My Coronavirus Crisis Experience - July 2021 Update

My Coronavirus Crisis Experience – July 2021 Update

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Another month has passed, so it’s time for another Coronavirus Crisis Update. Regular readers will know I’ve been posting these since the first lockdown started in March 2020 (you can read my June 2021 update here if you like).

As ever, I will begin by discussing financial matters and then life more generally over the last few weeks.

Financial

I’ll begin as usual with my Nutmeg stocks and shares ISA, as I know many of you like to hear what is happening with this.

As the screenshot below shows, my main portfolio performed pretty well in June. It is currently valued at £21,045. Last month it stood at £20,435, so overall it has gone up by £610. I am happy with that, obviously.

Nutmeg June 2021 Main

Apart from my main portfolio, I also have a second pot using Nutmeg’s new Smart Alpha option. I added another £500 to this in June, bringing the total invested to £2,500. This pot is now worth £2,635, compared with £2,060 last month. Disregarding the extra £500 investment, this pot is therefore now £135 in profit compared with £60 a month ago, an increase of £75. So again I am quite happy with that. Here is a screen capture showing performance in June 2021. As you will see, my £500 investment was credited to the account on 20 June 2021.

Nutmeg Smart Alpha June 2021

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 2021/22 ISA allowance, based on my experience they are certainly worth considering.

  • If you haven’t yet seen it, check out also my recent blog post in which I looked at the performance of Nutmeg fully managed portfolios at every risk level from 1 to 10 (my main port is level 9). I was actually amazed by the difference the risk level you choose makes.

Regular readers will know that this year I am using Assetz Exchange for my IFISA. This is a P2P property investment platform that focuses on lower-risk properties (e.g. sheltered housing on long leases). I put £100 into this in mid-February and another £400 in April. Touch wood, everything has been going well, so in June I added another £500, bringing my total investment on the platform up to £1,000.

Since I opened my account, my portfolio has generated £8.38 in revenue from rental and £58.61 in capital growth, for a total return of £66.99. Here’s my current statement in case you’re interested:

Assetz Exchange portfolio July 2021

The eagle-eyed among you may notice that although I have now put £1,000 into Assetz Exchange, only just over £800 of investments are listed above. The balance is still in my account waiting to be invested. The truth is that Assetz Exchange has been, to a degree, a victim of its own success. Over the last few weeks (my contacts at AE tell me) they have had a big influx of new members and all available investments are being quickly snapped up. New projects are coming on stream all the time, however, and AE are limiting how much members can invest in the first few weeks so that everyone has a fair chance to purchase a share. And as time goes on more members may opt to offer their shares for sale on the exchange, opening up additional opportunities for would-be buyers.

I am investing relatively modest amounts in new projects as they come onto the platform and expect to be fully invested by the end of this month. Indeed, I could be already if I chose, but I am following my strategy of diversifying as widely as possible, so don’t invest more than around £100 in any one project. As you can see, I already have a well-diversified portfolio with 19 different projects. This is a particular attraction of Assetz Exchange in my view. You can actually invest from as little as 80p per property if you really want to proceed cautiously.

As mentioned above, 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 if you like. You can also sign up for an account on Assetz Exchange directly via this link [affiliate].

Lastly in this section, I wanted to say that the low-key sideline-earning opportunity I have mentioned in previous updates has reopened for new members, with slightly different terms (see below). About a dozen PAS readers (including my sister Annie) have already signed up to this and are enjoying a hassle-free monthly sideline income.

The opportunity is based on matched betting, a sideline I have been pursuing for several years myself. I was asked not to divulge too many details about it publicly, for good reasons I will explain privately to anyone who may be interested (and no, it’s not illegal!). It doesn’t require any financial outlay and is risk-free and entirely hands-off (once you have set up your account). No knowledge of betting is required and you don’t have to place any bets yourself (this is all done by the company’s clever software). You just have to set up a separate bank account for bets to go through, but running the account is entirely financed by the company.

As I said above, the company has changed its terms somewhat for new members. You now get a larger £!00 initial payment once your account is up and running, and then £25 every month you remain a member. I think this is a good move personally, as setting up the account does involve a little work on your part (though it’s certainly not rocket science). So the £100 in effect compensates you for that, and once it’s done you continue to get £25 a month for no effort at all. As a matter of interest, the company is constantly developing its offering and just about to launch a new mobile-friendly site to make it even easier for new members to sign up (once you’re up and running you shouldn’t need to use the website at all),

Please note that this opportunity is only open to honest, trustworthy people who haven’t done matched betting before and have no more than two accounts already with online bookmakers. For more information (and to receive a no-obligation invitation) drop me a line including your email address via my Contact Me page. And yes, I will receive a reward for introducing you, but this will not affect the service or the rewards you receive.

  • Finally, in the interests of full transparency, I should say that if you do matched betting yourself, you may be able to make more money than what is being offered by the company. However, you will have to research this in detail, place all bets yourself, and probably subscribe to a matched betting advisory service such as Profit Accumulator [affiliate link]. This opportunity is really for those who want an easy way to make some extra money without the hassle (or expense) of learning/applying matched-betting methods themselves.

Personal

Of course, the big news this week is that so-called Freedom Day is set to happen on 19th July 2021. Most of the legal restrictions on our lives, including mandatory masks and social distancing, are set to be lifted then.

Regular readers of this blog (and my social media) may not be surprised to hear that I’m in favour of this. Indeed, I think it should already have happened. In particular, I am glad that the mask mandate is being scrapped and the decision to wear one (or not) will be left to individuals. Unsurprisingly this decision has caused some controversy, but personally I have always felt that the harms of masks to people’s physical and mental health greatly outweigh any potential benefits. And despite much hot air being expended on the subject, the evidence they do anything to reduce transmission of the virus in real world settings is – as England’s Deputy Chief Medical Officer has admitted – weak at best.

I also regularly see misuse of masks and other face coverings, which in my view makes them a hazard to both the wearer and those around them. That includes masks being endlessly re-used and kept in pockets and handbags when not required. I have lost count of the number of people I see in shops fiddling with their masks and then touching products on the shelves, potentially passing the virus on. It doesn’t surprise me at all that those US states which stopped mandating masks months ago have all seen dramatic drops in case numbers. There is every chance the same thing will happen here.

  • And then of course there is the small matter of the billions of tons of plastic pollution from masks (including particles of potentially carcinogenic microplastics) clogging up our oceans and littering our pavements, roads and countryside.

So, as you may imagine, I do not intend to continue wearing a mask or any other form of face covering after the 19th. Even if they worked, which I highly doubt, the benefits are extremely marginal (one study estimated that if infection levels are relatively low, 200,000 people would need to wear a mask to prevent ONE case of the virus being transmitted – and that figure optimistically assumes that masks reduce the risk of transmission by 40%). I have no objection at all to other people continuing to wear masks if it gives them reassurance (or a sense of moral superiority). But even though I am 65 and suffer from a long-term lung condition, I absolutely don’t want or expect anybody to wear one for my supposed benefit.

Moving on, I have just returned from a short break in Llanbedrog in North Wales. I won’t say too much about this now, as I plan to write a separate blog post about it soon. But it was a relaxing and restorative break and I felt much better for it. I stayed in this Airbnb apartment (you can read my post about booking a holday with Airbnb here if you like). I had never been to Llanbedrog before but would definitely like to return before too long. There is a picture of the beach and headland (which I climbed) in the cover image.

Also in June I met up with various friends I hadn’t seen for some time for pub lunches and other social events. I am doing more driving now, and noticing increasing amounts of traffic on the roads. Also, sad to say, I am seeing some very poor driving, including one collision (which thankfully didn’t involve me). I suspect many people have got out of practice at driving during lockdown, so please do be extra careful out there 😮

On the entertainment front, I finally got around to subscribing to Britbox in June. They had a special offer of one month free followed by three months at half price and I decided that was too good to ignore (I think that offer is closed now – sorry).

The Avengers

I haven’t really used it much yet, but have enjoyed watching (or re-watching) some old episodes of The Avengers with Diana Rigg and Patrick Macnee (pictured above). Last night I watched The House That Jack Built, one of the all-time classic episodes (even though it’s in black and white).

I am also planning to watch some of the original Doctor Who stories, and the three series of the political drama House of Cards featuring the inimitable Ian Richardson (“You might very well think that; I couldn’t possibly comment”). I understand that Britbox also have Dennis Potter’s Lipstick on My Collar coming up shortly and am looking forward to watching that too.

Whether I will stick with Britbox once my trial offer is over I am not sure. The big attraction for me is the classic series. While they do have some new material on offer as well, there isn’t much that has really piqued my interest. Still, I have four months before I need to decide about that 🙂

I plan to do one further Coronavirus Crisis Update next month. Assuming Freedom Day does go ahead on 19th July as planned, I think that will be a suitable point to stop. I will probably continue with monthly investment updates, and may also do more personal/general ones as and when the occasion arises.

As always, I hope you are staying safe and sane during these challenging times. If you have any comments or questions, please do post them below.

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Applying for the Higher Rate of Attendance Allowance

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I recently helped an elderly friend apply for the higher rate of Attendance Allowance. She was already receiving the lower rate, but sadly suffered a stroke which badly affected her balance and mobility.

As Pounds and Sense is aimed especially at older people (and those caring for them) I thought it might be of interest to describe what the process involves and my personal experiences with it. But first, let’s recap on the basics.

What is Attendance Allowance?

As I said in my original blog post about Attendance Allowance, this is a UK welfare benefit available to people who have reached state pension age who need help caring for themselves due to illness or disability. If you haven’t yet reached state pension age, the equivalent benefit is Personal Independence Payment or PIP. It is thought that millions of older people who would be eligible for Attendance Allowance are not currently receiving it.

How Much Is It?

Attendance Allowance is paid at two different rates according to how much help and care you need.

The lower rate (currently £60 a week) is paid to people who need care through the day OR night

The higher rate (currently £89.60 a week) is paid if you need care through the day AND night, or if you are terminally ill.

Payments are normally made every four weeks direct to your bank account. The money is yours to spend as you wish to make your life a bit easier.

It is worth noting that you do not need to have someone currently caring for you in order to claim. Eligibility is based on your need for care rather than whether you are actually receiving it.

Another important point is that Attendance Allowance is not means-tested – eligibility is based purely on your care needs. Also, it is not taxable and will not normally affect your entitlement to other welfare benefits. Indeed, you may also be eligible for extra Pension Credit, Housing Benefit or Council Tax Reduction if you receive Attendance Allowance.

Attendance Allowance is administered by the Department for Work and Pensions (DWP) rather than local councils. In Northern Ireland the Department for Communities (DfC) has responsibility for it.

There is a long (31 pages) and detailed application form. You can either download this from the government website or you can phone them on 0800 731 0122 and ask for a form to be sent to you. In Northern Ireland you can download the form from this site or phone the Disability and Carers Service on 0800 587 0912. You can apply yourself or someone else can apply on your behalf (with your permission, of course).

Applying for the Higher Rate

Most people first applying for Attendance Allowance are awarded the lower rate. This is because they need help and support during the day but not (normally) at night. But of course – as in the case of my friend – that can change if your condition worsens.

If you – or the person you’re caring for – regularly need help during the night as well as the day, you may become eligible for the higher rate of Attendance Allowance. This also applies if you are diagnosed terminally ill (someone is classified as terminally ill if they are not expected to live longer than six months).

Anyway, after my friend had her stroke and received her diagnosis (this was delayed by a few weeks for reasons discussed below), I realised that she should now be eligible for the higher rate. Because of her reduced mobility and balance problems she now needs help getting to the bathroom at night, which previously she could manage herself. She also needs help taking medication at night, and so forth. All this means she does now regularly require assistance during the night as well as the day. So I phoned up the DWP Attendance Allowance helpline on the number above.

I spoke to a helpful young woman who asked me a few questions about my friend and how I was connected to her. I explained that I was an old family friend and had originally helped her apply for Attendance Allowance two years earlier. She accepted this without a quibble. She then asked me a few questions about my friend and why she (and I) believed she might now be eligible for the higher rate. I explained that – as stated above – due to her stroke she now required support at night as well as during the day.

The official told me she would be sending my friend a couple of forms to fill in. She reassured me that these were not as long as the original AA claim form, which I was pleased to hear. She said once they had received these they would re-evaluate her application. She cautioned me that this could result in her allowance being reduced as well as increased, which I duly noted.

Completing the Forms

I was told the forms could take up to 10 working days to arrive, but in fact they turned up at my friend’s house the next day. The form reference numbers were DBD420 and DBD138.

Form DBD420 comprises 5 pages. The first three pages are actually a letter explaining what you need to do with this and the other form. On pages 4 and 5 you are asked to explain why you are asking them to look at your application again. You are also asked why you didn’t get in touch sooner if your circumstances changed before the date you contacted them (shown on the form). This is an important point, so I’ll say a few more words about it now.

Unless you have a terminal diagnosis, you won’t become eligible for the higher rate of AA until six months after the change in your condition occurred. This is obviously somewhat arbitrary and you could argue that it is unfair, but that’s the rule. So it is important to contact DWP as soon as possible after your condition worsens, even though this may not be your top priority if you have just suffered a stroke 😮

In my friend’s case, she didn’t get an immediate diagnosis as the initial hospital tests were inconclusive. She therefore had to go back as an outpatient for an MRI scan. There was then a wait of several weeks until she got a letter confirming she had indeed suffered a stroke. I felt it would be best to wait until she had a definite diagnosis before applying for the higher rate of AA. In retrospect that might have been a mistake, although it’s hard to say for sure. But anyway, form DBD420 let’s you explain the reason there may have been a delay in applying, so we provided details as above. We also enclosed the diagnosis letter my friend (eventually) received.

The other form is DBD138. This is 11 pages long. I won’t go into detail about it here, but essentially it asks for information about your medical condition/s and – crucially – what help you need during the night and how many times. Inevitably this caused us a bit of head-scratching, but we filled it in to the best of our ability. It is important to note that you DON’T need to require constant watching over at night to qualify for the higher rate of Attendance Allowance. There must be a regular requirement for help at night, though – it can’t just be a one-off. Night is defined on the form as ‘when the household has closed down at the end of the day’ which made us think a bit of Downton Abbey 🙂

The Outcome

We sent off the forms in the reply-paid envelope provided. After three weeks my friend received a letter from DWP which was basically just an acknowledgment of the original query. Then the next day, rather to our surprise, a longer letter arrived confirming that her application had been reviewed and she was now eligible for the higher rate of Attendance Allowance.

The start date for the higher rate was six months after the date she suffered her stroke, which is what we requested on the form. Obviously, I was pleased about this and so was my friend. Although the extra money won’t compensate her for the loss of mobility she has suffered, she will be able to use it to pay for things that will make life a little more comfortable for her going forward.

If you (or someone you know) find yourself in a similar position to my friend, I hope you will find these notes helpful. As always, if you have any comments or questions, do post them below. But please bear in mind that I am not a trained welfare worker or financial adviser. If you need in-depth help, I would try Citizens Advice or an organization like Carers UK.

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Start Your Own Business with a Franchise (Part Two)

Start Your Own Business With a Franchise (Part 2)

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In my previous article I explained the basics of franchising and revealed some of the attractions of the method to anyone hoping to set up a business of their own.

I also discussed the personal qualities and skills required to run a business, whether a franchise or otherwise. You don’t need to have all of these initially to make a success of running your own business, but you will almost certainly need to develop them.

Today I’ll be setting out some advice on choosing the right franchise for you, and how to run your franchise successfully. I’ll also be listing a selection of current franchise opportunities, along with resources for finding many more.

Before that, though, let’s recap on the main attractions of the franchise route, along with a couple of possible drawbacks.

Franchising Pros and Cons

The main attraction of franchising is that you are buying into a ready-made business format.

While this does not guarantee the success of your business, with a good franchise you will be getting a format that has worked well for others, and with a little luck (and a lot of hard graft) should work for you too.

Another benefit is that, as a franchisee, you are not alone. If you have any problems or queries, the franchisor will be available to advise and support you. They will also in most cases provide training, promotional materials, and so on. You may also be able to network with franchisees in other areas for mutual support.

On the downside, running a franchise will require you to follow the franchisor’s format very closely. If you are a free spirit who likes to carve your own path in life, you may find the restrictions imposed difficult to bear.

The other drawback is, of course, you have to pay the franchisor! Typically there will be an up-front fee and further regular payments for support, training, materials, and so on. Obviously, with a good franchise you get plenty back for your money, but ultimately all these costs have to be covered by you and your business.

As mentioned last time, some big franchises such as McDonalds will set you back a six-figure sum. Finance deals may be available through the franchisor and other lenders, but you are still likely to have to fund a substantial chunk of the initial cost yourself.

If money is tight, however, there are lower-cost franchise opportunities as well. Later in this article I will set out a range of options to suit all budgets.

Choosing a Franchise

It’s important not to rush into choosing your franchise. Nowadays a huge range is available, and it’s vital to take some time to assess the options and identify which might be the most suitable for you.

A good place to start is a franchise exhibition. Held in cities across the UK, these events give you the chance to check out many different franchises and – just as important – chat with the franchisors. Obviously the pandemic meant many exhibitions had to be cancelled, but as normal life gradually resumes they are returning to the calendar again.

The biggest exhibitions are those organised by the British Franchise Association in cities including Manchester, Glasgow, London and Birmingham. Entry is generally free as long as you register in advance. A good place to find out about upcoming exhibitions (and much more besides) is the website https://www.franchiseinfo.co.uk.

Here are a few more tips for choosing the right franchise…

  • Choose something that interests you personally. You are more likely to succeed in a business you enjoy, as you will put more effort and enthusiasm into it. If you like cars, for example, there are franchises covering everything from vehicle rentals to fixing dents and scratches. If working in the outdoors appeals, you could focus on areas such as landscape gardening or window cleaning.
  • Look for franchises that will fit in with your family and personal circumstances. Sectors such as retail and catering involve long hours, often in the evening and at weekends. If you have childcare concerns, or simply fancy seeing your other half and friends now and then, you might prefer to focus on franchises that allow you a bit more free time.
  • Aim to pick a franchise with a good track record and reputation. Be wary of new franchises, especially those based around an unproven product or service. Remember that the franchise is going to have to provide your livelihood potentially for many years to come. You don’t want to hitch your wagon to a business that may prove no more than a short-lived fad.
  • Once you’ve identified some franchises that interest you, ask the franchisors for contact details of existing franchisees you can speak to. Don’t let them fob you off with one or two names. Request a list and choose a few at random to contact. Ask in particular how they get on with the franchisor and what the quality of support has been.
  • If at all possible, arrange to visit one or two existing franchises and stay a few hours to see what the work involves and whether or not it would appeal to you. This can be very illuminating.
  • Ensure the financials stack up. Study the projections provided by the franchisor and see if they tally with your own research, bearing in mind local market conditions. Your accountant, bank and existing franchisees can help verify your findings and assumptions. If the projected revenues look too good to be true, they probably are!
  • Also bear in mind that your start-up costs will need to be deducted from your revenues, so don’t leave yourself short. It may be 6–12 months until your business is fully established, and during that time you will need to have enough money to cover all your costs and expenses, including feeding yourself and your family!
  • Before proceeding further, an essential step is to draw up a detailed business plan. This should cover such things as the size of your territory, local competition, the national and local economic climate, trends affecting the product/service you will be supplying, and so on. It should also include a cash-flow projection showing anticipated monthly income and expenditure for at least the first twelve months.

Your business plan will be an invaluable guide when planning and running your business, and it will also be a necessity if you have to apply to a bank for finance.

Running Your Franchise

Having bought your franchise, you will of course want to get it making money for you in the shortest possible time. Here are some tips for starting and running a successful franchise…

  • Keep in regular touch with your franchisor and act on any advice they give you. Whatever issues you may be facing, you can guarantee that someone, somewhere has already faced something similar, and the franchisor will be able to advise you how they dealt with it. Use the franchisor’s knowledge to your advantage rather than learning the hard way. That is why you paid for a franchise rather than setting out on your own.
  • Improve your business skills. While franchisors will teach you their system, most also expect you to bring some basic business skills to the table. If you don’t know accounting basics, how to read and work with financial documents or how to hire and manage employees, you’re likely to encounter problems. If your sales skills are rusty, your knowledge of business taxes is shaky or you’re not up to speed on internet marketing, consider taking a class to improve your skills. Classes are often available at local colleges, and there are also online courses and seminars that require less time and monetary investment.
  • Likewise, make it your business to learn everything there is to know about your industry (in addition to whatever you found out during your franchise research). Almost every sector has associations and meetings where business owners gather and share ideas – these can provide a great forum for learning and networking. And, as mentioned earlier, your fellow franchisees can also provide invaluable insights into your industry.
  • Monitor your cash flow carefully. Regularly compare the figures in your forecast with the reality, and use this to make informed decisions about your business. It’s important not to under-estimate the working capital required to run a business day to day while it is growing. Cash-flow problems can be mistaken for poor profitability, in the early months especially. Careful planning and monitoring will reveal how you are really doing and prevent unpleasant surprises.
  • Market your business. Even with the franchisor’s name and system behind you, your business won’t sell itself. The fact is there is no-one better to market your business than you. Use the passion you have for your product or service to talk to people face to face. Enthusiasm is infectious and you will be more successful. Monitor carefully the results of any marketing activity, however. You don’t want to waste your money in future if a campaign has not proved profitable for you.
  • Master time management. As a business owner you only have so many hours per day and it’s important to deploy them wisely. Planning and flexibility are the keys to success when it comes to time management. Time spent planning saves a lot more time in the long run. But be flexible as well, and constantly assess any task associated with running your business to see if it can be done more efficiently.
  • Stay up to date with paperwork. Don’t leave it for a month then attempt to do it all in one day. Not only does this become a depressing chore, but by the end of that day you are more likely to be tired and make mistakes.
  • Wherever possible invest in IT and developing your computer skills. Many aspects of running a business can be performed faster and better with the aid of computers, from invoicing to accounts, marketing to stock control. Don’t forget to back everything up on a regular basis!
  • Recognize your strengths and weaknesses and use them to your advantage. If you really are terrible at managing one aspect of your business, employ someone to manage it for you. Your time will be better spent on the aspects of your business you are good at and enjoy.
  • Reward Yourself. The responsibility of running your business is down to you, and that includes rewarding yourself when things go well. Set yourself a goal and when you achieve it give yourself a little reward. You would do it for an employee, so why not for yourself?
  • And finally, enjoy yourself. The chances are you decided to start a business because you wanted to enjoy your work more than you were previously. Yes, running a franchise does require effort, determination and tenacity, but don’t lose sight of the reason you started. Stay positive, enjoy the challenges, and never lose your sense of humour. Have fun!

Example Franchise Opportunities

As promised, I have set out below a selection of franchise opportunities you might like to consider. As well as some high-profile (and high-cost) franchises, I have also included some that may appeal to those on a more limited budget.

1. The Pets, Homes and Gardens Company

Website: https://www.petshomesandgardens.co.uk Cost: £995

This is a pet-sitting and home-care franchise. The work involves visiting clients’ homes while they are away and looking after their pets, as well as keeping an eye on their homes and gardens.

2. Kumon

Website: https://www.kumon.co.uk Cost: £3,000

This franchise involves setting up your own Kumon maths and English study centre. To become a Kumon instructor you should have an interest in education, an understanding of business, and enjoy working with children.

3. Harmony at Home

Website: https://www.harmonyathome.co.uk Cost: £3,300

Harmony at Home is a recruitment and consultancy agency for the childcare industry, providing both permanent, temporary and supply nannies and childcare staff, as well as training courses and consultancy services. The franchise can be operated from home or from an office.

4. My Window Cleaner

Website: https://www.mywindowcleanerfranchise.co.uk Cost: £8,000

Everyone needs their windows cleaned, so there will always be a market for this business. My Window Cleaner offers training, marketing assistance and admin support via an app.

5. Open House Estate and Letting Agents

Website: https://www.onlineestateagents.org.uk (franchise info here) Cost: £1,000

This low-cost franchise involves setting up your own home-based estate and letting agency. Full training is provided.

6. Countrywide Signs

Website: https://www.countrywidesigns.co.uk Cost: £22,950

This business involves going round in a van installing and removing estate agents’ signs. You can start with a single van, and get more vans and take on staff to boost profits further.

7. Haus Maids

Website: https://hausmaids-franchise.co.uk Cost: £9,950

This franchise involves running a local branch of Haus Maids, a company that provides one-off and regular cleaning services for domestic homes. This is a managerial franchise, so the work involves managing a workforce of cleaners rather than actually doing any cleaning yourself.

8. Travel Counsellors

Website: https://recruitment.travelcounsellors.com/gb Cost: c. £10,000

Travel Counsellors is a company that offers clients the opportunity to book a bespoke holiday or business trip, planned for them to the finest detail by a trained and experienced Travel Counsellor. Experience in the travel industry is a particular asset with this franchise. It’s not essential, however, as full training is provided to bring franchisees up to the required standard.

9. Chips Away

Website: https://www.chipsaway.co.uk/franchise Cost: £29,995

This is a van-based business. Franchisees provide a service to vehicle owners, repairing scuffs, minor dents, scratches and other damage.

10. McDonald’s

Website: https://www.mcdonalds.com/gb/en-gb/franchising.html Cost: £400,000+

McDonald’s is one of the best-recognised brands in the world. A growing number of their restaurants are run by franchisees. This is not an opportunity for the faint-hearted, and applicants have to submit to a selection process as well as having at least £100,000 in unencumbered funds. For those accepted, though, the financial rewards can be considerable.

Note that all the costs stated above are approximate minimum amounts and do not include any ongoing payments that may also be required. VAT is also likely to be charged, though you may be able to claim this back once your business is up and running (and registered for VAT).

Closing Thoughts

As I hope I have demonstrated in these articles, if you want to start your own business, buying into a franchise is definitely something you should consider.

Not only will you be getting a tried-and-tested business format to follow, you will also have access to advice and support from the franchisor any time you need it. You will still need to put in some hard work yourself, of course, but your chances of success should be significantly boosted compared with going it alone.

What’s more, there are thousands of different franchises available, in a wide range of industries, and at prices to suit all budgets. Don’t rush into buying a franchise, therefore, but take some time to explore a range of options. And hopefully in less time than you think there is every chance you will be running your own profitable franchise and enjoying the many benefits of being a successful business owner.

As always, if you have any comments or questions on these articles, or franchising in general, please do leave them below.

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Start Your Own Business With a Franchise (Part 1)

Start Your Own Business With a Franchise (Part 1)

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If you want to be your own boss, the franchise route is well worth considering.

Franchising isn’t a business in itself, but rather a method of ‘buying into’ a brand and format devised by someone else. With a franchise you typically pay the franchisor an up-front fee, and possibly additional fees once you’re up and running as well.

Franchising has become a very popular method for getting started in business. It has the great advantage that you aren’t starting from scratch. In exchange for your fee, you gain the right to trade under the franchisor’s brand name. You get a ready-made (and hopefully proven) business plan, along with training, materials, assistance with marketing, and access to advice and support any time you need it.

A huge range of franchises is available, and there’s something to suit most budgets. At the lower end of the scale, you can get started as an Avon distributor for as little as £10. At the other end of the scale, you could pay up to £800,000 to purchase a McDonald’s franchise (see cover image).

In between these is a wide variety of businesses, from carpet cleaning to recruitment, gardening to children’s entertainment. While some franchises require business premises, many others can be run from home and/or a car or van.

Of course, some franchises are better than others, and it’s important to research any that interest you carefully. So in this two-part series I’ll be sharing some tips on choosing the best franchise for you and getting the most out of it. I’ll also be setting out a range of current UK franchise opportunities to give you an idea of what’s available.

In this first article, though, I want to start by addressing the more fundamental questions of what running a business entails and the skills and aptitudes required.

Business Basics

At the risk of stating the obvious, running a business is a very different thing from doing an ordinary job.

As a business-owner, you will be responsible for every aspect of your business’s operation. As well as providing a product or service, all the ancillary matters from marketing to book-keeping, purchasing to recruitment will become your responsibility.

Of course, you will get help with many of these from the franchisor, and you may also choose to outsource some to professionals such as book-keepers and/or paid staff. Nonetheless, you will need to oversee all of these tasks and ensure they are done properly even if you don’t do them yourself. That is quite different from an ordinary job, where you simply do whatever task you are paid for and leave everything else for your employer to worry about.

Running your own business requires a particular set of aptitudes and skills, and there is no doubt it suits some people better than others. In the next section I’ll set out the main qualities you need for business success.

Requirements for Success

Everyone has different views on which qualities are the most important for success in business, but there are certain ones that come up time and time again…

(1) Determination

Many people talk about starting a business, but only a small proportion do anything about it. Starting a business is a major decision that will undoubtedly change your life and that of your family. It is important that you are committed to your new career before making such a move; and that once you have started the business you are determined to see it through to success.

(2) Willingness to Work

We all think we are willing to work hard, but if you start a business you will soon find out what this means in practice! In the early days at least you are likely to have to work longer hours than the average employee. Although as your business becomes established some of the pressure may ease, you must still expect to work longer and harder than most people in paid employment.

(3) Persistence and Perseverance

Successful business people let nothing get in the way of achieving their goals. If they encounter problems, they try to find ways to overcome them. If their first attempt doesn’t succeed, they try a different approach; and, if this doesn’t work, another. They are not put off by pitfalls, or discouraged – other than temporarily – by failure. They persevere in their efforts until, eventually, they do succeed.

(4) Stamina

In view of the hours you are likely to have to put in, stamina and at least reasonably good health are important. People running businesses have to avoid taking time off for sickness if at all possible. As a self-employed sole trader in particular, if you are not working you are not generating any income. And if you let down a customer, next time he is likely to go elsewhere.

(5) Self-discipline

If you are in a paid job the chances are you will have a manager or supervisor, part of whose duty is to ensure that you fulfil your obligations to your employer. Your reasons for wishing to start a business may include escaping from such individuals! However, while as a business owner you will have no-one standing watch over you, you will still have obligations to customers, suppliers, employees, officials, and so on. If your business is to go on running successfully, it is important that you have the self-discipline to fulfil all your responsibilities and see a job through to the end.

(6) Willingness to Take Risks

All business people have to take calculated risks. Whereas in a job you have the relative security of a regular wage or salary, as a business owner there is no guarantee what your income will be from one month to the next. You will constantly find yourself having to make decisions about where and how to advertise, which areas to specialize in, when to invest in new equipment, and so on. Although this constant decision-making can be stressful, it can also be satisfying and enjoyable. Solving problems and making decisions can give you a sense of power and confidence. And if you are running a franchise, you will be able to get advice and assistance from the franchisor, of course.

(7) Ability to Cope with Stress

Starting and running a business will inevitably impose a range of stresses, both on you and your family. In the beginning at least, long hours, hard work and disruption to family life can cause tension. To be successful in business you need to be able to cope with, and even thrive on, this kind of pressure.

(8) Enthusiasm

Enthusiasm is an essential ingredient of every business owner. If you are half-hearted about your venture you may have difficulty summoning sufficient determination to overcome problems when they arise. If you are enthusiastic, on the other hand, you will relish the challenges your business presents. What’s more, your enthusiasm will rub off onto customers, employees (if you have them) and other people you have to deal with. Most of us would far rather work with or buy from someone who is enthusiastic and enjoys his work, rather than someone who is permanently depressed about it.

(9) Ambition

Most business people have a driving ambition to achieve the best they can for themselves and their loved ones: as well as money, this may include financial security and a better way of life. With such ambitions they can cope with any setbacks along the way, because in their mind they have a goal or vision that drives them on. Ambition and determination together can overcome many obstacles. In business, as in most others aspects of life, if you know what you want and are determined to achieve it, the chances are excellent that you will succeed.

(10) Honesty and Willingness to Give Good Service

Finally, every business depends for its continuing survival on a circle of satisfied customers. If people are pleased with the service they have received from you, they are likely to recommend you to others as well as keep coming back themselves. By contrast, if you give poor service then, even if they do not complain at the time, they will not return; and rather than recommend you to others, they will warn them about you (quite possibly nowadays on review websites that anyone can find). If you have a good reputation this will ensure that more people keep coming to you. For this reason, successful business people go to great lengths to obtain and keep a good name for themselves.

  • Franchisors are, understandably, fiercely protective of the good name of their brand. In many cases they will want to conduct checks to satisfy themselves that you are a suitable person to run a business in their name. Don’t be surprised or offended if this happens, therefore. It’s actually a good thing, as it demonstrates the franchisor’s long-term commitment to preserving their reputation.

Friends and Family

Just as it is important to have the right personal qualities yourself, you will also need a supportive family and friends.

If you decide to start your business from home, this will inevitably cause changes and disruption in the family routine. Even if you use separate business premises, your friends and family will still have to come to terms with your working long hours and having less time and energy for leisure activities. If you are married or living together, it is especially important that your partner understands the implications of your setting up in business, and supports what you are trying to do.

There is also a positive side, of course. Your family may be a valuable source of help in all sorts of areas, from answering the phone and writing letters, to book-keeping and assisting customers. Having others closely involved with the business can assist when problems arise, as they will bring different ideas and perspectives to the situation.

Although it is not absolutely essential to have a supportive family, there is no doubt that you are more likely to succeed if you have discussed your plans with them and have their wholehearted support.

Your Skills

To run your business successfully, as well as the right personal qualities and a supportive family and friends, you will need a range of skills. These are described in general terms below. If you lack any of these it does not necessarily mean that you should not set up in business. However, if you feel any of these areas is going to present serious problems, you might want to consider taking on a partner or employee to handle that aspect of the business, or using a specialist adviser or consultant. You might also consider taking additional courses to acquire the skills you need.

(1) Technical Skills

These are the skills that you need to actually deliver the service you are offering. In the case of a franchise, training will normally be provided to help you achieve the necessary standard. Obviously some types of business will require more in the way of technical skills than others, and you may also choose to employ staff to deliver services on a day-to-day basis. Even if the latter applies, however, you should still have an in-depth knowledge of the service in question, so you can ensure that all your customers receive the high quality service they expect.

(2) Financial

To run a business successfully you will need a range of financial skills. These include such matters as book-keeping, negotiating credit terms with suppliers, invoicing, credit control, estimating, drawing up budgets and controlling cash flow (the flow of money into and out of the business). Again, the franchisor or should be able to help with this, but it will be down to you to master the skills required and/or hire staff who can perform them to a suitable standard.

(3) Marketing

Marketing is the process by which you identify potential customers and persuade them to buy your products or services. It includes selling skills, and also such matters as pricing, advertising, sales promotions, public relations, and market research.

(4) Management

If you are going to employ others, you will need a variety of management skills in such areas as recruitment, motivating staff and team building. You will need a knowledge of employment law and health and safety requirements. You will also need to be able to fulfil legal requirements in matters such as deducting tax from employees’ pay.

(5) Organization

Whether or not you intend to employ others, you will need organizational skills to ensure that every aspect of your business runs smoothly. This includes setting up systems for dealing with orders and enquiries, keeping customer records, and so on. It also includes time management, i.e. ensuring that your time is used as efficiently as possible.

(6) Planning

Every business owner also needs planning skills. Good financial planning is crucial to the success of a business. Planning skills are also needed to take best advantage of new opportunities that may present themselves, and to avoid any problems due to changing market conditions. Good planning can avert many problems before they happen.

Many of these skills can be acquired through taking courses (including training provided by the franchisor), studying books and websites, talking to professional advisers, and so on. They will also develop naturally with practice and experience once your business is up and running. If you are to succeed in running a business of your own, however, the above are the most important skills you will need to master.

Closing Thoughts

In this introductory article I’ve talked about franchising as a means of starting your own business, and looked at the skills and aptitudes you will need to have or develop. Many of these requirements, of course, apply equally when starting any type of business, not only a franchise.

In case you’ve found this a bit daunting, I should say that everyone considering starting in business inevitably has worries and concerns (and the pandemic has obviously added a whole new layer of these) .With hard work and determination, however, you can almost certainly overcome the obstacles and set up a successful business. And choosing the right franchise will boost your chances of success even further.

In my next article I will discuss how to identify a good-quality franchise opportunity that is also a good fit for your own skills and interests. I will also reveal some steps you can take to ensure that you make a success of your franchise.

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What are the top big-ticket items people have bought during lockdown?

What Are The Top Big-Ticket Items People Have Bought During Lockdown?

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I recently saw an interesting survey of the main big-ticket items people have been buying in the UK during lockdown.

The YouGov survey of over 2000 adults was performed by YouGov on behalf of National Conversation Week (see below). The survey was commissioned by insurance services company Paymentshield, who sponsor National Conversation Week.

The top ten items were as follows:

  1. Gadgets or electronics – 22%
  2. TV – 13%
  3. Games console – 11%
  4. Gym equipment – 10%
  5. Jewellery or watch – 10%
  6. Bike – 6%
  7. Expensive equipment to support a hobby (e.g. photography equipment, a musical instrument) – 6%
  8. Pet – 6%
  9. Garden shed – 5%
  10. Art or antiques – 3%

I thought this list made very interesting reading, especially the fact that 1 in 10 people have bought home gym equipment. With gyms closed for many months due to the pandemic, it is no surprise that many of us have been investing in stationary bikes, rowing machines and even treadmills to try to maintain our fitness. I wonder whether people will rejoin clubs in the same numbers now they have this equipment at home.

I am not surprised either to see pets on the list. Certainly in my area I have the impression that many more people now own dogs. I can understand that they provide companionship, especially for those who live alone. Though I do think some of these new owners might benefit from education about how to look after their animals, and in particular the need to pick up after them 😮

I was slightly surprised to see that so many people have been buying jewellery, watches, art and antiques. I guess this may partly reflect that those of us lucky enough to have a continuing income have had fewer ways to spend it, leaving more spare cash available. I just hope the people concerned have checked that they are covered for any expensive items on their home insurance.

Finally, it’s interesting to see garden sheds on the list, with 1 in 20 buying them. I guess this reflects the fact that so many of us are working from home now, for some of the week at least. If you have the space for it, a shed can be a great option for reducing distractions and separating work life from home life. Around here I have also seen one or two mini-pubs created in garden sheds! (See cover image.)

National Conversation Week

National Conversation Week – which this year runs from 7 to 11 June – aims to get people talking in a bid to improve the nation’s well-being, at a time we are all facing unprecedented challenges. In particular, National Conversation Week hopes to encourage frank and open conversations about money. This is especially relevant at the moment, with many people having lost their jobs due to the pandemic and facing stress and hardship as a result.

As a money blogger I fully support the aims of National Conversation Week. As I’ve said before, if you have financial worries it is crucial to speak to someone about them rather than bottling them all up. Personally I am a fan of having a personal financial adviser (here’s a link to my blog post about why – despite being a money blogger – I have a personal financial adviser). But even if you don’t, talking to friends and family about money matters can help you put things into perspective and reduce stress and anxiety. You may also enjoy reading reading this article (in which i am quoted) about how to cope with common causes of stress.

Above all else, though, be kind to yourself, and don’t suffer in silence. And equally, if you know someone who may be struggling – or you just haven’t seen or heard from them for a while – reach out by phone or at least message them to check they are okay. It may be a cliche, but we really are all in this together. And pretty much everyone is struggling in their own way.

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

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Five Simple Money saving Hacks for Over 50s

Five Simple Money-Saving Hacks for the Over-50s

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Today I am pleased to bring you a guest post by Paul Green from Over50smoney. Paul is the founder and CEO of this popular website, which acts as a consumer champion for the over-50s.

Paul also has his own blog on Over50smoney, in which he mixes financial tips and guides with some personal pieces on subjects including sourdough bread making and growing his own fruit and vegetables!

In the article below (shared from his blog) Paul sets out some great tips for saving money that may particularly appeal to older people (though relevant to younger ones as well).

Over to Paul then…

 

My career has been spent helping people and businesses save money. With a business it makes sense to run operations efficiently as this enables investment to grow the business in the future. For individuals, saving money on everyday purchases is just the same. It enables you to save for the future. You can then spend the money you save however you like. This could be on holidays and enjoying life or maybe longer-term savings for your retirement. The choice is yours.

In this blog post I wanted to share five easy ways of saving money on everyday things that have worked for me. If you have other great tips that people over 50 could benefit from, please do share then below.

Don’t Take Out an Expensive Mobile Phone Contract

The smart phone has become a big part of most peoples lives. And this isn’t only the case for younger people. At Over50smoney about 80 percent of our website users visit the site with their mobile phones. However, those of us who wait in eager anticipation of upgrade time on our phone contracts are probably wasting hundreds of pounds. This used to include me until I realised how much money I was throwing away needlessly.

Let’s start by looking at why the standard type of pay monthly phone deal doesn’t make sense. The table below compares the latest Apple top of the range phone on a 24 month contact on the Vodaphone network against buying the phone upfront and getting the same data and minutes deal from Vodaphone on a SIM only deal. Taking out a phone contract is essentially the same as buying your mobile phone on Hire Purchase (HP). You have to pay for this. In the example below you are out of pocket to the tune of £250 over the course of a two-year deal. 

You could also make buying your own phone and SIM even cheaper. If you shop around, you could get a significantly cheaper SIM deal depending on your needs. Keeping the same amount of data but giving up 5G capability can save money, but do you really use all your data anyway?

 

   Comparison of a 24-month phone contract to buying your own phone

Phone contract Get separately  Savings
Apple IPhone 12 Pro Max £75 per month for 24 months = £1,800 Phone £1,099

Data £20 per month for 24 months = £480
Upfront payment £29 £0
Total cost over 24 months  £1,829 £1,579 £250

*Data from Carphone Warehouse, Vodaphone and Apple, correct as at 31 May 2021

There are also cheaper SIM providers than the main networks so it’s worth considering providers like ID Mobile that uses the 3 network. The point is, if you buy your phone, you have more flexibility on the SIM deal you use.

Not everyone has a thousand pounds to buy a new top of the range phone outright. And in my opinion, this wouldn’t be the best option if you wanted to maximise savings on your smart phone anyway. Have a think about these ways of getting a good phone for less.

If you have a phone coming to the end of a contract why not keep it for another year? The build quality in modern phones is high, so unless you already have a problem with the phone, it’s likely to last for an additional year or two. It’s been a while since there were any real breakthroughs in phone design, so the extra benefits of upgrading are likely to be limited to things like a slightly more sophisticated camera. A friend of mine recently decided to keep his Samsung when he came to the end of his 24-month contract. He had been paying £65 per month during the contract term with O2. He wanted to stay with O2 so based on his usage he decided to move to an O2 SIM only deal and now pays £20 per month. As he stayed with the same provider, he didn’t even need to get a new SIM card. He now enjoys the same phone he really likes for £45 per month less than he was paying during the contract term.

If you want a new phone, it’s definitely worth looking at buying second hand. You can do this online or in many of the high street phone retailers. A quick Google search will show you several companies that specialise in selling high quality second-hand phones including WeSellTek [sponsored]. These will be wiped clean of previous owners’ data, refurbished and sanitized. You can get models that are currently being sold new for hundreds of pounds less. However, the biggest savings are usually on models that are just out of date. Given the pace at which the main manufacturers release new phones this probably means the phones are only a couple of years old and will have all the features and capabilities you want.

I’m not going to cover the pros and cons of moving to pay-as-you-go deals here. If you use your phone infrequently or usually have access to Wi-Fi this is something you could consider as additional cost savings are possible.

Double Savings With Amazon

Being someone who likes to shop local where I can, buying grocery items from Amazon initially went against the grain. However, financially it can make really good sense.

I first noticed this with a couple of items. We love coffee and a few years ago invested in a great, beans to cup, machine. This means we use a lot of coffee beans at home. Likewise, my wife makes amazing risotto. This is a staple on our menu once a week. Which means we also use a lot of arborio rice. Of course, we can pick up coffee beans and arborio rice from the supermarket, but they come in fairly small packets and we go through these pretty quickly. I discovered both coffee beans and arborio rice were available in big 1 kg sized packs from Amazon and that the price per KG is less buying these bigger packets than the smaller ones we used to get in store.

However, on top of the saving for buying bigger packets, if you use something regularly Amazon can give you additional savings. If you buy using Subscribe & Save you can control how often Amazon sends you a product. And, if you used less than normal it’s easy to delay an order so your cupboards don’t get too full. For most grocery items Subscribe and Save seems to offer a 10% price reduction initially that can increase to 15% with repeat orders over time. For some products the saving is lower, with a 5% initial reduction increasing to 10% over time.

So, I am now converted to getting some of my groceries from Amazon. The value is really good with both cheaper prices for bigger quantities and a Subscribe and Save discount on top of that. I also like the additional benefit of the products being delivered which means you don’t have to remember to put them on your shopping list and then carry them home!

Big Savings With Groupon

As the over-50s community is now well and truly online, I wanted to look at another couple of routes to savings when buying online. First up, Groupon.

Groupon has been around since 2008 and is based on the American love of coupons. The site works in the same way as cutting coupons out of a newspaper. You select an offer from the site, and read the small print so you understand things like the time period the offer is available for and how to claim it. Traditionally you had to print a voucher from Groupon, though nowadays that isn’t generally the case.

Groupon is easy to sign up for. You need an email address. It’s the most useful if you download the app to your phone or tablet as you can use the settings to get offer alerts close by when you are out. Groupon guarantees sellers a minimum number of customers. This means that they can create offers for the platform to drive sales when they need them. Groupon claim the typical discount on an offer on their site is the range of a 30-40% discount, although I have seen discounts stated as high as 90% and as low as 5%. Groupon earn a commission every time a customer takes an offer.

Groupon organises offers into different categories, making it easier to find what you want. The offers are updated all the time so if you can’t find what you want its worth coming back again. Different people I know use Groupon in different ways. For example, I have a friend who before the pandemic only bought toilet roll in bulk from Groupon (today, I have seen an offer of 120 rolls of Cusheen quilted luxury aloe vera toilet tissues for £17.50!). I’ve not typically used the site for “basics” but have found offers for services near where I live to be really useful. Again, before the pandemic when my wife and I went out with friends regularly, Groupon was a good source of mid-week deals on food in local pubs and restaurants.  

So you understand why I like local deals on Groupon, these three are a selection from the recommendations near me as I write this post:

  • 40% off a two-course meal for four people in a local fish restaurant. The price includes a glass of wine each and is reduced from £84 to £50. The offer is for Tuesdays, Wednesdays and Thursdays only, unless you book at least four weeks in advance when it also applies to Fridays;
  • 60% off a spa day at a local hotel Mondays to Fridays or 56% off for Saturdays and Sundays. The offer for two people includes use of the spa facilities and hotel pool, Rasul mud treatment and lunch served with a glass of Prosecco. Mondays to Fridays the price is reduced from £201.90 to £79 or Saturdays and Sundays from £205.90 to £89. As it’s my wife’s birthday in couple of weeks this is an offer I may consider as it’s the type of experience she enjoys at a resort I know she likes;
  • The most interesting offer for me today is from a local chiropractor. Having hurt my back about a month ago lifting heavy pots in the garden I have put up with ongoing back ache. However, I will now book a visit for a chiropractic consultation and exam, which includes a report of findings and a treatment session. I haven’t been to this practice before, but it is offering a whopping 84% discount with the price reduced from £81 to £12.95. I wouldn’t have booked this at the full price but am happy to pay just under £13 to see if I can sort my ongoing backache out!

I think the two most important tips for using Groupon are to read the small print of the offers, especially availability in terms of dates or locations. Also, you do need to include the cost of postage when assessing an offer for goods. While the postage amount is specified on the site, for low value goods this can outweigh the savings from the offer.

Cashback Sites Offer Great Deals

I’ve written about cashback sites before and there is a range of content on the Over50smoney website about them. For example, they are mentioned on the short video here Revolutionise your finances – Part 2 (over50smoney.com).

You need to join a cashback site and because of the way they work this takes a little longer than signing up to Groupon. The two best cashback sites in the UK are TopCashback and Quidco. Both are well established, reputable businesses and free to join. Once you have signed up you can search the cashback offers available. If you select an offer, you will receive your goods or services and the appropriate cashback amount will be credited to your account. This can take a few weeks. Once the money is in your cashback account you will be able to transfer it into your bank account so long as you stay within the conditions of the site you are using. Transfers are usually straightforward. According to TopCashback members earn an average of £345 cashback a year. Retailers pay cashback sites a bonus based on volumes of sales. Cashback sites also earn revenue from sponsored adverts and promotions on their sites.

Cashback offers typically range from a few pounds for everyday products to hundreds of pounds for expensive items or ongoing services like energy or broadband deals. The important thing to remember with cashback sites is that while the offers can represent really good value for money you need to make sure you don’t get swayed just by the cashback amount. High cashback amounts can seem compelling but may be associated with high-cost products. You should be aware that many businesses use cashback sites to drive volumes when their prices may not be competitive. Always take a look online and see if the product or service you are thinking about is cheaper elsewhere when you include the cashback discount. If you have done your research and are confident that the cashback offer you have seen is a good overall deal, representing best value for money, it makes sense to purchase this way.

Both TopCashback and Quidco have a wide range of offers split into different categories including clothing, electricals, insurance, travel and so on. There are many offers in each category, so normally there will be a fair amount of choice if you want to make a purchase.

At the time of writing the following deals were available on TopCashback:

  • £210 off iPhone contracts with Tesco Mobile
  • £200 off energy with Scottish Power
  • Up to 8% discount on purchases from Marks & Spencer (different reductions depending on products purchased)
  • Up to 7% discount on purchases from ao.com (different reductions depending on products purchased)
  • 3% discount on Lego

If you would buy online directly from a retailer it always makes sense to see if there is a discount available from a cashback site. For example, why send flowers from Marks & Spencer directly when you can save 8% buy buying through TopCashback?

Always Use the 30-Day Rule

As someone who used to be a spontaneous shopper, buying things I liked when I was out, the 30-Day Rule has been a godsend for me.

The 30-Day Rule goes like this:

If there is something you would like to buy, think about it for 30 days. If after that time you still want it, go and get it.

Putting this discipline in place stops you buying things you don’t really need or want. The ultimate waste of money is buying things you never use!

I think all of us have bought things on the spur of the moment because they seemed like a good idea, but ultimately, we didn’t really use them. Recently, I was talking to friends who were moving house. Their weakness was kitchen gadgets! They had cupboards full of things they were planning to give away before they moved. They had bought soup-makers, salad spinners, air fryers, rice cookers, etc, etc, that had seemed like a good idea but were ultimately only impulse buys. Bought, used once, and then forgotten about!

For me the 30-Day Rule has stopped this. Waiting 30 days gives me time to reflect on whether I really want something. I no longer waste money on things that I don’t use or enjoy.

Paul Green, 1 June 2021

 

Many thanks to Paul for an eye-opening guest post. I shall definitely be checking out Groupon more often in future! Do check out his blog on Over50smoney and the Over50smoney website itself.

I do strongly agree with Paul about the savings to be made through buying your mobile and SIM card separately. And there are some amazing deals out there right now. Personally I pay EE just £6 a month for a SIM-only deal with unlimited texts, unlimited voice calls and 5 GB a month of data. Okay, 5 GB might not be enough if you are out and about all day, but personally I’m nearly always within wifi range and don’t need that amount of data or anything like it.

  • Older people might also want to look into getting a big button mobile phone. These can be great for those whose eyesight isn’t what it once was and/or those with arthritis or similar who struggle to use the small buttons on modern mobiles. Click here for more information on big button mobile phones.

I am old enough to remember the days when mobile phone calls were so expensive you only made them when you really had to and kept calls as short as possible. How times have changed!

Release the Equity from Your Property

While 50 won’t cut it, the great news for homeowners over 55 is that you can use your property value while still retaining full ownership. So, if you’re not planning to move out any time soon and dream of retirement at home, then opting for a lifetime mortgage will provide you with up to 65% of your property value in tax-free cash.

You can receive your home equity as a lump sum, put it in a drawdown facility to release as you wish, or opt for a monthly salary lasting up to 25 years. What’s best is that the money can be used in any way you desire, and no repayments are necessary during your life.

Be warned that equity release can impact one’s access to means-tested benefits. Luckily, homeowners are required by Equity Release Council regulations to use a financial adviser to help with sound decision making throughout the process.

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


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My Coronavirus Crisis Experience - June 2021 Update

My Coronavirus Crisis Experience: June 2021 Update

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Another month has gone by, so it’s time for another of my Coronavirus Crisis Updates. Regular readers will know I’ve been posting these since the first lockdown started in March 2020 (you can read my May 2021 update here if you like).

As ever, I will begin by discussing financial matters and then life more generally over the last few weeks.

Financial

I’ll begin as usual with my Nutmeg stocks and shares ISA, as I know many of you like to hear what is happening with this.

As the screenshot below shows, my main portfolio has been on a roller-coaster ride in May. It is currently valued at £20,435. Last month it stood at £20,430, so overall it has gone up by the princely sum of five pounds! Since 20th May it has been on an upward trajectory, so clearly I hope that trend continues 🙂

Nutmeg June 2021 Main.

Apart from my main portfolio, six months ago I put £1,000 into a second pot to try out Nutmeg’s new Smart Alpha option. This did pretty well, so in April I added another £1,000 from some money returned to me from another investment. This pot is now worth £2,060 (£7 down on last month’s figure). Here is a screen capture showing performance in May 2021.

Nutmeg June 2021 Smart Alpha

I updated my full Nutmeg review recently and you can read the latest version here (including a special offer at the end for PAS readers). If you are looking for a home for your new 2021/22 ISA allowance, based on my experience they are certainly worth considering.

  • If you haven’t yet seen it, check out also my recent blog post in which I looked at the performance of Nutmeg fully managed portfolios at every risk level from 1 to 10 (my main port is level 9). I was truly amazed by the difference the risk level you choose makes.

This year I am using Assetz Exchange for my IFISA. This is a P2P property investment platform that focuses on lower-risk properties (e.g. sheltered housing on long leases). I put £100 into this in mid-February and another £400 in April. Since then my portfolio has generated £5.59 in revenue received from rental and £2.54 in capital growth for a total return of £8.13. Here’s my current statement in case you’re interested:

Assetz Exchange portfolio June 2021

As you can see, even though I have only invested £500, I already have a well-diversified portfolio with 17 different projects. This is a particular attraction of Assetz Exchange in my view. You can actually invest from as little as 80p per property if you really want to proceed cautiously!

As mentioned above, 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 if you like. You can also sign up for an account on Assetz Exchange directly via this link [affiliate].

In May several of the loans I invested in with the P2P property investment platform Kuflink were repaid (with interest) and I duly reinvested the money in other loans.

I have a well-diversified portfolio of loans with Kuflink paying annual interest rates of 6 to 7.5 percent. These days I invest no more than £200 per loan (and often £100 or less). That is not because of any issues with Kuflink but more to do with losses of larger amounts on other P2P property platforms (such as this one). My days of putting four-figure sums into any single property investment are definitely behind me now!

You can read my full Kuflink review here. They recently passed the milestone of £100 million loaned, and say that since their launch no investor has lost money with them. They offer a variety of investment options, including a tax-free IFISA paying up to 7% interest per year, with built-in automatic diversification. And I’d particularly draw your attention to their revised and more generous cashback offer for new investors. They are now paying cashback on new investments from as little as £500 (it used to be £1,000). And if you are looking to invest larger amounts, you can earn up to a maximum of £4,000 in cashback. That is one of the best cashback offers I have seen anywhere (though admittedly you will need to invest £100,000 or more to receive that!).

Moving on, if you haven’t seen it yet, you might like to check out this eye-opening post about ‘how much is enough to retire on’ published on the PensionBee blog – I am quoted representing people in their 60s in this article!

You may also like to read my article on the Mouthy Money site in which I reveal why I am not a fan of premium bonds. I was recently hired as a regular contributor for Mouthy Money, so watch out for more articles from me there in the coming months. I also highly recommend reading the articles on the site by other contributors.

And finally, you can read my Q&A on the Lifeline24 blog, in which I talk about Pounds and Sense and share a few financial tips. Lifeline24 is a personal alarm service for older people and people with disabilities. If you’re interested, there is a code to get £10 off their already reasonably priced service at the end of the article. And no, I’m not getting any commission from them!

Personal

In May, as I’m sure you know, more of the government’s lockdown restrictions were eased. In particular, pubs and restaurants were allowed to open inside as well as out. Considering the monsoon-conditions that ensued after the outdoor reopening in April, that was a relief all round!

Last week I enjoyed my first pub lunch since the autumn at the Spread Eagle in Gailey, near Cannock. I met up with my old friend Liz, a former colleague from my days working at Wolverhampton University (the last ‘proper’ job I ever had). It was wonderful to see Liz again and in retrospect I hope I didn’t come across as too demob-happy! The food and service were both excellent. The pub was pretty quiet when we arrived at 12.30 but got busier later. There was still plenty of room inside and out, though.

Also in May I had my second Covid jab. For some reason I wasn’t able to book a slot at Whitemoor Lakes where I had my first jab, so this time I made my way to Great Wyrley Community Centre, another voyage of discovery for me. Everything went well, though bizarrely when I arrived a man at the door offered to ‘fast-track’ me if I took a lateral flow test (I declined). I had no side effects at all from this jab (the Oxford again), not even a sore arm. It is strange how people react so differently. I have friends who have had quite nasty reactions, though generally these lasted no more than a day or two. As for me, I have had (much) worse reactions from my annual flu jab.

With the better weather over the last week or two, I have resumed my habit of going for a breakfast walk. This is by far my favourite time of the day for walks, and I now have a good variety of routes to choose from around the local lanes. The photo in my cover image shows the beautiful Wisteria on Hope Cottage. This is about half a mile from where I live and features on many of my routes 🙂

Also in the last month I got back into the habit of reading again. I know many people say they read more during lockdown. However, I found that my concentration and attention-span were badly affected by the pandemic, so I more or less stopped reading for pleasure.

But in the last few weeks I’ve been feeling a bit more relaxed and that has helped me get back to reading, starting with some short books. Initially I picked up The No. 1 Ladies’ Detective Agency by Alexander McCall Smith. Having enjoyed that I moved on to the follow-up novel, Tears of the Giraffe. which is also very good. I remember that these light-hearted books were made into a TV series a few years ago, so I am thinking of buying the DVD set now.

After that, I moved on to another short novel, The Mountains of Majipoor by US science-fiction/fantasy writer Robert Silverberg.

Silverberg wrote a series of novels set on the giant world of Majipoor. I read most of them around 30 years ago, but for some reason this is the one novel in the series I never got around to.

I did enjoy it, but if you have never read any of the Majipoor novels, I wouldn’t start with this one. The place to begin is undoubtedly Lord Valentine’s Castle, a tour de force of the imagination with a compelling storyline. As a matter of interest, Lord Valentine’s Castle inspired me with the desire to learn to juggle (if you read the book you’ll understand why). But sadly despite many hours of trying I proved to have zero aptitude for it! Here’s an image link (affiliate) to the Amazon UK sales page.

The novel I’m reading at the moment is The Long Way to a Small Angry Planet by Becky Chambers. This is a longer science-fiction novel, which was recommended to me by Amazon as something I might enjoy.

Amazon recommendations can be hit or miss, of course, but I was very glad I acted on this one. The Long Way to a Small Angry Planet is a novel of great wit and charm, and I have been engrossed by it. It is mainly set on a small, commercial spaceship called The Wayfarer, whose job is to ‘tunnel’ wormholes in space. Becky does a brilliant job of bringing the ship and its (mostly) lovable multi-species crew to life.

The story is episodic – you could almost say picaresque – and told from the viewpoints of different crew members – from the reptilian pilot Sissix to the amiable alien chef/doctor called (quite reasonably) Dr Chef. There are some humans too, including the captain, Ashby, and the ship’s clerk and newest crew member, Rosemary Harper, who has a secret that is tearing her apart. There is plenty of humour and emotion alongside the science, so you definitely don’t need to be an SF aficionado to enjoy it. Anyway, I won’t rave on about it any more. If you want to find out more, here’s an image link (affiliate) to the Amazon sales page.

Finally on the subject of books, my nephew Steve (a semi-professional guitarist) has just published his first on Amazon. It’s called Crucial Guitar Basics and was written as a lockdown project. I had a very small input into it and my sister Annie rather more (she edited/proofread it). I’m no guitarist myself but thought it was a well-written and accessible introductory guide. Here’s an image link (affiliate) in case this might interest you. It’s available in both print and Kindle ebook form.

As I write this, the whole UK has just enjoyed its first day since March 2020 without a single Covid death. There is still some concern over the rise in cases of ‘The Indian Variant’, but so far these don’t appear to be causing a significant increase in hospitalizations or deaths. There is some speculation about whether the final stage of the PM’s ‘Roadmap to Recovery’ will take place on June 21st as promised. Personally I think it should, but in my view it’s more likely we will see a partial lifting of restrictions, with others retained for longer. I would particularly like to see an end to mandatory masks, as the evidence in favour of their use is weak (and many US states have done away with them for months now with no calamity ensuing). But we will see, I guess!

I hope that at some point soon I will be able to stop producing ‘Coronavirus Crisis Updates’ as normal life resumes. At that point, I may switch to creating monthly updates about my investments and maybe separate, more personal updates if anyone would be interested to read them. But I will definitely do at least one more full Coronavirus Crisis update next month.

As always, I hope you are staying safe and sane during these challenging times. If you have any comments or questions, please do post them below.

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What is an IFISA and Why Might You Want One?

What Is An IFISA And Why Might You Want One?

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If you’re reading this post you will almost certainly know what an ISA is.

The term stands for Individual Savings Account. ISAs effectively serve as tax-free wrappers for various types of savings account. The two best-known types are the Cash ISA and the Stocks and Shares ISA.

You get an annual allowance for your ISA investments which currently stands at a generous £20,000 a year. Money saved in an ISA is permanently exempt from taxes such as income tax, dividends tax, capital gains tax, and so on.

So What Is An IFISA?

IFISAs are a lesser-known type of ISA that can be used for peer-to-peer (P2P) lending. They were launched in April 2016. After a slow start, the range available has grown steadily.

You can put any amount into an IFISA up to your annual ISA allowance. In the current 2021/22 tax year, as mentioned, this is £20,000. This can be divided however you choose between a cash ISA, a stocks and shares ISA, a Lifetime ISA (if eligible – you have to be under 40) and an IFISA. So, for example, you could invest £6,000 in a cash ISA, £10,000 in a stocks and shares ISA and £4,000 in an IFISA.

  • Note that under current rules you are only allowed to invest new money in one of each type of ISA in a tax year. It is though generally possible to transfer money from one type of ISA to another without it affecting your annual entitlement (although there may be platform fees to pay).

IFISAs vary considerably in the returns they offer. Annual rates range from from around 4% to 15%. Obviously, the higher rates reflect the higher levels of risk involved.

Although all IFISAs involve P2P lending, a number of different types are available. They may include lending for all the following purposes:

  • property development
  • business loans
  • personal loans
  • green energy projects
  • bonds and debentures
  • entertainment industry loans
  • infrastructure projects

What Are The Risks?

All UK IFISA providers have to be authorized by the Financial Conduct Authority (FCA) and HMRC. This doesn’t in itself protect lenders (or investors if you prefer) against the failure of a platform, however. While savers with UK banks and building societies are covered by the government’s Financial Services Compensation Scheme (FSCS), which guarantees to reimburse up to £85,000 of losses, this does not generally apply to IFISA platforms.

All IFISA providers do offer various safeguards, though. These vary, but include provision funds to cover potential losses, insurance policies, and so forth. In many cases loans are made against the security of property or other assets, which in the worst case could be sold to pay off any debts.

Even so, IFISA investors don’t enjoy the same level of protection in the UK as bank savers. This is, of course, a major reason why the returns on offer are significantly higher. It’s therefore important to be aware of the risks and ensure you are comfortable with them before investing this way. It’s also important to lend across a range of platforms and loans, and not make the mistake of putting all your savings eggs into one P2P lending basket.

What Are The Attractions?

So why might you want an IFISA? There are several reasons.

One is that they offer the potential of much higher rates of return that ordinary (bank) savings accounts. Even the best of these are currently paying interest rates of under 1 percent. IFISAs typically pay several times more than that (though obviously at somewhat greater risk).

Another big attraction of an IFISA is that it provides a way of gaining extra diversification for your portfolio. As mentioned earlier, the law currently only allows you to invest in one type of stocks and shares ISA per year. This rather perverse rule actually makes it harder to diversify your investments. But you can have an IFISA as well as a stocks and shares ISA, so long as you don’t exceed your total £20,000 allowance. So having an IFISA gives you a way of diversifying your investments while keeping them all protected within a tax-free ISA wrapper.

And finally, IFISA investments are typically not tied to the performance of stock markets in the way a stocks and shares ISA would be. This is a different type of investment, with different risks and rewards. While an IFISA won’t provide a way of hedging your equity investments directly, it is likely to be less directly affected by short-term fluctuations in the markets.

Two IFISA Examples

Two IFISAs of which I have direct experience are offered by Kuflink and Assetz Exchange. Both of these platforms offer tax-free IFISA options. They are both based around property investing.

Kuflink – which I reviewed in this post – offers an automatically diversified IFISA comprising loans on property. They quote interest rates from 5% to 7%, depending how long you invest for. Your money is automatically diversified across a range of secured loans. The screen capture below from the Kuflink website sets out the main features of their IFISA.

Kuflink IFISA

One point to be aware of is that there is no ‘self-select’ option with the Kuflink IFISA. So you have no choice about which projects your money is invested in. But, of course, it does make investing in a Kuflink IFISA very quick and simple.

Assetz Exchange – which I reviewed in this post – has some similarities with Kuflink. But they concentrate on low-risk investments, typically with corporate clients (e.g. charities) on long leases. Here’s an example of the sort of investment I mean…

Assetz Exchange hostel 1

Assetz Exchange hostel 2

Assetz Exchange aims to offer net yields to investors of between 5.2 and 7.2% per year. One thing I especially like about them is that you can choose your own IFISA investments (indeed, they don’t currently offer an auto-select option). In addition, you can invest as little as 80 pence per project, making it easy to build a well-diversified portfolio even if you are only investing small amounts.

I am using Assetz Exchange for my 2021/22 IFISA, so here is a screen capture of my current portfolio for your interest. Note that while I have only invested £500 so far, I already have a well-diversified portfolio with 17 different investments!

Assetz Exchange IFISA

Summing Up

If you are looking for a home for some of your savings that can offer better interest rates than banks and building societies and won’t incur any tax charges, an IFISA is certainly worth considering.

As well as the higher interest rates, they can add diversity to your investments, helping you ride out peaks and troughs in the financial markets.

Just be aware of the risks involved in P2P lending, diversify as widely as possible, and ensure you invest only as part of a well-balanced portfolio.

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

Disclaimer: 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 speak to a professional financial adviser/planner if in any doubt before proceeding. All investments carry a risk of loss.

This post (and others on Pounds and Sense) includes my referral links. If you click through and make a qualifying transaction, I may receive a commission for introducing you. This will not affect the products or services you receive or any fees you may be charged.

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Simply Tax review

Simply Tax: A Low-Cost Online Service for Anyone Having to Complete a Self-Assessment Tax Return

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Regular readers of Pounds and Sense will know that I am not a fan of the DIY approach in matters related to tax.

In my blog post Two Places You Should Never Turn for Tax Advice Advice (and One You Definitely Should) I caution against relying on advice about tax from social media or even HMRC. And I strongly recommend getting help from a professional accountant if you are self-employed (even part-time) or run a business. As I said in that post:

Accountants are trained and experienced in all aspects of the tax system. They have both theoretical and practical knowledge of how the system works and how the (complex) rules are typically interpreted by HMRC. And they have to keep themselves up to date with the endless legal and procedural changes.

Also, unlike HMRC, an accountant is four-square on your side. They will advise you on the best way to organize your affairs to minimize your tax liability. They will answer any questions you may have, e.g. what records you need to keep. When the time comes, they will (if you want them to) compile your accounts and submit the relevant figures to HMRC in your tax return. And if any queries or problems arise, they will act on your behalf to try to resolve them.

A further benefit of having your accounts prepared by an accountant is that HMRC will know that a finance professional – someone who speaks their language – has compiled them. Other things being equal, this is likely to mean they will be more inclined to accept the figures and not dispute them.

Even if you aren’t self-employed or running a business, there may still be a strong case for getting an accountant to help with your taxes. Many older people, for example, have multiple streams of income, from stocks and shares to ISA accounts, property rentals to pensions. Some of this income may be taxable and some not, and varying tax rates and tax-free allowances may apply. Most accountants are more than happy to provide a service to people in this situation as well.

There is, of course, one drawback to engaging an accountant, and that is the cost. This will probably amount to a few hundred pounds a year (maybe more in some cases). Not to pay this, however, is in my view a false economy. A good accountant is likely to save you at least as much in unnecessary tax as they cost you. And the reassurance (and relief) of having a finance professional on your side when any queries with taxation arise is impossible to put a price on (but extremely valuable).

Of course, finding a good accountant who offers a service suitable for your needs isn’t always straightforward. And the amount they charge varies considerably. If you are looking for a keenly priced and easily accessible service, you might therefore like to check out what my friends at Simply Tax have to offer.

The Simply Tax Option

Simply Tax is a service run by professional accountants that provides a simple and inexpensive method for preparing and submitting tax returns to HMRC. They operate mainly online and are therefore able to keep charges to a bare minimum (starting from as little as £90). They say their service is for:

  • First time tax filers
  • Sole traders
  • CIS subcontractors
  • High earners (£100K+)
  • Landlords
  • Investors
  • Company directors
  • People living abroad
  • Anybody who needs a tax return

As the name indicates, Simply Tax aim to make the process of drawing up and submitting a tax return as simple as possible. In a nutshell, they say their procedure is as follows:

  • Create your free online account (just need your full name and email address)
  • Once verified, go into your user area and complete your personal information
  • Select the button to start your tax return (you’ll be taken to a screen to answer a few questions)
  • Once you’ve paid and been checked for your identification, simply drag and drop the information requested
  • We will do all the leg work and prepare the tax return for you
  • We’ll upload a draft tax return for you to review and approve electronically
  • Once you’ve approved, leave it to us to submit to HMRC

Although all of this is done online, you will be allocated a personal tax adviser whom you can contact at any time with any questions.

Simply Tax say their service will save you lots of time (they estimate between 70-80%) compared with filing your return yourself. They also estimate that their service is up to 50% cheaper than using a traditional high street accountant or tax advisor.

Finally, Simply Tax are fully regulated by the ICAEW (Institute of Chartered Accountants in England & Wales), providing added reassurance.

If you are looking for a straightforward, cost-effective way of preparing and submitting your annual tax return, in my view Simply Tax is well worth checking out. Okay, if you run a multi-million pound business empire it may not be for you. But if you are like most of us and just need a friendly, professional accountancy service who won’t charge an arm and a leg, they could certainly fit the bill.

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

Disclosure: This is a sponsored post on behalf of Simply Tax. If you click through any of the links and make a purchase, I will receive a commission for introducing you. This will not affect the fee you pay or the service you receive.

Simply Tax banner

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How Much Difference Does Risk Level make With Nutmeg Investments?

How Much Difference Does Risk Level Make With Nutmeg Investments?

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Regular readers will know I’m a big fan of the Nutmeg robo-advisor investment platform.

You can read my full review of Nutmeg here. You can also see how my own Nutmeg stocks and shares portfolio has been performing over the last year or so in my monthly Coronavirus Crisis updates (here’s my latest May 2021 update).

Nutmeg Risk Levels

One of the many things I like about Nutmeg is that you can choose the risk level for your portfolio and any pot within it. In the case of a fully managed Stocks and Shares ISA such as mine, you can choose between risk levels of 1 (ultra low risk) and 10 (highest risk).

  • With other investment products and styles on Nutmeg, the scale may be different. For example, with a Smart Alpha portfolio, the risk range you can choose is between 1 and 5.

In the case of my main portfolio, I set the risk level near the top of the scale at 9/10 and have kept it there since I opened my account in April 2016. I felt I could afford to be bullish, as I don’t have any living descendants (my partner Jayne passed away a few years ago and we didn’t have children). And I didn’t have any particular purpose in mind for this portfolio, so was willing to take a few more chances with it.

As regular PAS readers will know, my Nutmeg ISA has performed very well for me. At the time of writing it is showing an overall profit of 57.71 percent, even after a tumultuous year due to Covid.

Recently, however, a reader named Kevin asked if I knew whether the high risk level I chose had any impact on my return, or whether I would have had a similar return with a lower risk level. It was a good question and one I hadn’t really looked into before, so I decided to check. I have to admit the results surprised me.

Researching Performance

For a fully managed Nutmeg stocks and shares portfolio like mine, the good news is you can can research performance yourself on this page of the Nutmeg website: Use the slider to set the risk level from 1 to 10 and you will be able to see the net returns for the risk level in question over a range of periods. Here are the figures for a 9/10 portfolio such as mine.

Nutmeg Risk 9

As you can see, for the five-year period to 30 April 2021, overall performance is quoted as +63.1%. That is slightly above the +57.71% currently showing for my portfolio over a similar (but not identical) period. There are various reasons why the figures may differ, notably that I added to my investment at various times over the last five years rather than investing one lump sum at the start. But the numbers are close enough to appear reasonable to me.

As you will see, even though this is a level 9 portfolio, in every year bar one (2018) it has produced a positive return. Anyone investing in a level 9 portfolio from Nutmeg’s launch in September 2012 will have seen the value of their portfolio more than double.

So What About Lower Risk Portfolios?

Obviously I am not going to reproduce the table above for every other risk level. Here though is a table showing the five-year performance of every fully managed Nutmeg stocks and shares portfolio from risk level 1 to 10.

Risk Level5-Year Performance %
1+1.7
2+11.1
3+17.2
4+23.5
5+31.2
6+37.0
7+47.4
8+55.9
9+63.1
10+67.0

I hope you will agree this makes interesting reading. Over a five-year period, as you can see, risk level has made a huge difference to performance achieved. Anyone choosing risk level 1 will have seen a return of just 1.7% over that period. That looks poor to me – you would almost certainly have done better putting your money in an ordinary bank savings account. And there were actually two years – 2017 and 2018 – when the value of a level 1 portfolio went down. Okay, it was only by small amounts, but even so it is hard to see any good argument for opting for the lowest risk level .

By contrast, the higher up the risk scale you go, the bigger the returns have been. Yes, there has been more volatility, but even so over most time periods – and certainly when investing for at least five years – higher risk portfolios have significantly out-performed lower-risk ones.

Of course – as I always have to say – past performance is no guarantee of what happens in future. Even so, looking at these figures makes me glad I opted for a high risk level initially, and having done this analysis I intend to continue doing so. I may even raise my risk level to the maximum 10!

  • One other thing I should mention is that if you are thinking of withdrawing money from your Nutmeg account soon (in the next few months, say) there is then a strong case for reducing risk level. This should help protect your capital in the event of a downturn.

Nutmeg’s Flexible Options

As I said to Kevin – who has a level 6 portfolio – if you are happy with the returns you are getting from Nutmeg and increasing the risk might cause you sleepless nights, there is of course a case for not rocking the boat.

But if you want to test the water without risking too much, Nutmeg does offer a few options. For example, you could create a new ‘pot’ with a higher risk level to see how it compares going forward. You could use new money for this and/or transfer some of your existing pot over. You don’t have to switch your entire portfolio to a higher risk level if this would worry you.

You can also have pots with different investment styles. In my case, as well as my fully managed main portfolio, I have a small Smart Alpha portfolio (mentioned earlier). As discussed in this blog post, Smart Alpha portfolios are managed by J.P. Morgan’s Asset Management team. As well as allowing Nutmeg investors to tap into the expertise of this leading investment house, these portfolios are ESG integrated, meaning that environmental, social and corporate governance considerations are factored into every investment decision. These portfolios are therefore suitable for investors for whom ethical considerations are especially important.

You can have multiple pots with different risk levels and/or investment styles. You can also change risk levels or investment styles any time you like. Nutmeg does just caution about chopping and changing too often, as this can incur additional charges. But there is no reason you shouldn’t take advantage of the flexibility Nutmeg offers if your needs or circumstances change or you just want to try something different.

  • It’s also worth mentioning that you are only allowed to invest in one tax-free ISA of each type per year (stocks and shares ISA, IFISA, cash ISA, etc.). However, if you have a Nutmeg account, you can invest in as many different pots within that ISA as you wish (as long as you don’t exceed your total annual ISA allowance of £20,000). This can provide valuable diversification compared with putting all your money into one single investment product.

Conclusion

As I said above, I was genuinely surprised to see how big a difference risk level made to overall performance with a Nutmeg Fully Managed Stocks and Shares ISA. And obviously I’m glad I opted for a high risk level initially, as doing so has clearly paid off for me.

Of course, nobody knows what will happen in the months and years ahead. It is still possible that opting for a lower-risk portfolio could prove a good decision as we move into a post-pandemic world with all its uncertainties. But personally I hope to see a strong economic recovery and am willing to accept a reasonable degree of risk in order to capitalize on this. You might see this differently, of course. But I hope that at least comparing the historical performance of portfolios at different risk levels will help you decide how best to proceed, whether you’re new to Nutmeg or an existing investor.

Closing Thoughts

I am obviously a fan of Nutmeg and have a significant amount (by my standards!) invested with them. You can read my full review of Nutmeg here if you like..

Of course, I am not a qualified financial adviser and everyone should do their own ‘due diligence’ (and/or take professional advice) before deciding to invest. In addition, you shouldn’t consider investing with Nutmeg (or anyone else) unless you have paid off any interest-charging debts and have at least three months of easily-accessible savings in case of emergencies.

Based on my personal experiences with Nutmeg, though, I am happy to recommend them. They provide a simple, easy-to-understand investment platform, the customer service is excellent, and certainly in my case the results to date have exceeded my expectations.

If you have any comments or questions about this post or Nutmeg in general, please do leave them below.

Disclosure: This post includes referral links. if you click through and open an account with Nutmeg, I will receive a commission for introducing you. This will not affect in any way the product or service you receive. Indeed, as mentioned above, it will entitle you to six months’ portfolio management entirely free of charge. All investments carry a risk of loss.

 

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