contribute to make up for the time you missed.

If you’re putting it off because you think your financial situation will get better, you’re taking a huge risk. From our experience, life gets more expensive as you get older, not cheaper.

If you invest £100 a month for 40 years from age 20 at 8% return, your pot is worth £324k at age 60.

But if you miss the first 10 years, and then invest £100 a month for 30 years, your pot is worth only £142k.

If you did start early, you might even be able to Coast FIRE if you wish. Coast FIRE is when you have enough in your investment accounts that without any additional contributions, your net worth will grow to support retirement at a traditional retirement age. For instance, stopping investing at age 40 and allowing your pot to grow by itself until you’re 60 and ready to retire. Then you can spend more money on lifestyle and enjoy your later career a bit more.

All your peers will be squirrelling away as much money as they can for the last couple of decades before they retire and probably still won’t have enough, whereas you who learnt these financial lessons early, could be coasting all the way to a comfortable retirement.

What other financial tips does everyone need to know before turning 30? Join the conversation in the comments below.

Written by Andy

 

Featured image credit: Dean Drobot/Shutterstock.com

Also check out the MoneyUnshackled YouTube channel, with new videos released every Wednesday and Saturday:

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Why You Should Buy Gold In 2022 (And The Best Way To Do It!)

Hey guys! Today we’ll be looking at the many different ways to invest in gold, as well as the reasons why you should.

We’ll look at the parallels that gold has with cryptocurrencies, and we’ll explain the great advantages of holding gold physically, as well as the dangers that holders of gold need to be aware of.

We’ll ask whether gold should really be thought of an investment, or should it be considered as an insurance product against disaster.

And finally, we’ll look at the expected returns of gold. Let’s check it out!

The world’s largest online investment gold service, BullionVault, have a special offer for gold lovers. Everyone who opens a BullionVault account with this offer link will receive 4 grams of silver for FREE, and will find their online account preloaded with a small amount of cash to let you try buying and selling for free.

Alternatively Watch The YouTube Video > > >

How Do You Invest In Gold?

There are lots of ways to own gold that on the face of it seem to be different ways of essentially doing the same thing.

  • You can own gold bullion physically and take delivery of it at home.
  • You can store physical gold in a managed vault, like the BullionVault service above.
  • You can buy a gold ETC.
  • You can own gold derivatives, which have the added benefit of being able to apply leverage.
  • Or another way that some people choose to loosely track the gold price is to own shares of gold mining companies.

Gold enthusiasts or gold bugs as they’re often known will say that there is only one way to own gold, and that is to take physical delivery. They would say that if you don’t hold the gold, you don’t own the gold.

People who physically hold their own gold are using gold for its primary function, as a store of wealth that can’t be magicked out of existence by the banking system or stolen by a computer hacker or corrupt government. No other method of owning gold provides this protection.

But physical holdings of gold are not as popular as synthetic holdings, also known as gold derivatives, or paper gold, whose values fluctuate in price in line with the real price of gold. There is vastly more synthetic gold on the market than the actual amount of real gold in the world: 50 times as much, by some estimates.

Paper gold has its uses in the global economy, helping the flow of transactions between investment banks and letting them bet on future gold prices. But does it provide you with the full benefits of owning physical gold?

Holding Gold Physically

Imagine the world’s digital economy imploded, and there was a run on gold with people wanting to take physical delivery of their assets.

At least 49 out of 50 people presumably wouldn’t get any, as they only held paper gold. People who can actually touch their gold bullion have a significant advantage in this scenario.

However, there is a security risk in holding gold physically. You either need an expensive safe – or a combination of a garden, a spade, and a treasure map.

There is every chance that your gold might be stolen and insuring it may be difficult. But this may be a risk worth taking if your gold only constitutes part of your total net worth.

The solution in the interim may be to buy physical gold but have a specialist company hold it for you in a vault, with the option to take physical delivery of it in the future if you so wished.

Using BullionVault as an example, you can do exactly this, building your gold reserves up regularly, just like you would any other investment. You can even set up a direct debit monthly to make the process automatic.

You can even hedge your bets further by storing your precious metals in a vault in renowned jurisdictions such as Switzerland or Singapore, so the British government wouldn’t be able to confiscate it in times of crisis.

This isn’t such a crazy idea. It’s happened before in the US in 1933, when a law came in banning private citizens from holding gold, which stayed in effect right up until 1974.

Coins vs Bars

Gold coins can also come with an added antique value, due to the engravings on them. Historic gold Sovereigns have been known to command premiums of 35 per cent over and above their contemporary gold value.

This is of little benefit to you if you are both buying and selling at inflated prices, but it should be factored into the price you should trade at. Gold bars meanwhile hold little historic or traditional value and are traded exclusively for their gold content.

Certain gold coins also have the tax advantage of being exempt from Capital Gains Tax. This is only if they are considered legal tender in the UK and includes gold Sovereigns and gold Britannias amongst others. But all gold coins have a big disadvantage versus gold bullion bars, and this is a much higher bid/offer spread.

The bid/offer spread is the difference between the buy price and the sell price – it’s effectively a cost of trading. Because coins are smaller and less commonly traded in bulk than bars, their spreads can run above 10%. That’s an instant 10% loss on the day that you buy. Whereas the spreads on gold bars can be around 0.2%. Gold bars are therefore likely to be the better investment of the two.

Gold Exchange-Traded Commodities (ETCs)

ETCs are like ETFs, but for commodities. They are traded on a stock exchange and can be bought on the majority of stock market investment platforms. They come in 2 types: synthetic and physical.

Synthetic gold ETCs use futures or options contracts to replicate the gold price. While we don’t use synthetic gold ETCs, we do use gold futures elsewhere in our spread betting strategy – more details here.

But when it comes to ETCs, we prefer the physical type. Physical gold ETCs have some similarities with the service offered by companies like BullionVault, whereby your investment is in physical gold, stored in a vault, with every penny of your investment matched to a real piece of metal.

You get the same advantages from market movements in the gold price, but the great disadvantage of an ETC versus a gold storage service is not having the option to take physical delivery of the gold. As such, you might not be protected if the digital economy gets hacked or if there’s a financial or political crisis.

With a service like BullionVault you own the gold, but with an ETC, you own the fund, which owns the gold. Small difference, but it could have a large impact during Armageddon!

If you are looking at gold ETCs, you’ll note they are all in different currencies. A top tip is to get one priced in GBP, as it will avoid any FX fees charged by your investment platform.

Why Gold Is A Good Inflation Hedge

Gold provides such good protection against inflation over the long term primarily because nobody’s making any more of it.

While the Bank of England and the US Fed run the printing presses on full to pump cash into their flagging economies, nobody is producing any more precious metals. They have to be mined, at great expense, and there is a limited supply of the stuff on planet Earth.

Gold preserves its purchasing power for long periods of time. When measured against gold, the prices of commodities such as oil are relatively stable over history; but it’s not the case for fiat currencies like the US dollar, with the dollar inflating by over 5,000% against gold in the last 70 years.

But gold didn’t get more expensive: rather, the value of paper money has depreciated significantly over time. The major economies of the world are still locked in a downward spiral of currency devaluations in their efforts to stimulate growth. Meanwhile, gold stands as stable as it has for thousands of years.

Gold As An Insurance Product

Owning gold is like holding an insurance product. If the stock market goes belly-up, or if there’s a banking crisis, or a political crisis, you may be glad you own gold. Historically, gold is an excellent hedge against a falling stock market.

This chart shows how gold has moved during the last 9 stock market crashes. The majority of the time, and overall, gold went up, shown in green. Twice it fell by less than stocks did: also a good result. Gold’s only significant selloff – 46% in the early 1980’s – occurred just after its biggest bull market in modern history.

Gold is therefore a little different to other investments, and common cries of “well it’s not a productive asset” are perhaps misguided.

You don’t hold gold for its dividends – it has none. You hold gold because when the chickens come home to roost in the economy or the stock market, you can hope for a big pay-out from gold. You also hold gold because it’s a great store of wealth.

Why Gold Has Always Been The Best Store Of Wealth

Gold is amongst the oldest of investment assets, in the sense that it was once literally money. Gold has some very special qualities that have kept it in demand for thousands of years as a store of wealth.

First up, it doesn’t decay. Unlike corn, furs, or bits of paper, gold will last forever. Secondly, it is easily divisible into standard units, or grams.

Thirdly, gold is portable. One small coin may have been worth several cows back in the day, but it’s easier to carry a coin around with you than a herd of cattle.

And finally, gold has a limited supply, and is why things like pebbles and rocks could never become a mainstream currency. It is this limited supply that sets gold apart from government cash, which is theoretically infinite.

Crypto As Digital Gold

Crypto also shares some characteristics in common with physical gold. Though there’s nothing stopping new cryptos from popping up all the time – and they do – most individual cryptos like Bitcoin have a finite supply, meaning only so much can ever be in existence. Like gold bullion, central banks can’t print more of it.

As such, crypto has come to be seen as an alternative hedge against inflation, sharing the role traditionally dominated by the precious metals.

And also like gold, you can spend your crypto anywhere in the world. There are no borders when it comes to gold, and now crypto has come along to claim the same role of international currency.

As investments, cryptocurrencies have been hoovering up money from the economy over the last couple of years that may otherwise have flooded into gold during these times of inflation and quantitative easing.

But given the volatility of cryptos like Bitcoin, the next big crash in the crypto markets may remind investors that if they’re looking for a STABLE long-term inflation hedge, gold has always been the answer in the past.

Gold Returns

Gold has an average 5.8% per annum return going back 70 years, but there have been periods during that time where gold has exploded. Over the last 20 years, the average annual return has been 10.0%, in part due to large scale money-printing around the world.

The price of gold lagged throughout 2021, despite inflationary worries, we think due to the crypto craze.

We would have expected with all the talk of inflation right now to have seen a gold price BOOM during the pandemic if it had followed the usual pattern of its history. The next major gold boom may happen if crypto starts to lose some of its shine.

Will you be expanding your portfolio to include gold? Join the conversation in the comments below, and remember to grab your free silver from BullionVault and try their service for free.

Written by Ben

 

Featured image credit: Momentum Ronnarong/Shutterstock.com

Also check out the MoneyUnshackled YouTube channel, with new videos released every Wednesday and Saturday:

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Big Bold Money Moves To Make In 2022 To Explode Your Wealth

Today’s post is about taking massive action to significantly change the course of your life.

We’ve covered the need for regular monthly saving and investing on this site a lot – the small incremental steps that almost guarantee eventual success. That is all very important stuff and must be done, but arguably more important are the big, one-offs events that transform your finances in one go.

Looking back over the last few months and years, have you taken some specific action that you can single out as the point when you achieved something big financially?

Let’s make this next year count, with massive action. It’s time to put a stop to all of your years merging into one long line of working and saving.

If you want to grab some free cash, check out the Offers page. Loanpad, EasyMoney, Octopus Energy, and others are all giving away £50 in welcome bonuses. Free stocks potentially worth hundreds of pounds are available too.

Alternatively Watch The YouTube Video > > >

What Is Massive Action?

Massive action in the personal finance world is when you spend a short amount of time to implement a major change to your life which from that point on results in a bigger income, lower costs, and/or more free time.

It is an event, rather than a lengthy process – though it may be followed by continuous action such as starting and then managing a business. Massive action instantly changes everything about your money making potential or return on investment. Massive action might also be a restructuring of your working life which results in you having more free time to work on your life goals.

The End Goal

So how will taking massive action result in you getting rich? Your end goal might be to massively increase the income you earn from your 40 hour work week. Or, maybe you’ll slash your expenses so much that you can retire a few years earlier. Maybe you’ll engineer a shorter work week, making more time for family and friends. Or, maybe… you’ll establish multiple income streams.

This last one is the secret that sets the rich apart from the working and middle classes. Nearly everyone in the UK has just a single income stream – their job.

They may have a few quid from dividends or interest trickling in each month too from savings accounts and investments, but because no massive action has been taken these pots are small for most people, and the income insignificant compared to their wage.

Having several income streams in addition to your main wage, each providing at least a few hundred quid to your total income, is all but guaranteed to result in you becoming rich.

Let’s now look at the practical bold money actions you can take to initiate this change and rocket-power your wealth.

#1 – Reset Your Primary Income Stream

Before you get started on building multiple income streams, first focus on your main one. If you’re not satisfied with what you’re earning from your job or maybe you’re having second thoughts about your career choices, then it might be the time to hit that reset button.

Usually, changing jobs alone isn’t enough because you’ll probably end up in another one with similar pay to what you’re already on, in a similar field to what you’ve done in the past. Your CV will allow little else.

Instead, consider abandoning your current career path altogether and going through the short-term pain of retraining. Unless you’re passionate about your job it’s unlikely you’ll ever rise to the top anyway. Your massive action in this regard might be paying those fees for a new degree or professional qualification.

As an example, someone who puts themself through a professional accountancy qualification can make around £40,000 on the day they qualify.

If you’re stuck in a lower paying career, signing up to a professional course like that could mean you make significantly more money going forward for the same number of hours worked each week.

On the flip side, it’s just as bold to scrap a qualification that you’ve already earned, in favour of taking a different path. We both did this, choosing to end lucrative careers in order to strike out on our own with this website and our YouTube channel.

#2 – Start Your Own Venture

You’ve heard us preach the virtues of starting a business or side hustle before, so all we’ll do here is remind you that this can be an excellent second income stream alongside your main job. Quitting your job is optional, once you’ve built your venture large enough.

As such, we believe most people would benefit from having a side hustle, especially if you can monetise a hobby. In fact, in the UK, 1 in 4 people do have a side hustle, and have already taken the massive action to set this up, contributing an estimated £72 billion to the UK economy.

Some of these hustles will be true businesses capable of going to the moon, and some will just be second jobs. But if you enjoy what you’re doing and are making extra money then it’s all good. Some practical steps you can take to make sure that you commit to the idea of a side hustle are as follows:

[1] Register your new business as a limited company on Companies House. The act of making it official may seem inconsequential, but it makes it feel real and exciting, and gets the ball rolling.

[2] If your business idea requires you to learn new skills (which it will), go all in and sign up to a proper course that teaches those skills.

Maybe you want to learn carpentry, so you can make and sell furniture on the side. When you hand over your money and attend the course, you’re far more likely to make a success of it than if you just bought a book or watched some free videos on YouTube.

[3] Announce your services to the world. You should be making good use of all the local Facebook groups in your area to tell the world about the service you’re offering. All your friends and family will know, and it will be harder to go back.

If your service isn’t confined to the local area, find the time to build a website.

#3 – Materially Downsize Your Outgoings

The amount you can invest each month is significantly affected by your outgoings too. But trimming a bit of fat from your household budget is unlikely to make that much of a difference.

There are, however, perhaps 2 main expenses you need to focus on that can be vastly reduced with massive action, improving your savings rate and future wealth.

These 2 areas are cars, and housing. Starting with housing then, you can save hundreds of pounds a month and many years off your mortgage payments if you were to move to a cheaper city.

Londoners could more than halve their housing costs by relocating to Manchester. Residents of leafy Cambridge could have a similar lifestyle in York, again for a fraction of the price.

Regarding cars, there are a few actions you can take to slash hundreds of pounds a month from your car expense.

  • If you’re a multi-car family, drop to one car. Even the most basic of cars costs at least £200 a month, and often more once you factor in insurance, tax, depreciation and maintenance.
  • If you’re leasing your car, stop doing that! Buy a second-hand car instead. Even a 3-year-old equivalent model to your current lease car will save you a fortune.
  • If you drive a BMW, Mercedes, Audi, Tesla or other top-end car, trade it in for a Ford or a Kia. You can invest the difference, and it won’t cost so much to service.

#4 – Get A Lodger

While this probably fills most homeowners with dread, getting a lodger is not a permanent fixture – if you don’t get on with them, you can ask them to leave. But they CAN bring in £400 or more a month in passive income – I once enjoyed this boost to my income for nearly 2 years.

#5 – Investing Action

Starting to invest in the first place can be a mental leap too far for some. This won’t be an issue for many of our viewers who have already taken massive action in opening their first investment account, but for many people it’s a big psychological hurdle to overcome.

We suggest starting out by putting a material, yet losable, amount of cash into an investment account, which might be a couple of hundred quid. That first deposit is like breaking through a mental wall.

I remember my first investment well. Other than a brief dabble at age 16, I had done nothing until around 6 years ago, where in a moment of inspiration whilst chilling in a holiday cottage I decided enough was enough, opened a Stocks & Shares ISA, and whacked £500 into a stock market fund.

This action spurred me to then properly research what it was I’d just bought – it was something undiversified and expensive like a managed fund – but this was how I began investing like a pro, from that first leap forwards.

Most people do already invest, though they may not realise it, because their pensions are invested in the stock market. But the quality of the investments in a workplace pension, as we said before here, are often substandard.

You could potentially increase your retirement wealth by hundreds of thousands of pounds by simply taking a weekend to understand what your pensions are invested in and moving that money into better and more suitable funds. You might also want to perform this exercise on your Stocks & Shares ISA if you have one. Here’s some videos to get you started [How To Build The Perfect Vanguard Portfolio & The Ultimate ETF Portfolio – Low Fees, Low Taxes, High Returns!].

Wealthier investors might choose this next year to be the one where they add a seriously high returning asset to their portfolio – a buy-to-let property.

I’ve taken massive action 4 times now with buy-to-let – buying one isn’t as simple as buying a stock. The cash profit I earn monthly from my 4 rentals brings in at least an extra grand of income each month. More information on my property strategy here.

#6 – End Relationships

A controversial one perhaps, but sometimes the relationships you have with partners or friends can be holding you back from achieving your potential. With regard to partners, their financial priorities may not be in line with yours.

Maybe they are a big spender. Or maybe the two of you have conflicting life goals, such as financial freedom and travelling the world at age 40 for you, versus work and a community-based life for her. Is it time for a fresh start?

Likewise, if your mates like to blow their wages and waste their weekends and are dragging you down to their level, then maybe it’s time to find a better network as you are the average of your 5 closest friends.

#7 – Master Good Debt

The massive action which started my rental property portfolio was doing a low interest equity release on my own house for some 50 grand, which was added to my home mortgage. I stand by my assertion that it was the best thing that I’ve ever done, and was the single biggest influence on my wealth today.

I’d go as far as to say my wealth would be a third the size that it is now, if I hadn’t taken on good debt to buy investment assets with.

#8 – The Big Clear-Out

Andy (MU co-founder) has just moved house and has realised he had a tonne of stuff that was clogging up his space and mind. So, recently he’s been selling all his possessions on eBay and Facebook, minimalist style. Well ok, not all his possessions – just the stuff that is surplus to requirements. Most of which was just gathering dust in the loft anyway.

There are 3 financial benefits:

[1] There’s less stuff to distract him from the job of making money.

[2] Less time and money goes on replacing or maintaining stuff he didn’t need when it breaks.

[3] He’s making over a grand, which he could invest.

#9 – Claw Back Time From Your Employer

As we’ve stated, you can and should also take massive action to free up more of your time. This time can then be used to implement some of the big-money actions we’ve already covered.

There really is no need to work 5 days a week, every week, without pause. Why not arrange a 6-month career break like Andy did, or drop a day and go part-time to 4-day weeks, like I did?

The action in this case is to give your boss an ultimatum. You need to tell them that this is what you want to do, and if they can’t make it work, you will have to leave. Always be prepared to walk away and find another employer who can give you what you need.

What bold steps have you made in your life or career? Join the conversation in the comments below!

Written by Ben

 

Featured image credit: Ollyy/Shutterstock.com

Also check out the MoneyUnshackled YouTube channel, with new videos released every Wednesday and Saturday:

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We’ve Had Enough! On Crypto Luck, Media Nonsense & Crazy Politics

Normally we like to focus on topics that enhance your financial life; how to invest, what not to waste money on, important finance news, and the like. But today we need to have a good old moan about certain things in the money space that are really annoying us right now.

If it frustrates you too, let us know in the comments below. Or otherwise tell us to stop whinging and to get back to telling you the finance news. We’ll be moaning about investing, YouTube, the media, politics, tax, and people. Now, let’s check it out…

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Investing

First off, we need to moan about crypto, meme stocks, and lucky stock picks. We don’t have a problem with these things per se, but more precisely what winds us right up are the lucky sods that make a quick win – on what is essentially a gamble – and then think they’re investing gods.

Meanwhile the rest of us – who are investing in a more calculated, and some would say, boring, fashion – have to spend years and decades growing our investments at a snail’s pace. Then of course we all look stupid when we’re only getting, say 10% growth a year, while some of those who took a reckless punt are laughing all the way to the bank.

Bitcoin really started to gain traction and widespread attention in 2017. It started that year hovering around the $1,000 mark and by the end of 2021, it was priced around $50,000 – a 50-fold increase.

Somebody could easily have turned a 10 grand investment into 500 grand – a lifechanging sum of money. The internet is awash with people who rode that gravy train, and an entire community of crypto “experts” has popped up on YouTube claiming to have rewritten the investing rulebook.

Perhaps a little more common are those who started investing in Bitcoin when it was hovering around $15,000 at the tail end of 2017 and you, like us, probably have some friends who did this. If they continue to hold to this day, this is still an epic return of 3.3 times in just a few years. Quite frankly, this makes those of us who invest in conventional index trackers look like idiots.

There is a danger here that we’re wrongfully describing incredible investors as lucky. Serious Bitcoin investors will argue that it was obvious, and that Bitcoin will continue to surge ever higher. However, we have yet to meet anyone who can put together a compelling case for Bitcoin at its current price, and we see no reason why the price couldn’t have gone the other way. Seriously, what is Bitcoin worth? All we tend to hear are soundbites like, “invest in Bitcoin”, “Bitcoin is the new gold”, or “Bitcoin is my retirement”.

While we see potential uses in Bitcoin and crypto in general, we have no idea how anyone can put a value on them, so how can we justify investing serious money into this asset class? Honestly, we would not be surprised if it either went up 10-fold from here or collapsed 10-fold.

On a related note, we get frustrated at the quantity of social media influencers on places like here on YouTube that are relentlessly plugging crypto, no matter the coin.

Even respectable YouTube stars like Graham Stephan who initially talked about real estate, and has 3.6 million subscribers on his main channel, seem to be ruthlessly knocking out video after video about crypto.

The infamous YouTube algorithm rewards videos that get clicks, and there’s no doubt about it that clickbait ‘get rich quick’ style videos are hugely popular. Meanwhile YouTube channels that focus more on “boring” but tried and tested methods of investing into stock-market index funds and property are sadly far less popular.

If you want to make a quick £1,000 after Christmas, or even more if you continue, give Matched Betting a go. It’s not betting, and it’s not investing either – in fact, it’s a logical, step-by-step process of scooping up the cash bonuses offered by bookies.

We’ve got introductory guides here, but in short you subscribe to one of the Matched Betting services and they serve you all the offers and walk you through it. We have discounted offers for both Oddsmonkey and Profit Accumulator on our Matched Betting page.

The Lying And Sensationalising Media

Something that really has got to stop is the constant negativity from the media. And much of the media are so lazy now in their reporting that they just stick a few tweets in their articles and try to pass the negative opinions of 3 random people or celebrities as if it’s the opinion of the masses.

But what annoys us the most about the media is the constant sensationalising, headline-grabbing news stories. They spread fear because negativity sells. This obviously applies to all aspects of the news, but it seems to be very prevalent in the financial space.

Take this recent headline from the Mirror as a typical example, “Bank of England HIKES interest rates to 0.25% as inflation jumps to 10-year high”.

The fear mongering in that headline is full-on supercharged – trying to terrify anyone who has debt like a mortgage and also those who are worried about the rising cost of living. Nobody on planet earth considers an interest rate increase from 0.1% to 0.25% as a “hike” – honestly, you’ll barely notice it.

For investors, this negativity is a minefield that needs to be avoided at all costs. If you paid close attention to the news, you’d never invest, because there’s always a reason to sell and sit out of the market.

This chart is an updated version of one we have shown before. It’s littered with negativity that the media would have been hysterically reporting at the time, and it shows how the S&P 500 responded – it continued to storm ahead. Remember Brexit? Well, some people may have thought it was the end of the world, but this is what the market thought. It simply didn’t care!

Don’t even get us started on how Covid has been reported these past 2 years. The thing with statistics is you can spin almost any story from the same set of data – both positive and negative, but the media obviously choose the latter.

Every death these days seems to go down as “dying with Covid”. A blind 112-year-old, driving dunk and stoned, drove off a cliff, whilst having a heart attack. But his autopsy showed that as well as having no head, he had contracted Omicron. Add him to the “died with Covid” statistics!

Negative news was bringing Ben (MU co-founder) down so much that at one point he stopped watching the news entirely. But as a finance YouTube channel, it’s our job to cut through all that noise to bring you the news that matters, so he has reluctantly started tuning in again, so you don’t have to. You’re welcome.

Politics & Taxation

We’re sick to death of the government. They’re either raising taxes, banning stuff, or taking away our freedoms. We’re very much pro-freedom as you might have guessed based on our slogan ‘Investing For Freedom’, which you might have seen during our video intros on YouTube.

Both of our goals in life are to build up big enough Freedom funds, so we’re free to live the life we want. But if the government continues to keep overreaching, and forcing their will on the people, no amount of money will ever be enough to achieve true freedom.

Much of the stuff that the government bans doesn’t even directly affect us but it sickens us that other people lose the right to enjoy whatever it was that was banned. One such example in the finance space, was the banning of crypto derivatives by the FCA. Another was preventing investors from having more than 10% of their net worth in P2P Lending.

We’re all for laws to guide positive behaviour and protect people but outright bans – to put it bluntly – pisses us off.

Here’s one that probably affects everyone and the economy in a big way – antiquated Sunday trading laws. Most people are too busy slaving a full-time job during the week to go shopping and probably save Saturday for a little bit of well-earned fun.

You finally get a chance to head to the shops on Sunday evening to do a big food shop but remember the silly law that prevents shops over a certain size from opening for more than 6 hours, so you’re out of luck. You’re forced to go and overpay at a far smaller shop, which has less choice.

As for taxes, we’re in favour of making them as low as possible, to encourage economic growth and make Britain the world’s choice for investment. But both major parties in the UK, despite their rhetoric, are pro high taxes, which is why The Institute for Fiscal Studies (IFS) said the chancellor was on track to lift the UK’s tax burden to the highest sustained level in peacetime.

It’s not just the amount of tax that is the problem though, it’s the fact that the tax system is ludicrously complicated and imposed on certain aspects of life that it has no right to, such as on death.

Inheritance tax is 40% after some relatively small tax-free allowances. Every person should have the right to pass on most of their wealth, which they probably spent a lifetime earning, without having almost half of it siphoned off by the sticky fingers of the government.

In a Guardian article published in 2015, they stated that the UK tax code was the longest in the world at 17,000 pages, which is considerably longer than Hong Kong’s, which at the time was 276 pages. Theirs is widely held by tax lawyers to be the most admirably efficient in the world.

Taxation.co.uk, said, “We can’t stress enough how important a nation’s system of tax is – societies are shaped by the way they are taxed. A large part of a nation’s destiny – whether its people will be prosperous or poor, free or subordinated, happy or depressed – is determined by its system of tax.”

They also said that the UK’s tax code is eight times longer (and considerably less readable) than the longest novel ever written.

Their taxes and regulations also punish aspiration and those who seek to better themselves. Landlords, for example, are having a tough time of it recently – after years of fiddling with the way property is taxed (in HMRC’s favour of course), property investors now face a rough decade of trying to make their properties “green”.

From installing car charging points outside houses (how do you do that on a terraced street?), to insulating lofts and wall cavity spaces, to replacing boilers with costly heat-pumps, at what point is the landlord meant to draw a decent profit? Landlords don’t take substantial financial risk to provide housing out of the goodness of their hearts. Soon, what will be their incentive to keep providing housing to renters?

People

The most annoying thing of all though could be people. People don’t fact check and believe everything they hear.

This meme always makes me laugh, “Don’t believe everything you read on the Internet just because there’s a picture with a quote next to it.” – Abraham Lincoln.

Just the other day, Ben was telling me about some revolutionary wisdom he had just read about. It was Warren Buffett’s three-step productivity strategy, which has been dubbed as the “25/5 Rule”. He was about to enact it in his own life, only to find out that it was complete nonsense and Buffett never even said it.

Also, people are prone to whinging a lot and then making preposterous suggestions that would never work in the real world. Hopefully we’ve not done any of that today.

I don’t help myself because I listen to talk show radio shows like LBC, where any idiot is given airtime when they ring up. One such ludicrous suggestion is that MPs should earn minimum wage, so they can see how difficult it is to live on. I’ve lost count how many times I’ve heard people say that MPs get paid too much.

Despite all the criticism MPs get for doing a poor job, if anything they don’t earn enough for what the job involves. FYI, the basic salary for an MP is about £82k.

One major reason why many MPs are so useless is because the wage is so low, compared to wages for the top jobs in the private sector. The right person for the job instead chooses to work as a director in a large business and often earns many hundreds of thousands of pounds, so why take a stressful job as an MP for relative peanuts?

For reference, the director general of the BBC earns a staggering £525,000 per year, which is about 3 times as much as the prime minister. Come on people, MPs are hardly making the big bucks. Do you really want drunk Dave from the pub running the country?

The same applies to company directors. We want the best people running our great companies, and they demand a very high wage.

Another thing that frustrates us is people whinging about wanting a higher wage for themselves and taking no action. We’ve even spelled out to friends and colleagues exactly what they need to do, and yet many years later they’re still doing the same job for the same pay and still moaning.

As a minimum, these people simply need to inform their manager that they want more money. Your boss isn’t psychic, so probably doesn’t even know you’re unhappy – or it’s easier to ignore if you don’t raise the issue.

What’s annoying you right now? Have a moan in the comments below.

Written by Andy

 

Featured image credit: altanaka/Shutterstock.com

Also check out the MoneyUnshackled YouTube channel, with new videos released every Wednesday and Saturday:

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The 8 Retirement Blunders To Avoid

Today we’re looking at 8 retirement blunders that you need to avoid. If you get your retirement strategy wrong, you will likely retire poor, and your later life will be unpleasant or even destitute but avoiding these mistakes will help you to retire rich.

If you’re new to retirement investing and want the professionals to manage your money, a great option for hands-off investors is to open a SIPP with Nutmeg. They will build and manage your portfolio on your behalf in just a few clicks. New customers who use the special link on the Money Unshackled Offers page, will also get the first 6 months with zero management fees. If you’d rather manage your retirement investments within an ISA, check out our hand-picked range of ‘do-it-yourself’ Stocks & Shares ISAs.

 

 

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#1 – Not Saving Enough

According to unbiased.co.uk, almost 4 in 10 British adults don’t have a pension, including 1.4 million people who are within a decade of retiring.

Assuming you retire at State Pension age, which will be age 68 for most of our audience including us, then you will need to have enough money tucked away to fund 14 years of retirement if you’re a man or 16 years if you’re a woman based on the UK’s average age of death. And of course, you may live far longer than this, so you need to factor that in.

Required retirement income, by lifestyle

According to a Which? Study, these are the annual incomes needed to fund different qualities of lifestyle during retirement. A single person would need £13k just to pay for the absolute essentials like food and rent. That rises to £19k for a comfortable lifestyle and £31k for a luxury lifestyle. Bear in mind that even the money required for the Essential lifestyle exceeds that of a full State Pension.

Which? go on to state that for a single-person household, achieving a comfortable retirement would mean a pot of around £192k alongside the State Pension to get to an annual income of £19k via pension drawdown, or to reach £19k using an annuity you’d need nearly £306k.

We don’t know how exactly they’ve worked this out, but we tend to use the 4% rule. With the State Pension providing around £9k a year, that means you would need to find an extra income of £10k a year yourself. So, using the 4% rule we would say you’d need a pot of £250k.

Also, many people are paying into a workplace pension without realising how little they are actually saving. The headline 8% that you get on auto-enrolment is total nonsense; it applies only to your qualifying earnings, which is earnings between a lower and upper limit that’s set by the government.

The lower limit is currently £520 a month, which means if your salary is £25k, then you’re contributing 8% on just £18,760. Your total pension contribution is just £125 a month, and remember you need hundreds of thousands at retirement.

Basically, if you’re a low earner, then you’ll barely be making a dent on your required pension size because that lower earnings limit makes up a larger proportion of your overall salary.

Most of our viewers will have even loftier ambitions and will be seeking to retire much earlier than when they qualify for the State Pension, and they might need to fund 40-plus years of retirement. People tend to neglect saving properly for retirement because it always seems like tomorrow’s problem.

#2 – Delaying Investing

Investing works best when it has time to compound. Compound interest or compound investment returns behaves like a snowball. A small snowball can roll and get exponentially bigger and rolls faster as it gathers more snow. This is precisely what happens when you invest. Plus, the more time you give to your pension to grow, the less you have to contribute overall making your monthly retirement savings far more manageable.

Don't delay - start today!

Hargreaves Lansdown produced this excellent graphic showcasing the impact of time on your projected retirement pot. The graph shows how much you will have at age 65 by investing £125 a month starting at different ages. Roughly speaking, every ten-year delay wipes out approximately half of the fund’s potential growth.

We actually think they have been very conservative by only using a 4% growth rate, which even ignores inflation. The impact of time would be even more telling had they based it on say an 8% return, which is what we think the stock market will return on average.

#3 – Never Reviewing Your Pension

Pensions are hardly the most interesting of topics and this is coming from a couple of guys who are passionate about investing. Our problem is that because its inaccessible for decades it just doesn’t have the excitement of a Stocks and Shares ISA – people want to get rich quick, which is the exact opposite of what a pension does. As a result, people tend to neglect the management and performance of their pensions which can be a very costly mistake indeed.

Research done by Hargreaves Lansdown found that only 37% of non-retirees had a clear idea what all their pensions were worth.

The biggest issue is likely to be the default funds being used in your workplace pension. Our research found that most default funds are investing in low performing assets with needless home bias to the UK market. We believe a globally diversified portfolio is likely to give the best balance of high returns and safety due to your exposure being spread across all geographic regions.

If you’re managing your pension investments yourself in a SIPP, which often provide the widest investment range and lowest costs, then it’s vital to review your pension every so often – perhaps yearly. Don’t forget to occasionally rebalance your investments, as over time your exposure to any one fund, stock, or region could drift away from your intended allocation.

It’s also a good idea to review the fees that your pension provider and funds charge. Fees across the industry have been cut in recent years, so always make sure you’re not overpaying with your current provider. We have an excellent guide which looks at all the best SIPPs, so check that out next.

#4 – Turning Down Employer Contributions

The good news is that every employer must pay into a workplace pension if you do. The bad news is that some people don’t take full advantage of this and are effectively turning down free money. Essentially any money you contribute gets an instant 100% return.

There are very few reasons that we can think of where it makes sense to not pay into a workplace pension up to the maximum matched percentage. Otherwise, you’re just throwing money away.

#5 – Only Using A Pension

There are many ways to build wealth and investing in a pension is just one of them. Unfortunately, it seems that the average person – at least those saving for retirement – only ever considers using a pension.

Ben’s (MU co-founder) preferred wealth builder is buy-to-let property. It’s obviously not quite as effortless as a pension but there many other benefits, including leveraged gains and the ability to access the money at any age. In fact, we did an entire article and video demonstrating how you can make 25% annual returns in property passively, which you should check out if property investing is of interest to you.

Another excellent way to build a retirement pot is using a Stocks and Shares ISA. These are very tax efficient as they avoid most taxes such as capital gains tax, which means your investments can grow unopposed from the taxman.

The second advantage of ISAs is you can withdraw the money whenever you like. This flexibility makes them incredible when used alongside pensions as you can effectively retire early and use the ISA to bridge the gap between your early retirement date and when your pensions become accessible.

Our third way we love to invest is using a spread betting account to invest in financial futures. This is super complicated and extremely risky and probably not suitable for most people, but for transparency we’ve included it here.

We use 3x leverage on this part of our portfolios to supercharge our investment returns. If you’re an experienced investor you should check out these articles/videos next [Spread Betting Startegy Overview, Step-By-Step Guide] where we explain exactly how we use spread betting to earn mega returns.

#6 – Assuming The State Will Provide

Research in 2020 found that 1 in 6 workers over 55 had no pension provisions other than the State Pension. Frankly, these guys are in serious trouble. As we mentioned earlier the State Pension is currently a little over £9k a year, which is £180 a week and this does not even cover the most basic of lifestyles.

And don’t assume that you will get the full pay-out either. You need to have paid National Insurance tax for 35 years, known as an NI qualifying year, otherwise you will only get a proportion of it. For example, if you’ve only paid 20 years that is 20/35ths, so you’d only get £103 a week.

In most circumstances you should be able to accumulate 35 years of NI qualifying years, but some people may not if they take a career break for example.  You can always make voluntary NI contributions every year to qualify, for instance if you retired young.

You can easily check your state pension record by searching Google for ‘check-your-state-pension’ and visiting the government’s website.

What’s more, there are whispers in the finance community that doubt whether the government can afford to continue paying a state pension to everyone for much longer. The country is broke, and the state pension is just a humongous pyramid scheme, which relies on current taxpayers to fund the current crop of pensioners.

There is a possibility that the state pension will be means-tested in the future, so don’t count on it being there for you. Personally, we plan as if it won’t even exist, and if it does it’ll be one hell of a sweet bonus for us!

#7 – Failing To Claim Back More In Tax Relief

Tax relief on pension contributions is one of those rare occasions when the taxman gives you something back. The government effectively pays 20% of your total contribution. For higher rate taxpayers this is 40% and for additional rate taxpayers it’s 45%. This means a £2,000 pension contribution could effectively cost you as little as £1,100.

However, the government only automatically adds the 20% tax relief to your pension, and you must claim back the rest if you’re a higher or additional rate taxpayer. You have to actively claim this money back though via your self-assessment tax return or by contacting HMRC directly. Many people are missing out simply by being ignorant of the tax system.

Not claiming their tax relief is one of the most common retirement mistakes people make and is literally throwing money away. Your tax-relief, once claimed, will either be supplied as a rebate at the end of the year, or as a reduction in your tax liability, or as a change to your tax code.

If you’re one of these unfortunate souls, you can thankfully make backdated claims, but you can only claim back any tax relief for the last four tax years.

#8 – Not Shopping Around When You Retire

So, the big day has arrived, and you can finally tell that boss you hate to stick the job where the sun don’t shine. Congratulations! You’re now retired.

You can normally take 25% of your pension as a tax-free lump sum, and after that there are two main ways to draw a taxable income.

One way is Income Drawdown, or Pension Drawdown, which is a way of taking money out of your pension to live on in retirement. The pension remains invested, and the investor draws an income from it.

The other is to buy an annuity from an insurance company, which provides a secure retirement income for life. If an investor chooses this option, they should shop around as rates can vary significantly.

No sensible person would ever take out car insurance or choose an energy provider without running a price comparison first because you know that the providers of such services will always rip off the complacent. The same is true if you take out an annuity from your existing pension fund provider.

According to a 2019 Which? report, shopping around for an annuity can increase an individual’s retirement income by up to 20%.

As a little sidenote to this point, before taking out an annuity be absolutely clear that it’s the right financial product for you. We here at Money Unshackled are not very fond of annuities because the rates are measly, and when you die all the money is usually lost. Those with guaranteed periods where your beneficiaries can benefit after your death naturally have even worse rates.

With your bog-standard single-life annuity, if you die relatively young having just taken it out you may have wasted hundreds of thousands of pounds, which could have been passed on to your loved ones.

Annuities are usually best for those who need a guaranteed income and cannot cope with the whims of the stock and bond markets. We believe the State Pension should be enough to provide a guaranteed income though for most people and should replace annuities as their base layer, to be topped up with riskier investment-based income.

Which of these blunders have you made and what other tips can you give to retirement savers? Join the conversation in the comments below.

Written by Andy

 

Featured image credit: Krakenimages.com/Shutterstock.com

Also check out the MoneyUnshackled YouTube channel, with new videos released every Wednesday and Saturday:

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Is P2P Dead? Zopa Betrays Customers As It Exits Peer-To-Peer Lending (Alternative P2P Platforms)

We’ve been running Money Unshackled for close to 4 years now, and if you’ve been following us from the beginning, you may remember that we used to promote peer-to-peer lending (P2P) as a great way to make excellent investment returns of around 6 or 7%.

During those good times we would recommend – for want of a better word – that every investor should consider having some peer-to-peer loans in their portfolio. But in 2022, should investors continue to invest in P2P loans?

Peer-to-peer lending really was an incredible way to get a good return on your money for relatively low risk. Unlike the stock market where the market value of your investments fluctuates massively on a day-to-day basis, peer-to-peer lending generally provided stability and excellent interest payments, which when left to compound would enable your investment to steadily grow more or less in a straight line.

Most of the British public are risk averse and shy away from the stock market, so that steady growth from peer-to-peer was perfect for them, which was why Zopa – one of the leading peer-to-peer providers – was able to lend out over £6billion and had 90,000 investors over 16 years.

Until recently, it looked like the peer-to-peer industry was going from strength to strength, which culminated in the 2018 IPO of Funding Circle for £1.5 billion.

But in 2020 trouble began to brew. The Covid pandemic and various government actions provided serious challenges to the peer-to-peer industry. In December 2021, Zopa – which was in fact the world’s first peer-to-peer lending provider and survived the 2008 financial crisis – announced they were closing this part of their business, which we’re calling a betrayal of their customers.

In this post, we’re going to take a look at what happened at Zopa and before them RateSetter, and what has been happening generally in the peer-to-peer industry. We’re going to look at the current state of the peer-to-peer lending market, and if you’re looking for a new platform to replace Zopa or you’re completely new to peer-to-peer lending, we’ll suggest some alternative platforms to invest your cash. Now, let’s check it out…

And while you’re here, check out the MU Offers Page which including £50 cash bonuses, FREE STOCKS from Freetrade and Stake, and Stockopedia 25% discount & FREE trial.

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What Happened With Zopa?

On Tuesday 7th December an email hit my inbox stating that after 16 years of peer-to-peer consumer investments at Zopa, they’ve taken the ‘difficult decision’ – their words – to close this part of their business. And to make the process as easy as possible for their customers Zopa Bank will be buying the entire loan portfolio at current face value without any of the fees you’d normally pay for a loan sale.

Now, doesn’t that sound awfully nice of Zopa – they’ll buy your loans at face value? And, just in case that sarcasm isn’t clear, let me say it another way. Zopa are forcefully buying the existing loans off their customers at their so-called face value and word it as if they’re doing their investors a favour.

The first problem we have with this is that collectively these older loans will be averaging a return of around 5% or more. If the loans had a market value, it would exceed the face value because interest rates today are lower than the interest rates on many of these existing loans. The dilemma investors now face is finding a new home for their money, which pays a similar rate of interest.

The second problem we have with this is that they’re selling the entire loan book to Zopa Bank – the very bank that they were able to establish over the last few years on the back of their successful peer-to-peer customers. Call us cynical but it sure as hell looks like they’ve been planning this since they first decided to launch a bank.

Why Zopa Are Closing Peer-To-Peer

In their words, “over the last few years, customer trust in P2P investing has been damaged by a small number of businesses whose approach led to material losses for customers investing in those platforms. Linked to this, the changing regulation in the sector has made it challenging to grow and remain commercially viable. We’ve therefore decided to fully focus on Zopa Bank and we will be closing the P2P business with effect from 7 December 2021.”

We have no reason to doubt that this is mostly true but what they don’t say – and this is speculation on our part – is that they can’t be bothered with the hard work and inefficiencies involved in raising capital from retail investors via peer-to-peer lending.

Instead, they have Zopa Bank, which can more easily lend without the cost and hassle of waiting for customer deposits. What most people don’t realise is that banks have a licence to create money without needing to find it first from savers or investors.

There’s an interesting article on Investopedia that explains why banks don’t need your money to make loans, which we’ll link to down below for some bedtime reading, but the bottom line is that banks lend first and look for reserves later. Or in other words, since Zopa launched a bank, the writing has been on the wall for its peer-to-peer business.

News just in – whilst we were filming, on the 14th of December, we got an email from Lending Works saying they too are closing their retail investor arm of the business. Another one bites the dust!

The Peer-To-Peer Lending Industry Is In Disarray

Some of the less well-known and in some cases nefarious peer-to-peer platforms have previously collapsed and entered into administration, which was referred to by Zopa as a reason why they chose to exit the peer-to-peer business.

However, we doubt that these platform collapses alone have been the main factor in the damage caused to the industry. The loss of industry giant RateSetter and the halting of lending by most major platforms, including the industry leader Funding Circle, has arguably caused more problems, leading to lost faith of investors.

RateSetter, which was the third biggest platform at the time, had a similar fate to Zopa. At the tail end of 2020, Metro Bank acquired RateSetter and at the beginning of 2021 they purchased the RateSetter loan portfolio, and the industry lost one of its best platforms.

When Covid struck in March 2020, major players like Funding Circle stopped lending investors’ money, instead choosing to only lend government funds via schemes designed to prop up failing businesses. In this way, they took the easy route, and realised they didn’t need investors anymore.

A Funding Circle representative told Peer2Peer Finance News that there had been no change to its plans in light of the Zopa news, adding: “We’re still planning to review retail lending once the government-backed Recovery Loan Scheme ends in June.”

We’re expecting Funding Circle to follow suit and also close the peer-to-peer side of their business.

Another major reason for the deterioration of customer faith was the sudden freezing of secondary markets, which meant investors could not sell their loans. For sensible investors this wasn’t a problem because they were prepared to lock up their money for the duration of the loans – often up to 5 years.

But many other investors took the secondary markets for granted and foolishly thought it was guaranteed. Perhaps most peer-to-peer platforms overstated how liquid the loans would be, but in fairness not many would have predicted the scale of the panic that Covid caused.

Has P2P Lending Lost Its Shine?

In addition to the difficulties we’ve already mentioned for the industry, we also think that the interest rates being offered by the peer-to-peer platforms are getting dangerously close to being too low and not worth the hassle or risk for investors.

We recall seeing rates being offered between 6-7% prior to the pandemic but now the norm is around 4%.  Don’t get us wrong, we fully expected rates to drop when the Bank of England lowered the base rate, but this was only lowered from 0.75% to 0.10%, so we’re not sure why the peer-to-peer rates dropped so harshly.

Investors are getting a worse return after the pandemic but there is potentially also an increased risk of losses. We believe that investors want bigger returns and so have gone elsewhere, but at the same time the interest rates being offered aren’t high enough to tempt traditional savers away from the comfort zone of a bank account or Premium bonds. The peer-to-peer platforms have found themselves in no man’s land – pleasing nobody.

Moreover, once upon a time, the media would raise awareness for the peer-to-peer industry as an innovate way to grow your money but now that’s all died down. It seems that peer-to-peer was the cool kid for a few years but now people are more interested in meme stocks and going to the moon with crypto.

Should You Still Invest In P2P Lending?

We think there is still a huge need for peer-to-peer lending. Let’s be frank, the rates offered by banks on a Cash ISA or Savings account is atrocious – you can currently expect around 0.6% if you shop around.

Premium Bonds aren’t much better; the prize rate is now 1% but with average luck you will probably get nothing, depending on how much you have saved.

So, with most peer-to-platforms paying around 4% you are at least defending your wealth against inflation, and you might see some real growth if inflation drops back down to normal levels.

Crypto might be making all the headlines but they’re hardly comparable asset classes. Crypto is more akin to gambling and you could make a lot of money or just as likely lose a lot of money.

A diversified global stock market fund should beat peer-to-peer in the long-term but expect a bumpy ride, plus with company valuations sky-high right now, you’d be forgiven if you consider the stock market too high risk.

And finally, the peer-to-peer industry doesn’t get enough credit for surviving an apocalyptic event like the pandemic. The government literally forced businesses to shut-up shop for months on end and ordered people to stay at home, and yet from first-hand experience, our peer-to-peer investments continue to perform.

For the platforms we were using, even when a platform has had to call in the administrators or voluntarily exited the industry, we have received every penny back of our investments without any problem. While that’s not a guarantee of the future, it does reflect well.

The Best P2P Lending Platforms For 2022

Despite the permanent loss of 2 of the 3 biggest platforms, there is still plenty of choice of platforms for investors. If and when Funding Circle start lending retail investors’ money again, they will be the biggest platform by a country mile. We’ve also had a good experience with Funding Circle in terms of interest earned, with an average annualised return of 5.8%, so fingers crossed that they stick around.

But if you want to start investing straight away, then you have the likes of Assetz Capital, Loanpad, easyMoney, Kuflink, ablrate, and others. Remember, diversification is key, and that applies to both the number of individual loans and to the platforms themselves. We encourage you to spread your money over multiple platforms to reduce the platform risk.

Many of these platforms are even offering new customer welcome bonuses when you use the special referral links found on the Money Unshackled Offers page.

Generally, they each pay £50 to new customers just for making a small investment, and you will of course earn whatever interest rate they’re offering on top, so definitely worth snapping up multiple bonuses if you plan to sign up anyway. These welcome offers come and go, so it is worth checking out the Money Unshackled Offers page for the latest offers.

At time of filming, Assetz Capital offer 3.75% on their Quick Access account, 4% on their 30-Day Access account, and 4.10% on their 90-Day Access account. We’ve used Assetz Capital for about 4 years now and really like their website and offering. However, we think the naming of their accounts is misleading as these access times can only be expected in “Normal Market Conditions”.

Loanpad is another platform we’ve had a very positive experience with. They’re currently offering rates of 3.0% and 4.0%, pay daily interest, have an easy-to-use website, and we really like their approach to protecting investors’ money. In the case of a loan default, there is a hierarchy in which losses are incurred. Loanpad investors will be repaid before the other lending partners which are big institutional investors, and before that you are protected by the borrowers’ equity. All loans are secured by property that they can sell to recover your money if the loan defaults.

Have you invested in P2P Loans and how has your experience been? Join the conversation in the comments below.

Written by Andy

 

Featured image credit: Lane V. Erickson/Shutterstock.com

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Why Is Getting Rich So Difficult?!

Almost everyone wants to make more money and get rich, but it never happens for most people. In this post we’re going to be looking at why it’s so difficult to get rich and we’ll even throw in some tips on how you can do it.

Amassing and keeping wealth is one of the hardest things you can set out to do – but is it easier or harder to get rich today than it was in the past? We’re also going to give our take on this. Now, let’s check it out…

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What Is Rich?

Although most people dream of becoming rich, most of us have never given two thoughts as to what rich actually is! It’s probably fair to say that most picture being able to buy luxury items like yachts and fast cars without batting an eye. That is certainly on the rich scale but where is the threshold that divides ‘not rich’ and ‘rich’?

Everybody will have their own definition, but we define rich as the ability to live comfortably without having to work, as your lifestyle is funded by assets you own – what we call financial freedom or financial independence. High levels of financial wealth provide wealth of time and better health (in theory).

Why A Job Probably Won’t Make You Rich

We’ll keep this section brief as we’ve done enough job bashing over the years, but the fact of the matter is if you want to become rich it’s unlikely that a job will suffice.

Most jobs don’t remunerate you enough to achieve wealth in a short amount of time. Even in a well-paid job it often takes a few decades to squirrel away enough to quit work. Having a high income without free time is not rich by our definition.

Moreover, the chances are that you didn’t start out in that high-paid job. It usually takes a significant amount of time working your way to the top, so even when you achieve the job that pays well it will take years of continuing to work before you can enjoy the fruits of your labour.

Doctors for instance spend around 10 years studying and training before they get a real doctor’s salary. After a decade, their financial journey is only at step 1.

So, in essence while you can eventually become rich slaving in a job, it will take more time than most people are understandably willing to give.

Can Investing Make You Rich?

Investing in the stock market is often considered to be the only sure-fire way to get rich by a lot of people. But there are two major problems: Most people are not investing enough, and the compounding effect takes years if you don’t have much money to start with.

Here’s a quick and realistic example of building wealth through investing:

We think financial freedom is achieved for a single person once they have around £30,000 annually in passive income, and therefore need an investment pot of around £750,000. This can be achieved by investing £500 a month, earning 8% returns, less 3% inflation, increasing the monthly contributions in line with inflation, and investing for a little over 33 years. And herein lies the problem; that’s a long game for most people to play.

This leads many people to try and take shortcuts, which only worsens their financial position. Short-term trading without the skills to do it will likely hurt you. We’ll probably get hate for this one but speculating on crypto or meme stocks is essentially gambling. It might make you rich…. possibly, but it’s not comparable to a safe, steady, and boring index investment that has a long historical record of success.

To sum it up, investing will make you rich eventually, or at the very least will make you richer and more financially comfortable. And additionally, investing is essential for staying wealthy – no matter how you make your money, whether it’s a job, a business, an inheritance, or whatever, that money needs to be invested otherwise you might not be rich for very long.

You’re Too Busy Firefighting To Get Rich

If jobs don’t cut it, hopefully we’re in agreement that owning a business is your best chance of getting rich in a short timeframe. However, starting a business seems like an impossibility for many because the journey is fraught with problems and risks.

The biggest problem of all is most people are living permanently close to the breadline and are too busy firefighting on a day-to-day basis. Their focus is on covering their immediate living expenses, such as keeping a roof over their family’s heads, so that they have zero spare time to ever invest in a business or side hustle that ultimately could change their life.

If you’re working a full-time job or even two jobs just to survive, even if you have time in the evenings, your best mental energies have already been spent. If you’re going to build a successful business, it’s going to require enough of your quality attention.

You might even have other responsibilities, like children or elderly parents to care for, which makes working on a business near impossible.

Very few people are willing to put in the work and make the sacrifices. When you’re young it takes a special kind of person to neglect friendships and relationships to focus their time on a business, especially if they’re working another job in the day. As a parent would you be willing to miss your kids Sunday league football game or school play? Most would consider that too much of a sacrifice!

One solution to this problem is to concentrate on your career a little longer and work towards a promotion and a payrise, and then with the increased pay aim towards going part time to perhaps a 4-day week. This new free time can be reinvested into a side hustle.

I did this but Ben (MU Co-founder) went even further, going from 5 days to 4 days to 2 days to none. But he also invested in rental property, which gave him a small secondary income to supplement my reduced salary. He established the rental properties with a mixture of existing savings and remortgaging his home mortgage to extract a significant wad of cash. Learn more in this post.

Need Money To Make Money?

In an extension to the previous point, most people don’t have the finances to fund a start-up business, but lack of finances may not be the dream killer in the way you think it is. You regularly hear the excuse from those that never do it, “that it takes money to make money.”

Having ourselves started a small business we can safely say this isn’t completely true although money does make it easier and certain types of businesses might be unachievable without a larger budget. Although, even when money is required, a good business will attract funding from outside sources if you make it happen. But crucially many businesses are possible on a shoestring.

A lot of businesses can be started with just a tiny sum of money and a lot of your time. The real financial problem is how to find money to live on while your business is in its infancy and not producing enough profit, if any.

Personally, we ran our business as a side hustle until it started producing a moderate income. Now that we’re running the business full-time, we have no choice but to draw a salary and dividends, but we know this is financially handicapping our business, hence why it makes getting rich so difficult.

If we happened to be on Dragons Den, we would be condemned for doing this, but we have no idea how the Dragons expect the entrepreneurs to live without any income.

Psychological Fear Of Losing Money

Most people fear losing money, which is why they avoid investing. There is a culture in the UK, encouraged by poor education, that pushes people to take safe harbour in a bank account rather than risk their money by investing it.

And if investing in public stocks is seen to be too risky, then spending money on a business is close to impossible for most people mentally. Even when you opt for starting a business on the cheap it will require a little upfront investment and reinvestment of profits.

It’s understandable to fear start-ups as each and every penny spent could be throwing money away if it doesn’t result in increased revenues. The worse your financial situation the more difficult it becomes to make the required investments.

No Mentors & No Connections

Wealthy people seem to be as rare as unicorns. People tend to hang around with similar people to themselves, which makes it difficult if you’re trying to break into the elite group.

If you want to achieve something in life, whatever that might be, it’s wise to take note of how other people achieved what you want and to replicate their success. Whatever you’re trying to do, someone has walked a similar path before.

A mentor will be able to show you the ropes, will guide you, and will likely be able to connect you with the right people. If we use another Dragons Den example, many of the entrepreneurs give away huge amounts of equity – not necessarily for the money but for the experience, guidance, and connections of the Dragons. The Dragons might be able to get them a crucial meeting with a key buyer that could supercharge their business overnight.

If you’re like us and unfortunately don’t have any personal mentors, then take advantage of the experts that are publicly operating in your space. Everyone these days is sharing their knowledge online. Love him or hate him, the best mentor available to us was Robert Kiyosaki, who spoke to us through the book, Rich Dad Poor Dad.

Wealth Is In Houses

In this post we reported that most wealth in the UK is stored in property and pensions. We all know that property prices are increasingly becoming more expensive and that the housing market is excluding those at the bottom, which only widens the rich-poor divide.

It’s not uncommon for someone to say that their house earned more than they did in any given year. Although there are some advantages to renting, generally you will be better off financially if you own property.

The longer you are not on the property ladder the more difficult it becomes. If your salary goes up 10% from £25k to £27.5k, but house prices also go up 10% from £250k to £275k, then your goal is forever out of reach because banks won’t lend to you beyond a certain salary multiple.

Lifetime ISAs are potentially a good way to save for a house deposit as the government will top up your contributions by 25%. Check out the Lifetime ISA guide for more info and the best providers.

Business Taxes

Tax is obviously necessary to run a country, but small start-ups need tax breaks to get off the ground, which are few and far between.

Individuals get a personal allowance, which protects their first bit of earnings from being taxed, but limited companies don’t get a tax-free allowance. They incur 19% corporation tax from the first tiny bit of profit, which is demoralising. You’re trying to get the wheels turning and the government are pushing you back in the wrong direction.

Has Everything Already Been Invented?

Now for a couple of counter points. Funny man Karl Pilkington said, “we’ve run out of new inventions cos everything has been invented.” He said it was so much easier in the past because as soon as you needed something, that was a new invention as it didn’t exist yet. In one of his TV shows he said something along the lines of if you have a bowl and wanted to scoop food from it you would have invented the spoon. It was that simple!

Karl is a comedy genius but he’s forgetting in this case that today the rate of innovation is only increasing, which means it must be getting easier. You may well be watching this video on a little device that fits in your pocket, can communicate with anyone on the planet and gives you the world’s information at your fingertips.

Access To Suppliers, Customers, Jobs, And Information Is Better Than Ever

Those inventions – being a phone and the internet – have also made the world smaller. For those that choose to, you can locate a supplier or manufacturer who could bring your idea to life. This is a quick Google search away, whereas in the past we can only imagine this came at great effort and expense.

You can take niche ideas and reach your customers globally. Ideas that were impossible before because of a small local market that didn’t offer enough demand have now become viable. No longer do you have to waste money on untargeted advertising, which ultimately failed, when you can now pinpoint your exact target audience… and it’s only getting better.

On the jobs front, we all have better access to education than ever before. Although, we still think there is a long way to go in making education affordable it’s undeniable that higher education boosts earnings as evidenced by data provided by the ONS.

For those educated to an A to C grade GCSE standard, gross annual earnings level out at around the age of 30 at an average of £19,000. For graduates, their annual income rises at a rapid rate as they get older, before plateauing around the age of 39 at an average of £35,000. The key to turning this into wealth though lies in investing what you’ve earned.

Why do you think getting rich is so difficult? Join the conversation in the comments below.

Written by Andy

 

Featured image credit: Fida Olga/Shutterstock.com

Also check out the MoneyUnshackled YouTube channel, with new videos released every Wednesday and Saturday:

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AJ Bell Launches Free Investing App / Tax Hike Scrapped / Brexit Win

Hello and welcome to Money Unshackled News. The headlines:

  • Proposed Capital Gains Tax hike scrapped by Rishi Sunak. The Office of Tax Simplification had previously suggested it should be aligned with income tax rates.
  • Mortgage lender, Accord Mortgages, part of Yorkshire Building Society, will no longer require a minimum income for buy-to-let landlords, opening the door to potential investors. Previously landlords had to earn £25,000 in addition to rental income.
  • AJ Bell to launch free investing app called Dodl, in acknowledgement that commission-free trading is the future.
  • Interactive Investor will be sold for £1.5bn to British fund management giant Abrdn. CEO promises customer pricing will remain the same.
  • You can now get up to £50 cashback in thousands of shops without buying anything. More retailers are expected to join as Cashback Without Purchase scheme is rolled out further.
  • In a move seized by the UK government as a post-Brexit vote of confidence in the City of London, Royal Dutch Shell will move its headquarters and tax residence to the UK and change its name.

We’ve gathered all the latest money news from the past few weeks that matter most to your finances. Let’s check it out…

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Capital Gains Tax Hike Scrapped

Let’s kick-off with a financial rarity – some good tax news. Rishi Sunak has shelved the proposal to hike capital gains tax, pointing to the “burden” it would place on HMRC. Interestingly, the burden it would place on the public wasn’t mentioned as a motive. At the end of 2020, the Office of Tax Simplification (OTS) proposed to the Chancellor that the Capital Gains Tax rates should be aligned with income tax.

Capital gains tax is charged at 10% for basic rate taxpayers and 20% for higher and additional rate taxpayers, with rates of 18%and 28% on residential property.

In contrast, income tax is charged at a basic rate of 20%, rising to 40% and 45% for higher and additional-rate taxpayers. Therefore, an alignment of these tax rates would be a major blow.

From the moment the tax hike proposal was made we thought it was utter madness. In our view, as a minimum everyone should have the ability to preserve the buying power of their financial assets. But with inflation constantly nibbling away at the real value and then a huge tax payment of up to 45%, we can’t imagine anybody would want to attempt to build wealth and prosperity in the UK as this tax would simply punish success.

Hargreaves Lansdown commented, “There would have been huge unintended consequences of the proposed CGT changes, because people would have been artificially trapped holding assets they didn’t want – because the tax benefits of hanging onto them until they died would have been too good to lose. This would mean, for example, buy-to-let investors refusing to part with properties they don’t really want in an effort to avoid CGT, while first time buyers struggle to get on to the property ladder.”

It was also proposed that the Capital Gains Tax annual allowance was lowered but thankfully this suggestion has also been put on hold.

Perhaps the worrying part of this proposed tax hike being scrapped is the reason given, with wider policy trade-offs and the burden on HMRC being cited. There seems to be no concern for doing the right thing. We fear we haven’t heard the last of this story.

Mortgage Lender, Accord Mortgages, Will No Longer Require A Minimum Income For Buy-To-Let Landlords

In other good news – that’s 2 out 2, so don’t expect many more – Accord Mortgages, the intermediary-only lender of Yorkshire Building Society, will no longer require a minimum income for buy-to-let landlords.

Previously, a landlord would have needed to earn at least £25,000 on top of any rental income to qualify for its buy-to-let mortgages. The move is designed to help more landlords to qualify for its mortgage products.

However, in cases where landlords are using earnings from outside of their property portfolio to top up any shortfall in the rental calculations, Accord will continue to specify a minimum income of £50,000 per year.

Generally, first time buyers might struggle to buy a rental property if they don’t already own their own home. But now, on a case-by-case basis, Accord will also consider lending to first-time buyers who want to become landlords.

According to the Telegraph, Accord has followed NatWest, which eased its rules earlier this year. Around a quarter of lenders now no longer require any minimum income for borrowers to qualify for a buy-to-let mortgage.

The relaxed requirements will particularly help retired freelancers, consultants and business owners, as well as those with smaller pensions, who were previously blocked from getting a loan because they lacked the annual income to qualify.

It also means that somebody who may never have earned good money but has still managed to build up a large amount of equity in their own home, could release some of that equity and start investing in buy-to-let property.

AJ Bell To Launch Free Investing App

We’re on a roll, so let’s keep the good news flowing – AJ Bell appears to have conceded to commission-free investing with the planned launch of a new app called Dodl. The name might be silly, but the fees will be competitive with the existing commission-free apps.

There will be no dealing fees, but there will be an annual fee of 0.15% of the portfolio’s value with a minimum of £1 per month. There will be no additional charges for the use of a tax wrapper, so it will be amongst the cheapest providers for ISAs, LISAs, and SIPPs.

AJ Bell is aiming to launch Dodl during the first half of 2022. The disappointing news, however, is that Dodl will have a very limited investment range. The platform will offer just 50 UK shares and 30 funds at launch, with aims to add US shares later down the line. Frankly, with such a small investment range it’s launch might be a bit of a damp squib.

AJ Bell are clearly struggling to make the shift to commission-free investing in one fell swoop, probably in fear that it will cannibalise their existing business.

Over in the US, all the major players swiftly cut their trading commissions to zero in order to remain competitive. We have long expected the UK market to do the same but equally thought it would take some time.

While we don’t think Dodl will be a game changer at launch, the competition is heating up, which is only good news for us as investors. As we always say, fees matter, so you’ve gotta keep driving them down.

Interactive Investor Will Be Sold For £1.5bn

In other investment platform news, Interactive Investor will be sold for £1.5bn to British fund management giant Abrdn.

Following weeks of speculation of a deal, the board of each firm said Abrdn would purchase 100% of Interactive Investor’s share capital, including those owned by its majority shareholder JC Flowers.

Abrdn said, “that the direct investing market has grown at an annual rate of around 15% and is expected to continue growing at a similar rate in the future driven by accelerating demographic and structural market trends”.

In an email customers received, Interactive Investor stated that pricing will remain the same. “We are committed to our transparent, fixed fee subscription pricing.” We’re glad that the fixed fee pricing model won’t increase but following on from the last news point, we can only see downward pressure on their trading charges. If they don’t eventually take an axe to those commissions, surely they will begin to haemorrhage customers to the platforms that do.

We’re not privy to the finances of Interactive Investor as it was a private company but the increasingly intense competition between platforms forcing them to lower fees cannot make the platforms good investments themselves when they have such sky-high valuations.

For example, Freetrade have just undertaken a fresh round of funding which has valued the company at £650m, which is an eyewatering sum considering the company is projecting a loss of £26m before interest, taxes, depreciation, and amortisation. The new valuation represented a multiple of 13 times projected 2022 revenues, never mind profits.

£50 Cashback In Thousands Of Shops Without Buying Anything

In our last news episode, we reported that in the past 5 years, 660 banks per year were closing in the UK. With closures expected to continue at pace, this would obviously make it more difficult to access cash.

Moreover, thousands of cash points have disappeared during the pandemic with many not being replaced. Around 8,000 ATMs have been switched off in the past 18 months, according to research by consumer group, Which? – equating to a loss of around 13% of all ATMs.

Personally, we’re not too fussed about access to cash because we, like most younger people, have fully embraced the cashless society where we can. In fact, shops and businesses that don’t accept card annoy us way more than the limited access to ATMs does.

But if you still need cash, fear not, because you can now get up to £50 cashback in thousands of shops without buying anything. Earlier this year, the government relaxed rules on shops offering cashback.

Under EU law, a business wanting to provide cash to customers had to register with the Financial Conduct Authority, a lengthy and expensive process. But new post-Brexit deregulation cut that requirement. More than 1,000 retailers are already part of the Cashback Without Purchase scheme, with 1,000 more expected to join by the end of 2021, according to The Sun.

Royal Dutch Shell Will Move Its Headquarters And Tax Residence To The UK And Change Its Name

In another Brexit win – honest we didn’t plan this – Europe’s biggest oil company, Royal Dutch Shell will move to London and change its name.

Royal Dutch Shell announced a major overhaul of its legal and tax structure that will see the company walk away from the Netherlands. Shell will drop its complex dual share structure and move its headquarters and tax residence to the UK.

Shell said the simplification was designed to strengthen its competitiveness and accelerate both shareholder distributions and the delivery of its strategy to become a net-zero emissions business.

Shell’s decision to quit the Netherlands follows similar exits by Unilever and RELX. According to Sky news, part of the impetus for Unilever’s move – and, it is thought, that of Shell’s – is the 15% withholding tax levied by the Dutch government on dividends paid by Dutch-domiciled companies.

Under the current arrangement, holders of Shell’s ‘A’shares pay the tax, but payments for the ‘B’ shares are routed through Jersey, avoiding the tax. In March this year, however, the Dutch government announced plans to tax dividend payments to low-tax jurisdictions, which would mean the tax would also apply to ‘B’ shares. This may well have concentrated Shell’s mind.

As part of the move, the company will be forced to change its name, since it will no longer qualify for ‘Royal’ designation. Subject to shareholder approval, the Board expects to change the company’s name from Royal Dutch Shell plc to Shell plc.

Do you care that cash machines are disappearing? And what do you make of Shell becoming British? Join the conversation in the comments below.

Want to grab £50 free cash? Or how about some free stocks worth potentially hundreds of pounds? Simply use the Offer links on the Offers Page for loads of free goodies.

 

Written by Andy

 

 

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I’ve Made £60k In 6 Months By Investing!

We’re always saying how important it is to own investments for wealth-building. But it’s one thing to hear the theory, and quite another to experience it first-hand.

Over the last 6 months I’ve made £60,000 passively, just by being an investor in stocks and property. And that is not including the value of my home either, which has also gone up significantly in this fast moving market, but which I don’t count as a financial investment.

Meanwhile, the vast majority of the UK public continue to fail to own ANY financial assets, which include investments like stocks and property held solely for the purposes of cash generation and capital growth.

In this video we’ll show how important it is to be in the market during the best days, and how bad days matter very little if you’ve played the long game.

We’re also going to address exactly HOW I’ve managed to make way more from investments than I ever could from working 40-hour work weeks. We’ll look at sensible ways that you yourself can invest for the long-term to get maximum exposure to the best trading days.

We’ll also briefly address the success of the crypto craze over the last few months. And finally, we’ll look at just how bad the investing culture still is in the UK. Let’s check it out!

Featured in this video is InvestEngine, a platform that lets you build a portfolio of fractional ETFs for FREE. Just set the percentage allocation for each ETF and you’re done – say goodbye to spreadsheets! And rebalancing your portfolio is as simple as couple of clicks. InvestEngine also offer a managed service at JUST 0.25% per year – the lowest we’ve seen.

And, new users to the InvestEngine platform will receive a £50 welcome bonus if you open an account using this offer link and deposit at least £100.

Watch The YouTube Video > > >

Written by Ben

 

Featured image credit: @Mehaniq via Twenty20

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Why THESE 3 Stocks Have Me Rushing To Buy!

A handful of stocks have been flagged by my Stockopedia filters that I’ve felt compelled to buy – all big American household names.

With the market priced as highly as it is, we’ve been cautious in recent months about buying stocks. But while the S&P 500 seems crazily high right now it’s simply not true that the whole market is overpriced – there’s some genuine bargains out there on some brilliant companies.

In this video we’re deep diving into the fundamentals of 3 wicked stocks that I’ve just added to my portfolio. You can decide for yourself if you want to buy them too! Let’s check it out…

Watch The YouTube Video > > >

Written by Ben

 

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