Ethical Investment Options

Three Ethical Investment Options For You to Consider

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More and more people are looking to invest ethically nowadays. As well as wanting decent returns from their money, they wish to ensure it is being used for purposes that will benefit the planet and local communities too.

So today I thought I would spotlight three ethical investment opportunities of which I have some experience and/or knowledge. There is nothing particularly scientific about this and I am certainly not saying these are the ‘best’ such opportunities. But based on my personal experience and feedback from colleagues and PAS readers, I am happy that they merit the ‘ethical’ description and are well-established and reputable.

Nutmeg Socially Responsible Portfolios

Regular readers of PAS will know that I am a fan of the robo-adviser platform Nutmeg and have a fairly substantial ISA investment with them.

As you probably know, an ISA is a tax-free wrapper that can be used for a range of investments. Every year you get an annual ISA allowance, which is currently £20,000. If you exceed your annual allowance (or invest it elsewhere) you can still invest in an ordinary Nutmeg account, which will be subject to taxation as usual.

Socially Responsible is an option you can choose for your Nutmeg portfolio (or one of them – you can have several). Your money is then invested in a managed, diversified fund which focuses on the environment, social values and good governance (ESG for short).

Nutmeg invest in exchange traded funds (or ETFs) that avoid companies engaged in controversial activities, while focusing on those that lead their peers on ESG. The screen capture below, taken from the Nutmeg site, shows the sort of things that are covered under ESG criteria.

ESG

As with all Nutmeg accounts, you can set your preferred risk level on a scale of 1-10 (you might like to check out this article in which I reveal why choosing a very low risk level when investing for the long term may not be the best idea).

There are, of course, management and other fees to pay. For Socially Responsible portfolios these fees are slightly higher than the standard Fully Managed portfolios, but still moderate overall. Example costs for a £5,000 portfolio are shown below. On the Nutmeg website [affiliate link] you can enter any amount and see the likely fees you would be charged over a year.

Nutmeg costs

  • You might wonder if choosing the Socially Responsible option means sacrificing performance, but Nutmeg say this is not the case. Since they started offering this option, performance has been roughly the same as their Fully Managed portfolios. Of course, the fact that charges are slightly higher means you may make a little less profit overall, but even so the difference should only be marginal.

For more information about Nutmeg, you may like to check out my in-depth review, which includes details of how my Fully Managed Nutmeg portfolio has performed since I opened it six years ago.

Assetz Exchange

Assetz Exchange is not an equities-based platform. Rather, it is a P2P property platform. I have been investing with Assetz Exchange since January last year and have gradually built up the amount I have with them (see below).

Assetz Exchange focuses on lower-risk properties, such as supported housing for people with learning difficulties or physical disabilities. Properties are bought jointly by investors under the usual crowdfunding/P2P model. Most are then leased to charities and housing associations. This means they are securely funded and there is a low risk of defaults.

  • Of course, defaults could still happen in certain circumstances – but as investors jointly own the property in question, ultimately you could still expect to get your capital (or most of it) back when the property is sold.

Although AE does also list some other types of property (e.g. show homes for new housing developments), you can of course choose which properties you wish to invest in. You could choose entirely charity/housing association projects – such as the one below – if you like.

Assetz Exchange project

I put an initial £100 into AE in mid-February 2021 and another £400 in April. In June 2021 I added another £500, bringing my total investment up to £1,000. Since I opened my account, my AE portfolio has generated £65.52 in revenue from rental and £70.97 in net capital growth, a total of £136.49. That’s a decent rate of return on my £1,000 (staged) investment and does illustrate the value of P2P property investment for diversifying your portfolio when equity markets are volatile (as at the moment).

I now have investments in 23 different projects and all are performing as expected, generating rental income and – in all but two cases – showing a profit on capital. So I am very happy with how this investment has been doing, and the fact that projects are generally beneficial to society as well.

To control risk with all my property crowdfunding investments nowadays, I invest relatively modest amounts in individual projects. This is a particular attraction of AE as far as I am concerned. You can actually invest from as little as 80p per property if you really want to proceed cautiously.

My investment on Assetz Exchange is in the form of an IFISA so there won’t be any tax to pay on profits, dividends or capital gains. I’ve been impressed by my experiences with Assetz Exchange and the returns generated so far, and intend to continue investing with them. You can read my full review of Assetz Exchange here. You can also sign up for an account on Assetz Exchange directly via this link [affiliate].

Abundance

Abundance is a well-established investment platform (launched 2012) for green energy projects. Cards on the table, I haven’t invested directly through them myself, but I do have friends and colleagues who have done so with good results.

Abundance offers peer-to-peer lending for green infrastructure projects to help combat climate change. You can invest in projects operated by businesses and also projects run by local councils. Business projects tend to be riskier but offer higher potential returns.

When I checked just now, there were two council projects offering annual returns of around 2% and three business projects offering returns of up to 9%. An example of the latter is Carbon Plantations, a project to fund new sustainable hardwood trees that capture more carbon and help regenerate farmland. This project was offering a return of 8% a year over a ten-year period.

One thing which put me off Abundance in the past is that the investments are typically quite illiquid. You were locked into an investment of (typically) 5 to 10 years, with interest paid annually (or more often) but no way of getting your capital back until the end of the investment period. In common with other P2P platforms, however, they now have a secondary market where investments can be bought and sold by members. Of course, there is no guarantee that anyone else will want to buy your investment if you need to sell up early or what price you will get for it.

On the plus side, if you want your money to be used for green, ethical purposes, Abundance certainly ticks that box. I also like the fact that there is a low minimum investment of just £5. There are no hidden fees, and you can invest tax-free within an IFISA if you like. As with all investments, money is at risk, and I highly recommend diversifying across a range of platforms and projects.

For more information about Abundance, do check out their website [non-affiliate link].

Closing Thoughts

In this article I have set out three different ethical investment opportunities for your consideration. While there are never any guarantees, if investing ethically is a priority for you, in my view they are all worth checking out.

As I always say, I am not a registered financial adviser and nothing in this post should be construed as personal financial advice. You should always do your own ‘due diligence’ before investing and seek professional advice if in any doubt how best to proceed. All investing carries a risk of loss.

As always, if you have any comments or questions about this post, please do leave them below.

Note: Articles on Pounds and Sense may include affiliate links. If you click through these and make a purchase (or perform some other qualifying transaction) I may receive a fee for introducing you. This will not affect the price you pay or the terms you receive.

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Is It Worth Waiting for Black Friday to Buy Big Ticket Items?

Is It Worth Waiting For Black Friday to Buy Big Ticket Items?

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Amazon Prime Day is over now and the next big shopping event is Black Friday, which this year takes place on Friday 22nd November. But in this time of rising inflation, is it sensible to wait until then for any big-ticket items you need?

My colleagues at Offeroftheday have been crunching the numbers, and their figures indicate that in these inflationary times, waiting for Black Friday might not be the smartest thing to do.

How Are Prices Changing?

Figure 1 (below) shows how prices from eight popular retailers on the Offeroftheday website, including clothing, home & garden and electronic retailers, have changed over the last 12 months. It reveals that during this time average prices rose by over 15%. As the chart shows, this is a significantly higher rate than the UK’s CPI inflation rate.

Figure 1

While the chart does show a dip in prices around the Black Friday period in late November 2021, the data suggests that when prices are rising rapidly (as now) it may still be better to buy as early as possible rather than wait months for possible Black Friday discounts.

Why Are Prices Rising So Fast?

There are various reasons for the rapid rise this year in consumer prices. One is the record increase in energy bills. This has had a knock-on effect on retailers, who are now paying substantially higher running costs for their shops and factories.

A further factor is the big increase in fuel prices, adding to distribution costs. Inevitably, some of these increased costs get passed on to the consumer. The average pump price in June 2021 was 130.73p. Compare this to June 2022 where the average price was 190.93p, a jump of 46% in just twelve months.

Other factors causing prices to rise include logistical issues (e.g. HGV driver shortages), wage rises, shortages of goods and raw materials caused by trade barriers and the war in Ukraine, the effects of extreme weather (possibly caused by climate change), the ending of support schemes for businesses introduced during the pandemic, and so on.

So Is Black Friday Worth Waiting For?

In November 2021, Offeroftheday found the mean average discount of all products on the website was 5.6% compared with the previous month. Given the current trend in pricing shown in Figure 1, by Black Friday November 2022 this discount would need to be significantly higher than that to offset the new base prices.

So does this mean you should do your shopping now? Well, yes and no. Black Friday has a focus on high-ticket items. It is one of the few days when the Apple Store has discounts, and many retailers cut their prices by 50% and more on some electronics and white goods. Even allowing for rising inflation over the next few months, those are significant savings.

While in previous years prices on Black Friday fell far below any other time of the year, Figure 1 shows that Black Friday 2021 only briefly managed to offset price rises, effectively turning the clock back a few months at best. Not surprisingly, many sources reported a decrease in total spend on Black Friday 2021 compared to the previous two years. While some of this can be attributed to lockdown measures and furlough, the data shows that Black Friday discounts simply were not as impressive compared to previous years, especially compared to the prices being charged just a few months earlier.

Black Friday 2022 and Beyond

As mentioned above, Black Friday 2022 falls on Friday 25th November. However, If cost increases continue on their current trajectory, prices could rise as much as 7% between now and November. This means that a product averaging £500 today could cost upwards of £535 in five months time.

Some products will undoubtedly see big discounts on Black Friday 2022. But with inflation currently approaching 10%, we can expect average prices from retailers to continue rising overall. If you’re on the fence about a big purchase, it may therefore be worth buying now rather than hoping for big discounts later in the year. Once we pass August/September, it might be worth holding out for a month or two to reap the benefits of Black Friday discounts. But there is, of course, no guarantee that the particular product you want will be discounted for Black Friday, or whether any discount will be enough to offset price rises caused by inflation.

Black Friday is still the largest shopping day of the year for retailers, so expect to see some big discounts and eye-catching offers. But if it is anything like last year, average discounts may not be as impressive as in years gone by, and for many items you may actually get better prices if you buy now.

  • Although in this post I have focused on big ticket items, it should be said that Black Friday can also be good for buying cheaper items at a discount. I am thinking here of consumables such as ink cartridges, stationery, clothing, cosmetics, food and drink, and so on. Black Friday can present opportunities for stocking up on such items at bargain prices.

Thank you to my friends at Offeroftheday for sharing their data with me. Please do check out their website for great offers from a wide range of leading online retailers.

As always, if you have any comments or questions about this post, please do leave them below.

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My short break in Criccieth

My Short Break in Criccieth

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I recently returned from a three-night break in Criccieth. This is a village on the Llyn (or Lleyn) Peninsula in NW Wales. It was the first time I had stayed in Criccieth, although I have visited a few times before.

The place I stayed was a self-contained, self-catering apartment facing the sea-front. I booked it using the website Booking.com. I’ll say more about the accommodation below.

Criccieth is by the coast, roughly half way between Porthmadog (home of the Ffestiniog Railway) and Pwllheli (famed for its Butlins camp, now run by Haven Holidays). Here is a map of the area from Google Maps.

Accommodation

As mentioned, I stayed in a self-catering apartment in Criccieth. This was on the second floor, with a view of the sea from the kitchen/lounge. The owners’ name for the apartment is Foel Wen.

The main Criccieth beach was ten minutes’ walk away, but I was happy where I was. It was quiet, there was plenty of free parking on the road outside, and while it wasn’t the most stunning length of beach, there was a small promenade which was pleasant to walk along in the morning or evening. You can see a photo of the beach opposite my apartment below.

Criccieth beach

You can read more about the accommodation on this page of the Booking.com website. It had a lounge/kitchen at the front, a small bedroom with bunk beds in the middle (which I didn’t use) and the main bedroom at the rear. The bathroom was next to the small bedroom; it was quite compact but fine for a short stay. There was a good-quality modern electric shower but no bath.

The kitchen area was well equipped with an electric cooker, microwave, fridge/freezer, dishwasher, toaster, sink, and so on. On my first and last nights I cooked for myself (Criccieth isn’t exactly crammed with eating places) and on the middle night I got fish, chips and peas from a local takeaway, Castle Fish and Chips, which was excellent 🙂

The apartment had free wifi which worked perfectly during my stay (not always the case in my experience). The location was quiet and peaceful, and I slept very well.

Financials

As Pounds and Sense is primarily a money blog, I should say a word about this.

I paid £355 for my three-night stay, which works out to around £118 per day. I thought that was very reasonable bearing in mind the high standard of the accommodation and the convenience of the location. Obviously as this was self-catering no meals were included, but there was more space and better facilities than you would get in a comparable hotel or B&B.

Things to Do

I won’t give you a blow-by-blow account of what I did while I was there, but here are a few highlights.

Portmeirion

Portmeirion

This is about 15 minutes’ drive from Criccieth (or a short train journey to Minffordd and a ten-minute walk). I spent my first morning here.

Portmeirion is a beautiful Italianate village created by the architect Clough Williams Ellis. These days it is probably best known as the location for the 1960s cult TV series The Prisoner, starring Patrick McGoohan. It is a wonderful place to while away a few hours.

There is an admission fee to get into Portmeirion, At the time of writing (July 2022) this is as follows:

  • Adult £17.00
  • Concessions £13.50 (this applies to anyone aged 60+ or a student with a valid student ID)
  • Children £10.00 (5-15 years)
  • Children (under 5 years) Free

There are also discounted family tickets for various permutations of adults and children.

You can also get free admission (in the afternoon) by booking a minimum two-course lunch at Castell Deudraeth; this is part of the Portmeirion estate, a short walk from the village itself. Free admission to the village is also available if you book a spa treatment or afternoon cream tea there.

More information is available on the Portmeirion website. One thing you may need to know is that they don’t allow dogs (other than guide dogs) into the grounds.

Ffestiniog Railway

Ffestiniog Railway

This heritage steam railway has two separate lines, both of which run from Porthmadog.

The Welsh Highland Railway takes you on a scenic two-and-a-quarter hour trip through the heart of Snowdonia to Caernarfon, while the original Ffestiniog Railway takes you on a one-hour trip to Blaenau Ffestiniog. On this occasion I took the shorter journey, but I have done the Welsh Highland Railway trip before and highly recommend it as well. You can get more info on both (and book in advance) via the Ffestiniog Railway website.

The harbour station in Porthmadog has a small car park which quickly gets full, but there is a free car park for people travelling on the railway at the back of the public car park opposite (Llyn Bach). I used that myself on this occasion. There were plenty of spaces when I arrived at around 10 a.m. but I noticed it was full later. So my top tip if going by car is to book a ticket on a morning train rather than leaving it until the afternoon!

  • You can also travel to Porthmadog via the mainline railway if you wish. This is on the beautiful Cambrian Coast line which runs from Pwllheli at one end to Aberdyfi (and beyond) at the other.

Criccieth Castle

Criccieth Castle

My accommodation was literally five minutes walk from Criccieth Castle, so of course I had to pay it a visit.

The castle itself is a ruin but (as the photo shows) plenty of the walls are still standing. There is also a visitor centre where, as well as buying your ticket and guidebook, you can learn more about the history of the castle and see some relics that have been found there.

Arguably the best reason for visiting the castle, though, is the spectacular views. The photo below shows the main Criccieth beach. You can even see as far as Harlech Castle from here, although you might need binoculars!

Criccieth

Final Thoughts

As you may gather, I enjoyed my short break in Criccieth, and am happy to recommend both the village and the accommodation where I stayed for a short break.

Criccieth is a lovely place to relax and chill out. It has excellent road and rail connections, and – as mentioned above – there are also some high-quality tourist attractions nearby.

One thing I really enjoyed about this holiday was the number of casual conversations I struck up with other visitors, staff, locals and so on. This applied especially on my Ffestiniog Railway trip, where I ended up chatting with half the people in my carriage! I’d have to say it did help that only a small minority of people are nowadays wearing face-masks. That human contact is something I missed during the pandemic, and as a solo traveller especially it is great to be able to get back to chatting with strangers again 😀

As always, if you have any comments or questions about this post, please do leave them below.

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My Investments Update July 2022

My Investments Update – July 2022

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Here is my latest monthly update about my investments. You can read my June 2022 Investments Update here if you like

I’ll begin as usual with my Nutmeg Stocks and Shares ISA. This is the largest investment I hold other than my Bestinvest SIPP (personal pension).

As the screenshot below of performance last month shows, my main portfolio is currently valued at £19,357. Last month it stood at £20,512 so, after another challenging month, that is a fall of £1,155.

Nutmeg main portfolio July 2022

Apart from my main portfolio, I also have a second, smaller pot using Nutmeg’s Smart Alpha option. This is now worth £2,942 compared with £3,119 last month, a fall of £177

Here is a screen capture showing performance over the last month.

Nutmeg Smart Alpha portfolio July 2022

There is no denying these are disappointing results. Though as I’ve noted previously on PAS, you do have to expect ups and downs with equity-based investments. And over the last few months there’s been no lack of volatility in world markets, caused by rising inflation, the war in Ukraine and the aftermath of the pandemic (among other things).

  • It is, however, worth noting that since I started investing with Nutmeg in 2016, and despite everything that has happened this year, I have still made a total net return on capital of 28.79% (or 52.94% time-weighted).

While performance this year has clearly been disappointing, I have no doubt there will be an uptick at some stage, and am considering topping up now while asset values are low. I definitely don’t plan to sell up, as that would only crystallize my losses this year and leave me unable to take advantage when – as I fully expect – things turn around again.

I should also mention that I selected quite a high risk level for both my Nutmeg accounts (9/10 for the main one and 5/5 for Smart Alpha). This has served me well generally, but I’m sure investors who selected lower risk levels will have seen smaller falls over the last few months. If you also have a Nutmeg portfolio and plan to withdraw from it soon, there is certainly a good case for switching to a lower risk level now.

You can read my full Nutmeg review here (including a special offer at the end for PAS readers). If you are looking for a home for your annual ISA allowance, based on my experience over the last six years, they are certainly worth considering.

If you haven’t yet seen it, check out also my blog post in which I looked at the performance of Nutmeg fully managed portfolios at every risk level from 1 to 10 (as mentioned, my main port is level 9). I was actually pretty amazed by the difference the risk level you choose makes. If you are investing for the long term (and you almost certainly should be) opting for a hyper-cautious low-risk strategy may not be the smartest thing to do.

I talked about the performance of my Kuflink and Assetz Exchange investments in my June update and also in this recent blog post. I don’t therefore plan to provide in-depth reports about them on this occasion. I will just say that both are continuing to provide steady returns for me, with a lot less ‘excitement’ than my equity-based investments!

As I said a few weeks ago, in these turbulent times I believe P2P/crowdlending platforms such as the two mentioned are well worth considering. Not only are the rates of return higher than those on offer from banks and building societies, they are relatively unaffected by ups and downs in the stock markets. P2P loans aren’t a way of hedging your equity-based investments directly, but they do help spread the risk.

  • To be clear, nobody should put all their spare cash into Kuflink, Assetz Exchange or any other P2P/crowdlending platform, but in my view (and experience) they are certainly worth considering as part of a diversified portfolio. 

My investment in European crowdlending platform Nibble (as mentioned last time) continues to perform as advertised. My latest investment was in their Legal Strategy. These are loans that are in default and facing legal action. Nibble buy these loans at a heavily discounted rate and then seek to recover as much as possible of the money owed. The minimum investment is 10 euros and the minimum period is six months. I invested 100 euros for 12 months initially at a target annual interest rate of 12.5%.

The Legal Strategy comes with a deposit-back guarantee. This is a guarantee to return the full investment amount at the end of the investment period and a minimum yield of 9% per year. The actual yield depends on how successful recovery efforts prove, so in practice you may end up with a return of anywhere between 9% and 14.5%. All has  gone to plan so far, but I will obviously continue to report on this in the months ahead.

Also as mentioned last time, I also recently set up an account with investment and trading platform eToro, using their popular ‘copy trader’ facility. I chose to invest $500 (about £412) copying an experienced eToro trader called Aukie. As of today my investment has fallen to $473, which I guess in the current circumstances isn’t too bad. In any event I am looking on this as a long-term investment so obviously won’t be judging it yet. I am also considering a further investment with eToro, possibly in one of their themed portfolios.

Moving on, I had another article published on the always-excellent Mouthy Money website. This one is titled Starting Your Own Business With a Franchise. If you harbour an ambition to be your own boss, a franchise can be a great way of achieving this. My article sets out some hints and tips for choosing the right opportunity and making the most of it.

Finally, I enjoyed a short break in Criccieth, North Wales, at the end of June. I won’t go into detail about this here, as I plan to write a separate blog post about it soon [now published}. But I will say it was a very enjoyable, relaxing holiday, and I definitely hope to return there before too long. I stayed in a lovely sea-front apartment about five minutes’ walk from Criccieth Castle. Here is a photo taken from the castle showing the main beach…

Criccieth

That’s all for today. As always, if you have any comments or queries, feel free to leave them below. I am always delighted to hear from PAS readers 🙂

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How to Get a Self Employed Mortgage

How to Get a Self-Employed Mortgage

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As of April 2022 there were 4.21 million self-employed people in the UK (source: Statista). Being your own boss clearly has many attractions, but it can have drawbacks as well. And one of these is the potential for complications when the time comes to apply for a mortgage.

So today I am sharing some tips for freelancers and other self-employed people to make this process as painless as possible. I am indebted to my friends from Suffolk Building Society for their assistance with this.

I should start by clarifying that in this article I am not only addressing freelancers operating as sole traders but also people trading in partnerships or as limited companies. Mortgage lenders tend to group everyone in these categories together under a ‘self-employed’ banner.

Suffolk Building Society’s Head of Mortgages, Charlotte Grimshaw, says: “Nowadays, many more mortgage providers are inclined to lend to freelancers than perhaps they once were. Some providers offer specific self-employed mortgages, while others offer freelancers access to standard mortgage products, as long as they meet certain criteria. So if you don’t see any ‘freelance’ mortgage products it doesn’t necessarily mean the provider won’t lend to you.”

Suffolk Building Society has collated a list of useful points to help freelancers be better informed, should they need to apply for a mortgage.

Considerations For All Freelancers

  • Many people, but especially freelancers, gravitate to their bank to obtain a mortgage in the belief that their bank will understand their finances and will be more likely to lend. This is not necessarily the case, especially for freelancers whose finances may be more complex than an average mortgage applicant’s. Finding a specialist mortgage lender who can understand your business gives a much higher chance of a successful application.
  • Lenders will understand that different industries make payments in different ways i.e. a videographer may be paid at the end of a project, whereas a marketing consultant may invoice once a month. As long as the freelancer is being paid in what is considered a ‘normal’ way for that industry, lenders tend to take a favourable view.
  • There is generally no minimum age for freelancers to apply for a residential mortgage, whereas buy-to-let mortgages often have a minimum age of 21, 25, or even 30. If someone has a proven history and deposit, their age should not hold their application back.
  • Similarly, there is no legal maximum age limit for freelancers to apply for a mortgage, but lenders will set their own criteria.
  • If freelancing is a side hustle (as opposed to an individual’s main source of income) most lenders’ standard position is to use 50% of their freelancing work in affordability calculations and the individual should be prepared to provide tax returns as evidence that this income is sustainable.

For Freelancers Running a Limited Company

  • Two years of company accounts are usually required for freelancers running their own business – some lenders may consider less.
  • Make sure company accounts are filed on time – late filing could ring alarm bells with the lender.
  • Different lenders will have different affordability criteria and may base their mortgage offer on salary and dividend, net profit or retained profit. It is worth speaking to an accountant to properly understand the relevant figures before applying for a mortgage.
  • If a freelancer has switched their business model from sole trader to limited company but doesn’t have two years’ worth of accounts, the lender may take a favourable view if the individual is in a similar industry or sector.
  • Some lenders will take the average of two years’ accounts, others will base their lending decision on the worst year – whether that be year one or two. Freelancers who have had a particularly poor year (e.g. due to the impact of the Covid pandemic) but can explain why will still be considered for a mortgage.
  • Freelancers who are concerned about having a poor year before applying for a mortgage can ask their accountant for an estimated projections letter to support their case.

For Freelancers Operating as a Sole Trader

  • Two years of operating as a sole trader is usually the minimum required to apply for a mortgage. Some lenders will prefer more and some will accept less but two years is a good rule of thumb.
  • Keep all paperwork related to freelance work – from contracts, to bank statements, invoices and remittance notes, as a lender may ask to see it.
  • It can be helpful, but not always essential, to have a separate bank account to keep track of business expenses and income away from personal finances. If not, be ready and able to clearly demonstrate the difference in personal and business funds.
  • Lenders may use a day rate calculation such as five times the value of daily contracts, multiplied by 46 or 48 weeks (to allow for some downtime/holiday etc). The S302 form will be used as a way to calculate previous earnings based on submission to HMRC, so this needs to be available.
  • If the applicant’s freelance work is in the same sector as their previous employed job, then an application can sometimes be supported by evidence of PAYE income in the form of P60 forms.

For Freelancers Operating Under an Umbrella Company

  • There are mortgage providers who will lend to freelancers who use an umbrella company but it is usually best to engage the services of a specialist mortgage broker for advice on this front, as the application can be more complex. Much of the guidance above still applies in terms of demonstrating clarity of earnings and stability of contracts.

Final Thoughts

Charlotte Grimshaw from Suffolk Building Society concludes: “Having been made redundant during the pandemic, many people turned to freelancing and in most cases, they haven’t looked back as they embrace the autonomy and freedom of being their own boss – but some may be a little concerned if they need to apply for a mortgage for the first time or remortgage their existing property. However, the barriers that freelancers once faced in getting a mortgage are coming down, as lenders embrace different, and often multiple, sources of income.

“There are plenty of mortgage products for freelancers out there but start by researching ‘self employed mortgages’ rather than ‘mortgages for freelancers’. Don’t get too bogged down in worrying about whether your business structure will be suitable for a specific lender as most are adept at understanding the different ways freelancers are paid – just make sure your finances are organised, comprehensive and up to date.”

Many thanks again to Charlotte and her colleagues at Suffolk Building Society for their help with this article. If you are self-employed and considering applying for a mortgage, I hope you will find it helpful. Naturally, SBS offer self-employed mortgages themselves. You can find out more on this page of their website if you wish.

As always, if you have any comments or questions about this post, please do leave them below.

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Is It Time for Investors to Look Again at P2P?Crowdlending Platforms?

Is It Time for Investors to Look Again at P2P/Crowdlending Platforms?

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There isn’t much doubt this year has been a challenging one for stock market investors.

The war in Ukraine, rising inflation, and lingering fallout from the pandemic have all conspired to damage investor confidence. As a result, what we’re seeing now is a bear market, with share values falling across the board. How long this will continue I don’t know, though one thing I can say for certain is that there will be an upswing sooner or later. 

I have witnessed this with my own equity investments and it hasn’t been pretty. My Nutmeg Stocks and Shares ISA has fallen by 11% in value since January 2022. My Bestinvest SIPP (personal pension) has fallen by a roughly similar amount (I’ve suspended withdrawals from it as a result, to avert the risk of pound-cost ravaging). I’m not panicking about this, as all equity investments have their ups and downs. And since I started both of these investments, I am still well up overall.

There is indeed an argument that now could be a good time to invest, while asset values are depressed. Nonetheless, I do of course understand why many people are wary of investing in stocks and shares at the moment, as markets may well have further to fall.

So today I thought I’d talk about an alternative approach that has fallen out of favour in the last year or two, but still has the potential to generate good returns for your money even when stock markets are in turmoil.

P2P/Crowdlending

I am, of course, talking about P2P/crowdlending. A few years ago these platforms were being touted as an exciting new alternative to banks, allowing individuals the opportunity to club together to buy property or lend to people/businesses. Investors could then benefit from interest paid, rentals received and/or capital gains made.

While initially everything went well, Covid in particular put a big spoke in the P2P sector’s wheel. More borrowers went into default, and platforms struggled to stay afloat as a result. Some (e.g. The House Crowd and Lendy) went bust. Others (e.g. Zopa and Ratesetter) decided to withdraw from P2P lending. Still others (e.g. Bricklane and Crowdlords) continue to operate but have closed to new investors and begun a process of winding down. 

While that might sound depressingly negative, it’s not all doom and gloom. A number of P2P/crowdlending platforms are still running and indeed thriving. Three I have investments with myself are Kuflink, Assetz Exchange and Property Partner. 

Interestingly, these are all property investment platforms. Kuflink offers secured loans to property developers, while the other two are more ‘conventional’ property crowdfunding platforms where investors jointly purchase a property and share pro rata in rental received and any capital gains on sales. P2P platforms that lend directly to individuals and businesses without the security of property are a lot scarcer nowadays than they used to be.

Regular PAS readers will know I have money in all three platforms mentioned above and am still actively investing in two of them (I am gradually winding down my Property Partner portfolio, though I do still recommend them). One big attraction of property platforms is that investment outcomes are not directly linked to the performance of stock markets. Yes, where the economy is rocky, this might ultimately impact on some commercial properties. Overall, though, these platforms are much less affected by market fluctuations than equity-based investments. That means they can offer an attractive alternative at times (like now) of high volatility.

In this article I’d like to highlight my two current favourite P2P/crowdlending platforms, Kuflink and Assetz Exchange. I will say a word about each and explain why I am still enthusiastic about them and continue to invest with them.

Kuflink

Kuflink offers opportunities to invest in loans secured against property. These loans are typically made to developers who require short- to medium-term bridging finance, e.g. to complete a major property renovation project, before refinancing with a commercial mortgage. They offer three types of investment, as follows:

  • Select-Invest (individual loans)
  • Auto-Invest
  • Tax-free IFISA (Innovative Finance ISA)

Auto Invest and IFISAs both automatically invest your money across a number of loans and pay a fixed interest rate, typically between 5 and 7%. You can choose a 1-year, 3-year or 5-year term, and interest is paid annually. The Auto-Invest product is basically the same as the IFISA, but without the tax-free wrapper. Self-Invest loans can also be put in an IFISA, with most (not all) loans on the platform being eligible.

I have been investing with Kuflink for nearly five years now. My experiences have been entirely positive and my investments have been generating the promised returns. I started cautiously with them, but have gradually built up the amount I have invested. Although – like all property P2P platforms – they were adversely affected by the pandemic, they appear to have come through it strongly, with new loans now being added almost daily.

There have been no defaults so far on any of my loans, and Kuflink say on their website that to date nobody has lost a penny on their platform. I have experienced short delays with loans being repaid, but in such cases you continue to earn interest, of course.

Although Kuflink don’t pay the highest rates in P2P lending, I think the returns on offer are realistic and sustainable. The steady expansion of the platform seems to testify to this, as does the fact that they have received several industry awards. .

Kuflink are also highly rated on the independent TrustPilot website, with an average 4.7 out of 5 (‘Excellent’). At the time of writing 80% of reviewers award them the maximum five-star rating, which is among the highest figures I have seen for a financial services platform.

As with all P2P lending, your money doesn’t enjoy the same level of protection as bank and building society accounts, which are covered (up to £85,000) by the Financial Services Compensation Scheme. Nonetheless, the rates of return on offer are significantly better than those from most financial institutions. And the fact that all loans are secured against bricks and mortar – and Kuflink themselves have cash invested in them – clearly offers some reassurance.

From my experience, Self-Select loans tend to fill up quickly. On the positive side, this shows investors have confidence in Kuflink and want to invest through the platform. On the minus side, it means there are typically no more than two or three new loans open for investment at any time.

You can read my full review of Kuflink in this blog post, or sign up directly here if you wish [affiliate link].

Assetz Exchange

Assetz Exchange is a P2P property investment platform focusing on lower-risk properties (e.g. sheltered housing). I put an initial £100 into this in mid-February 2021 and another £400 in April. In June 2021 I added another £500, bringing my total investment up to £1,000.

Since I opened my account, my AE portfolio has generated £59.49 in revenue from rental and £60.93 in net capital growth, a total of £120.42. That’s a decent rate of return on my £1,000 investment and does illustrate the value of P2P property investment for diversifying your portfolio when equity markets are volatile (as at the moment).

I now have investments in 23 different projects and all are performing as expected, generating rental income and – in all but three cases – showing a profit on capital. So I am very happy with how this investment has been doing. And it doesn’t hurt that most projects are socially beneficial as well.

To control risk with all my property crowdfunding investments nowadays, I invest relatively modest amounts in individual projects. This is a particular attraction of AE as far as I am concerned. You can actually invest from as little as 80p per property if you really want to proceed cautiously.

My investment on Assetz Exchange is in the form of an IFISA so there won’t be any tax to pay on profits, dividends or capital gains. I’ve been impressed by my experiences with Assetz Exchange and the returns generated so far, and intend to continue investing with them. You can read my full review of Assetz Exchange here. You can also sign up for an account on Assetz Exchange directly via this link [affiliate].

Final Thoughts

Clearly, no-one should put all their spare cash into Kuflink, Assetz Exchange or any other P2P/crowdlending platform. Nonetheless, in my view it’s certainly worth considering as part of a diversified portfolio. Not only are the rates of return higher than those currently on offer from banks and building societies, they are relatively unaffected by ups and downs in the stock markets. P2P loans aren’t a way of hedging your equity-based investments directly, but they definitely do help spread the risk.

If you have any comments or questions about this post, as always, please do leave them below.

Disclosure: I am not a registered financial adviser and nothing in this post should be construed as personal financial advice. You should always do your own ‘due diligence’ before investing, and seek advice from a qualified financial adviser if in any doubt how best to proceed. All investing carries a risk of loss.

This post (and others on PAS) includes affiliate links. If you click through and perform a qualifying transaction, I may receive a commission for introducing you. This will not affect the product or service you receive or any fees you may pay.

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Spotlight: eToro Trading and Investment Platform

Spotlight: eToro Trading and Investment Platform

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[Updated 4 January 2023] Today I’m looking at eToro, a popular online trading and investment platform. I recently opened an account on eToro and started investing with them, partly in order to review their service.

eToro is a Israeli fintech company based in Cyprus. The company also has registered offices in the UK, US and Australia. It is regulated and authorised by the Financial Conduct Authority (FCA) in the UK and is covered by the Financial Services Compensation Scheme (FSCS). That means if eToro were to go bust any deposits with them up to £85,000 would be protected. Of course, the FSCS doesn’t protect you if you lose money simply due to your investments performing poorly.

eToro is particularly known for its copy trading feature. This allows you to automatically copy any of various established traders on eToro and benefit from any profits they  (hopefully) make. More about this later.

What Does eToro Offer?

eToro offers just one type of general trading account. Unlike other platforms such as Bestinvest, there is no option to set up UK tax-free accounts such as ISAs and SIPPs (Self-Invested Personal Pensions). That being said, there are still plenty of investment options available.

For starters, eToro lets you invest in over 2,000 different stocks and shares from the world’s leading exchanges including the UK and US. You can access major stocks, including Apple, Amazon, Google, Tesla, Barclays, Airbus, Microsoft and Adidas.

If you don’t want to pick and choose stocks yourself, you can also invest in ready-made, themed portfolios. Some examples include:

  • Diabetes Med – diabetes care stocks
  • MetaverseLife – invest in virtual worlds
  • Oil Worldwide – global oil industry
  • Utilities – public utility stocks
  • Renewable Energy – clean energy production
  • LatamEconomy – Latin American region

You can also trade over 50 different cryptocurrencies, including Bitcoin, Ethereum, Cardano, and so on (eToro creates a crypto wallet for you for trading purposes). You can also buy and sell various indices (e.g. UK100) and commodities.

And for advanced traders with an appetite for risk, contracts for difference (CFDs) are available. Just be aware that these investments are leveraged, so you can lose a lot more than your original stake if a market moves against you.

What Are The Charges?

A big selling point for eToro is that they offer commission-free trading. This makes them especially attractive to active traders who buy and sell regularly.

Of course, eToro do have to make their money somehow, so other charges apply. It’s important to be aware of these. The main charges are listed below.

  1. Withdrawal fees – any time you make a withdrawal from eToro, you are charged a withdrawal fee of $5 (about £4).
  2. Inactivity fees – If you haven’t logged into your account for a year, you will be charged a monthly inactivity fee. Of course, this won’t apply to most people but is something to bear in mind if you are investing for the long term.
  3. Currency conversion fees – You can deposit on eToro in pounds sterling, but the platform operates in US dollars only and currency conversion fees apply. UPDATE: If you use the new eToro Money app, you can avoid fees for depositing to the platform, potentially saving up to £5 per £1,000.
  4. There are also buy and sell spreads with some types of investment, e.g. cryptocurrency and CFDs.

None of this is to say you shouldn’t invest via eToro. Their offering is still extremely competitive, but you do need to take these charges into account.

Information and Advice

eToro is obviously aimed at people who are comfortable choosing their own investments.

As mentioned above, they have a range of ready-made, themed portfolios you can choose from. The minimum investment with these is $500 (around £420).

They also have plenty of educational resources about investing. Users can also learn from one another through the eToro newsfeed and other social features.

There is also in-depth information (and charts) about specific shares and other investments. One-to-one personal advice (free or paid-for) is not on offer, though.

Copy Trading

As mentioned above, copy trading is a very popular feature of eToro. This allows you to automatically copy the trades of an established eToro investor. An example is shown below…

NezaTron

As with smart portfolios, there is a minimum investment of $200 (about £170) for copy trading on eToro. However, many approved traders recommend a higher minimum than this. That’s because when you sign up to copy a trader, eToro automatically duplicates all of that person’s trades in proportion to the size of your investment. eToro has a minimum investment size of $1 and if a trade would work out less than that pro rata it will not be executed. It follows that traders whose strategies typically involve placing large numbers of relatively small trades generally recommend a higher minimum starting investment.

All approved traders who allow copying have a homepage on which they specify their recommended minimum investment. This can be anything from $200 to $1500 or more, depending on the strategy they use.

What Are the Pros and Cons of eToro?

Pros

  • Established platform with a large, international client base
  • Well-designed, user-friendly website and app
  • No dealing fees when buying or selling shares
  • No monthly or yearly portfolio fees
  • No deposit fees
  • Access to US and other world markets
  • Cryptocurrency trading and CFDs also available
  • Low minimum investment (just $10 or around £8)
  • Social trading features, including easy copying of top traders
  • Range of ready-made portfolios available
  • Plenty of research tools and information
  • Stop Loss and Take Profit features
  • Free $100,000 ‘virtual account’ lets you practise without risking any real money
  • Covered against collapse by the UK’s Financial Services Compensation Scheme (FSCS)

Cons

  • No UK tax-free accounts such as SIPPs and ISAs
  • Can’t invest in UK investment trusts and similar pooled investments
  • Trading on the platform is in US dollars only and currency conversion fees may apply (though not if you use the new eToro Money app)
  • Withdrawal fees and inactivity fees are also charged

What Do Users Think?

On the independent TrustPilot website, eToro has an average rating of 4.2 (‘Great’) at the time of writing, with 55% of users awarding them a maximum five stars rating.

Positive comments typically emphasize the simplicity and user-friendliness of the website, the low charges, the quality of the customer service, and the range of information available. The social trading aspects are also highly praised. Some of the negative comments concern customer service, and in particular issues experienced when trading Russian stocks due to sanctions imposed on Russia over the war in Ukraine. To be fair I am not sure to what extent eToro can be blamed for this.

eToro has also received various industry awards. These include:

  • ADVFN International Financial Awards Best Social Trading Platform 2019 Winner
  • ADVFN International Financial Awards Best Platform for Trading Cryptocurrencies 2019 Winner
  • Ultimate Fintech Awards 2021 – Best Stockbroker
  • Ultimate Fintech Awards 2021 – Best Copy Trading Platform
  • Ultimate Fintech Awards 2021 – Best Multi-Asset Trading Platform
  • World Finance foreign exchange award for best mobile trading platform and best software provider 2011 Winner
  • Star Awards Best Trading Platform 2013

Closing Thoughts

The commission-free share trading at eToro makes it an attractive option for people who wish to buy and sell shares regularly. Yes, they do have some other charges, but even so for regular traders it represents a great-value proposition.

The inability to open a tax-free ISA or SIPP is obviously disappointing for long-term investors, for whom a UK-based platform such as Bestinvest or Hargreaves Lansdown  might be a better option. Nonetheless, eToro does offer a good range of medium- to long-term investment opportunities as well, including copy trading and Smart Portfolios.

  • It should also be said that profits made buying and selling shares and other assets such as cryptocurrencies are generally taxed in the UK as capital gains. Everyone has a substantial annual CGT allowance (£12,300 in 2022/23). So in practice the majority of UK residents who trade currently on eToro are unlikely to generate a tax liability. But with tax-free CGT allowances due to be substantially cut over the next couple of years, it may become more of an issue.

Smart Portfolios are an attractive option for novice investors and those who don’t have time to research all their investments themselves. As a prediabetic myself, I was quite tempted by their Diabetes Medicines portfolio, which I mentioned above. But equally, if you are happy to pick your own stocks and shares (and other asset types), eToro has all the information and tools you will need.

The social trading features of eToro are clearly a major attraction of the platform, particularly copy trading. But in addition you can chat with fellow investors and pick up tips and advice from them (though don’t take everything you read as gospel!). I also like the Stop Loss and Take Profit features, which allow you to automatically close losing positions before they deteriorate further or take a profit any time a pre-set target is achieved.

If you want to trade cryptocurrencies, eToro offers a simple, straightforward method for doing so. The risk of a platform collapse (as has happened with some crypto exchanges) is probably less, and UK investors also have protection in the form of the FSCS. The buy/sell spreads on eToro mean it may not be the most economical method for crypto trading, though. As I don’t personally touch cryptocurrencies due to the risks involved, I don’t intend to say any more than that. But the option is there if you want it (and many do!).

As for me, I recently started my journey on eToro by investing $500 on copy trading a member called Aukie2008 (real name Mike Moest). He has a good track record, over 1000 people copy him already, and he promises a relatively low-risk strategy. I was tempted to copy Nezatron (see screen capture above) but she has a higher minimum recommended investment of $700 and I wanted to start cautiously. I will let you know in future updates how my investment fares and any other investments I may make on the platform.

As always, if you have any comments or questions about this post, please do leave them below. I should also be very interested to hear from anyone else who has tried  eToro. What markets are you investing in, and what results have you obtained? Are there any particular drawbacks or good points to the platform you would like to highlight? All comments are welcome!

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Disclaimer: I am not a qualified financial adviser and nothing in this blog post should be construed as personal financial advice. Everyone should do their own ‘due diligence’ before investing and seek professional advice if in any doubt how best to proceed. All investing carries a risk of loss.

Note also that this post includes affiliate links. If you click through and perform a qualifying transaction, I may receive a commission for introducing you. This will not affect the product or service you receive or the terms you are offered.

If you enjoyed this post, please link to it on your own blog or social media:
Ten Work From Home Jobs You Can Do

Guest Post: Ten Work From Home Jobs You Can Do

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Today I have a guest post for you from my fellow money blogger Bilquis, whose blog you can read at http://getmoneysaving.com.

In the article below, Bilquis sets out ten work-from-home jobs that can be done without large amounts of training or experience. Whether you’re looking for part-time or full-time work, there may be something suitable for you here.

Over to Bilquis then…

 

The pandemic has changed how we do many things. A big one is how we work. A lot of companies now prefer the work-from-home (WFH) method. This saves money for the business as they don’t have to pay as much for office space. For employees it means they don’t have to spend time and money commuting and can stay in the comfort of their own home and work there.

While working from home can have drawbacks as well as benefits, it can’t be denied there are lots of opportunities. In this post I will set out ten jobs you may be able to do on a WFH basis.

Sales

If you’re good at selling, this is perfect for you. With improved technology and cloud-based software, having a home-based sales job is a realistic possibility for many. You can sell anything from carpets to pet food. And the great thing about sales jobs is that most pay commission for every sale you make.

There are plenty of businesses looking for salespeople. Check out job boards like Indeed and search for “work from home sales” – plenty of jobs will come up! If you want to brush up your sales skills then I suggest going on YouTube and watching videos from experts like Zig Ziglar.

Customer Service

As with sales, customer service is now in many cases fully remote. Many companies are looking for home-based customer service reps to help with enquiries from customers. These jobs are generally very flexible, so if you can only manage a certain number of hours a week, employers will often be happy work around that.

Again, the best place to find customer service roles is job boards like Indeed.

Admin

If you are well organized and good at creating reports and spreadsheets then you might like working as an administrator. This might include other duties as and when required. Look on job sites like Indeed or WeWorkRemotely.

Social Media Management

Do you like using social media platforms like Instagram and Facebook? Businesses are willing to pay good money for people who can help them grow their business through social media. After all, millions of people use social media and the numbers are increasing every day. Many businesses are clueless when it comes to social media and don’t know how to make the most of it.

That’s where you come in. As a social media manager you will manage and grow their social media by adding interesting content and responding to queries from clients and potential clients. If you don’t know anything about growing social media accounts, you can always learn. Go to Udemy and take one of the many courses available there.

As a social media manager you can either take the freelance route applying for opportunities on Upwork and Fiverr, or you can start your own business. You could also get a job with a company, working in their marketing department.

To start your own business as a social media manager it might help to offer to work free for the first few clients, to gain reviews and social proof.

Audio Transcription

Audio transcription involves preparing a written version of spoken content such as a video or podcast. Podcasts are a very popular way to consume information but some people prefer to read a transcript or at least have it available for reference.

So if you have good typing speed and enjoy listening to podcasts this job could be for you. There are plenty of companies in this field like Happy Scribe, Rev.com and Accuro. Some of these companies do require you to be a native English speaker. According to Happy Scribe, their top earners are making $3,000 (£2,400) a month.

Voiceover Artist

If you have a good voice and enjoy speaking, doing voiceovers can be a great stay-at-home job. The work may involve creating voiceovers for videos and courses. You may also work on audiobooks and other projects.

A good website to get started is Mandy. Others include Voices.com, Voquent and Backstage. Companies or individuals post jobs on these sites and you can apply for them by submitting a short audition.

Top earners can earn over $50,000 (£40,000) per year

Teacher

High speed internet and software like Zoom and Skype has made it easy and convenient to teach online from home. If you are knowledgeable about a particular subject, you can set your own hours and work as many or few as you want. There is also a big demand for native English speakers who can teach the language and/or help learners practise their conversational skills.

All you need is a laptop, internet connection and a working webcam/microphone. Some websites you can try are Preply, Cambly and SkimaTalk. Some of these do require you to have qualifications and/or experience.

If you are looking to boost your income you can create online courses. Using platforms like Skillshare or Udemy you’re able to create online courses that people can sign up to and you can profit from each sign up.

Paralegal

As a paralegal you will be helping solicitors and barristers by preparing legal documents, researching, providing quotes to clients, going to court and performing admin work, all based from home.

Most paralegal jobs will not require you to have a law degree, but some do require you to have some legal training or experience.

You can find WFH paralegal jobs on Indeed, TotalJobs or even social networking site Linkedin.

Virtual Assistant

This WFH job involves helping businesses with any task they may have such as data entry, admin, email, research, simple bookkeeping, and so on. The job can be varied and interesting. You can find jobs for virtual assistants on Upwork, Freelancer, and so on.

Web Developer

Businesses need an online presence and can’t afford not to be online. If a business isn’t online and doesn’t have a website, their competition most likely will. As a home-based web developer, you can use your programming skills to build websites for business clients. You can also enjoy a continuing income maintaining and updating the site for them.

Conclusion

With high-speed internet connections and ever-improving technology, working from home is now commonplace. For many of these jobs you do not need any special experience or qualifications. And because you will be working from home, you – and your clients – can be based anywhere in the world.

If you want to work from home, opportunities have never been better, whether you want to work for an employer or become self-employed and seek out clients yourself.

Good luck, and enjoy your new WFH career!

 

Thank you again to Bilquis for an eye-opening article. Please do check out his blog at http://getmoneysaving.com.

As Bilquis says, there has never been a better time to seek work from home. And as someone who has done this himself for over 30 years, I do highly recommend it! But it must be said that it can have certain drawbacks as well. You might enjoy reading my blog post The Pros and Cons of Working From Home in which I discuss this in much more detail.

As always, if you have any comments or questions about this post, for me or for Bilquis, please do leave them below.

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My Investments Update June 2022

My Investments Update – June 2022

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Here is my latest monthly update about my investments. You can read my May 2022 Investments Update here if you like

I’ll begin as usual with my Nutmeg Stocks and Shares ISA. This is the largest investment I hold other than my Bestinvest SIPP (personal pension).

As the screenshot below of performance in the year to date shows, my main portfolio is currently valued at £20,512. Last month it stood at £20,799 so, after a roller-coaster month, that is a fall of £287.

Nutmeg Main Portfolio June 2022

Apart from my main portfolio, I also have a second, smaller pot using Nutmeg’s Smart Alpha option. This is now worth £3,119 compared with £3,166 last month, a fall of £47

Here is a screen capture showing performance this year.

Nutmeg Smart Alpha June 2022

Obviously the continuing falls are disappointing (though much smaller than last month). As I’ve noted previously on PAS, you do have to expect ups and downs with equity-based investments, and certainly over the last few months there has been no shortage of volatility in world markets. And it’s also worth noting that since I started investing with Nutmeg in 2016 I have still enjoyed a total return of 36.48% (or 62.07% time-weighted).

I should also mention that I selected quite a high risk level for both my Nutmeg accounts (9/10 for the main one and 5/5 for Smart Alpha). This has served me well generally, but I’m sure investors who selected lower risk levels will have seen smaller falls over the last two months.

  • If you also have a Nutmeg portfolio and plan to withdraw from it in the next few months, there is certainly a case for switching to a lower risk level right now.

You can read my full Nutmeg review here (including a special offer at the end for PAS readers). If you are looking for a home for your annual ISA allowance, based on my experience over the last six years, they are certainly worth considering.

If you haven’t yet seen it, check out also my blog post in which I looked at the performance of Nutmeg fully managed portfolios at every risk level from 1 to 10 (as mentioned, my main port is level 9). I was actually pretty amazed by the difference the risk level you choose makes. If you are investing for the long term (and you almost certainly should be) opting for a hyper-cautious low-risk strategy may not be the smartest thing to do.

Moving on, my Assetz Exchange investments continue to perform well. Regular readers will know that this is a P2P property investment platform focusing on lower-risk properties (e.g. sheltered housing). I put an initial £100 into this in mid-February 2021 and another £400 in April. In June 2021 I added another £500, bringing my total investment up to £1,000.

Since I opened my account, my AE portfolio has generated £57.24 in revenue from rental and £92.28 in capital growth, a total of £149.52. That’s a decent rate of return on my £1,000 investment and does illustrate the value of P2P property investment for diversifying your portfolio when equity markets are volatile (as at the moment).

I now have investments in 22 different projects and all are performing as expected, generating rental income and – in every case but one – showing a profit on capital. So I am very happy with how this investment has been doing. And it doesn’t hurt that most projects are socially beneficial as well.

  • To control risk with all my property crowdfunding investments nowadays, I invest relatively modest amounts in individual projects. This is a particular attraction of AE as far as i am concerned. You can actually invest from as little as 80p per property if you really want to proceed cautiously.

My investment on Assetz Exchange is in the form of an IFISA so there won’t be any tax to pay on profits, dividends or capital gains. I’ve been impressed by my experiences with Assetz Exchange and the returns generated so far, and intend to continue investing with them. You can read my full review of Assetz Exchange here. You can also sign up for an account on Assetz Exchange directly via this link [affiliate].

Another property platform I have investments with is Kuflink. They have been doing well recently, with new projects launching almost every day. I currently have over £2,150 invested with them, quite a large proportion of which comes from reinvested profits. To date I have never lost any money with Kuflink, though some loan terms have been extended once or twice. On the plus side, when this happens additional interest is paid for the period in question. At present all my Kuflink loans are performing to schedule, though one is showing as ‘pending a status update’. I suspect this may translate to a delay in repayment. We shall see.

My loans with Kuflink pay annual interest rates of 6 to 7.5 percent. These days I invest no more than around £150 per loan (and often less). That is not because of any issues with Kuflink but more to do with losses of larger amounts on other P2P property platforms in the past. My days of putting four-figure sums into any single property investment are behind me now!

  • Nowadays I mainly opt to reinvest the monthly repayments I receive from Kuflink, which has the effect of boosting the percentage rate of return on the projects in question

Obviously a possible drawback with Kuflink and similar platforms is that your money is tied up in bricks and mortar, so not as easily accessible as cash savings or even (to some extent) shares. They do, however, have a secondary market on which you can offer any loan part for sale (as long as the loan in question is performing and not in arrears). Clearly that does depend on someone else wanting to buy it, but my experience has been that any loan parts offered are typically snapped up very quickly. So if an urgent need arises, withdrawing your money (or part of it) is unlikely to be an issue.

You can read my full Kuflink review here. They offer a variety of investment options, including a tax-free IFISA paying up to 7% interest per year with built-in automatic diversification. Alternatively you can now build your own IFISA, with most loans on the platform (including the one shown above) being IFISA-eligible.

  • I also recently published a blog post about another P2P property investment platform called BLEND. Like Kuflink, they offer the opportunity to invest in secured loans to experienced property developers. They offer (on average) somewhat higher rates of return than Kuflink, though arguably with a little more risk. As well as my blog post about BLEND, you can also check out what they have to offer on their website [affiliate link].

As mentioned last time, I invested some more money in European crowdlending platform Nibble last month. On this occasion I invested in their Legal Strategy. The loans in question are in default and facing legal action. Nibble buy these loans at a heavily discounted rate and then seek to recover as much as possible of the money owed. The minimum investment is 10 euro and the minimum period is six months.

The Legal Strategy comes with a deposit-back guarantee. This is a guarantee to return the full investment amount at the end of the investment period and a minimum yield of 9% per annum. The actual yield will depend on how successful recovery efforts prove, so in practice you may end up with a return of anywhere between 9% and 14.5%. All is going well so far, but I will obviously continue to report on this in the months ahead.

One other thing I wanted to mention is that I have just opened an account with online share trading/investment platform eToro. I’ve been planning to do this for a while, with a view to reviewing it on PAS. I’m finding it quite different from other online investment platforms I have used such as Bestinvest.

As well as commission-free share trading, eToro offer a popular copy-trading feature, where you can copy the trades of other successful investors automatically. You can also practise with a virtual portfolio of $100,000. I put some of this into Platinum on the eToro commodities market and initially its value soared. But then it went right down again. So I am not the investment genius I thought I was at first 😀 It’s all very interesting, though. If you’d like to check out eToro for yourself, here’s an invitation link [affiliate]. And keep an eye open for my full review in due course.

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Moving on, I have two more articles on the always-excellent Mouthy Money website. The first concerns Two Important State Benefits Many Older People Are Missing Out On. And the second is on the subject Could You Make Money as a Blogger? I have been blogging for over twenty years now, initially about freelance writing and now about personal finance. So I had plenty to talk about in this article!

  • Incidentally, Mouthy Money currently have a vacancy for a graduate-level personal finance reporter. This is a one-year paid internship working partly from home and partly from MM’s London office. If you know anyone who might be interested in this opportunity, please do draw it to their attention.

Finally, there has been a lot of talk about the cost of living crisis this month. As you may know, Chancellor Rishi Sunak announced a raft of measures to try to mitigate the worst effects of this.

Whatever your political or economic views, I do think he has been quite generous to older people in particular. Not only will those of us receiving the state pension get £400 off our household energy bills, we will also receive an extra £300 on top of our usual Winter Fuel Allowance (that means I’ll get £500 this year).

Many pensioners will also qualify for the £150 bonus for those on non-means-tested disability benefits such as Attendance Allowance. And they may also get the £650 cost of living payment going to anyone receiving various means-tested benefits (everyone getting pension credit will qualify for this, for example). Some households will receive a total of £1,500 in additional benefits through these measures, which should certainly help in these challenging times. .

If you would like to know more about the latest round of financial support from the government, Martin Lewis has a good summary on his Moneysaving Expert website. The government has also published a web page which sets out all the help that may be available for those on lower incomes.

That’s enough for today, so I’ll close by wishing you a very happy Jubilee Holiday. Whatever you are doing in the next few days – going away or staying home with family and friends – I do hope you have a relaxing and enjoyable time. As ever, if you have any comments or queries, please feel free to leave them below. I always love hearing from my readers 🙂

Jubilee

Disclaimer: I am not a qualified financial adviser and nothing in this blog post should be construed as personal financial advice. Everyone should do their own ‘due diligence’ before investing and seek professional advice if in any doubt how best to proceed. All investing carries a risk of loss.

Note also that posts may include affiliate links. If you click through and perform a qualifying transaction, I may receive a commission for introducing you. This will not affect the product or service you receive or the terms you are offered, but it does help support me in publishing PAS and paying my bills. Thank you!

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Financially Fat to Financially Fit!

Guest Post: Financially Fat to Financially Fit!

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Today I have a guest post for you from my colleague Richard Winstone (not pictured above). Richard has just launched a new, diary-style blog called Financially Fat about his quest to achieve ‘financial fitness’.

I thought Financially Fat could be of interest to many Pounds and Sense readers, so I invited Richard to create a guest post about it. He was happy to oblige, so here is his article.

 

Hi everyone. I’m Richard Winstone and I write a blog called Financially Fat.

I want to start this post by thanking Nick for allowing me to guest blog on Pounds and Sense. I appreciate the feedback he has given on my blog and am really proud to have this opportunity to showcase Financially Fat to the Pounds and Sense community.

What is Financially Fat?

“If financial fitness is the aim, then I am Financially Fat.” This is the tag-line of the Financially Fat blog.

Being financially fat isn’t supposed to paint the image of a fat, wealthy man. It’s meant to imply that my finances are out of shape, which they are.

I’ve decided to take a no-holds-barred approach to financial honesty in my blog: the good, the bad and the ugly. So, in the second post I wrote down my complete financial position. I left nothing to the imagination and fully revealed my “financial nakedness”. I did this because I wanted my readers to know that I’m not another rich guy giving quick tips to save a few quid (not that there’s anything wrong with that), but that I’m actually financially struggling and that I’m taking action to improve my financial fitness.

Financially Fit is written as a diary, in which every Friday I comment on how I did with the previous week’s targets and set new targets for the following week. There are also a couple of sections of me rambling about my thoughts from the previous week, which I hope are insightful but may just be the ramblings of a mad man 😉

The purpose of the blog is two-fold. First, I want to chronicle my journey from being financially fat to being financially fit. I think this is easier to do weekly while I’m on the journey rather than try to remember what I did after (I hope) I’ve become financially fit. And second, I’m hoping to provide a step-by-step guide for others to follow to help improve their financial fitness. I write and post my blog to the over50smoney.com website and email it out to our over50smoney community each week.

So, below is a quick summary of how my blogging journey has gone so far, now that I’m five weeks in…

Meet Me, Richard Winstone

I won’t say much about this. It is a simple five-paragraph post introducing myself and the Financially Fat blog.

Week 1 – My Starting Point and What Is Financially Fat?

This is another introductory post, but it goes into much more detail. I start by detailing what I hope to gain from Financially Fat and then move on to set out my starting financial position, including my salary, savings, debts, shares, assets and anything else I could think of. It’s a complete works of my financial position, which I’ve committed to reviewing monthly in a similar format so I can see how my financial position improves month-to-month (the next review is this Friday and I’m nervous!).

Week 2 – Workout #1

Right, Week 2 is when it starts getting more interesting and where the format of the blog really starts to become clear. I started this post by highlighting three things I did that were bad for my finances over the previous week, which were:

  • Moving home (kind of unavoidable)
  • Working from Costa far too often
  • Dining out

I then came up with the idea of setting targets for the following week to address things that I’ve done wrong in the previous week, with the hope that I’ll eventually move away from bad habits that cost me way too much money. This seems to be working to be honest, at the moment I’m down to working from Costa only once or twice a week and usually only for a couple of hours each time rather than full days.

Week 3 – A Marathon, Not A Sprint

Continuing the development of the blog format, Week 3 is where I started titling the blog posts a little more nicely, and where I started summing up my financial savings from following the targets on my previous week.

In this post, I point out how working from Costa only once a week instead of five times a week can save me around £50 per week, over £200 per month! I also discuss setting yourself targets as you follow the blog. Reading it is (I hope) interesting, but for the blog to be useful you need to follow the thought processes I go through and make sure you’re applying them to your own life. So, if you have a small, seemingly inexpensive habit that you do frequently, then I recommend reviewing how much that habit has actually cost you over a month and see how much you could save by cutting down.

Week 4 – Invest In Knowledge

In Week 4 I discussed the target of reviewing my standing orders and direct debits. After just one review, which took about 45 minutes, I was able to save just under £600 per year! Which is insane. I continued to review into the following week but was only able to save an additional £1 per month by changing my gym membership.

This is also the week I formalised my “Ramblings” as an introduction to the blog, I hope you enjoy reading them and please feel free to email me any time to comment, ask questions or provide suggestions (I’ve been getting some great tips from readers!).

Week 5 – Overcoming My White Whale

By this point, I’ve started getting really into the money-saving game. I’m also discussing things like increasing income to ensure I’m not reliant only on my salary.

But, as the title indicates, I talk about tackling my biggest challenge yet, which is currently destroying my finances – smoking! I know, it’s a horrible habit and I’m obviously very aware of the negative health affects as well as the impact it’s having on my bank balance. So, I’ve set out a five-week plan to quit (which I can say I’m currently doing okay on, but it has only been four days).

Cutting out smoking could save me around £2,400 per year, which means from the Financially Fat blog I would have saved around £3,200 a year in disposable income just in the first five weeks, and there’s still so much more work to do!

Follow the Financially Fat Blog

That’s it for the summary of my first six blog posts. I hope you will click through and give them a read as there’s a lot more information in there and some interesting views, I like to think.

If you’re interested in following my blog, please head over to over50smoney.com and sign-up for our newsletters. Or, if you’d rather not receive emails, you could just follow us on Facebook. I write and post every Friday and put links on our Facebook page, so please consider liking and following this. Thank you 🙂

I want to thank Nick again for letting me write this short summary of Financially Fat. I really hope you find it as useful as I am. If you have any questions or comments, or just fancy a chat about finances, please feel free to reach out to me directly at richard@over50smoney.com. I sometimes take a few days to reply, but I promise I get back to every email I receive.

I’m Richard Winstone and I am Financially Fat.

 

Many thanks to Richard Winstone (pictured, right) for this article. I hope you will take a moment to check out Financially Fat.

I particularly admire the honesty with which Richard sets out his financial position. I try to be honest about my finances on PAS as well, but not in nearly as systemaRichard Winstonetic a way as he is doing!

If you are also ‘financially fat’ (as Richard defines it) I hope you may find the info and advice on the new blog inspires you in your own quest to achieve financial fitness.

As always, if you have any comments or questions about this post (for me or for Richard), please do share them below.

 

Losing weight

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