Investing

Post about boosting your funds through investment. Includes both traditional and non-traditional investment opportunities.

Inflation - What Does It Mean for Your Savings or Loans

Guest Post: Inflation – What Does It Mean for Your Savings or Loans?

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Today I have a guest post for you from my friends at Money Marvel about the effects of inflation on savings and loans.

With inflation currently over 10 percent and prices seemingly rising by the day, this is clearly a big concern for many people right now. It’s not always such a bad thing if you’re paying off debts, though. And if you’re saving for the longer term, higher rates of inflation can actually provide an extra incentive to invest. Learn more in the article below…

 

If you’ve been following the news at all in the UK over the past year you’ll have no doubt heard about inflation – it has been almost impossible to avoid it in the press. But what actually is inflation? And, more importantly, what does it mean for your savings and loans? Read on for my thoughts.

What is Inflation?

Simply put, inflation is the economic force that drives prices to change over time. Everyone has an item from their childhood that always surprises them with how much more it costs now (for me it’s the Freddo! I remember them being 10p each, now they’re almost 40p). That’s a great example of inflation in action: the gradual increase of prices over time.

Month to month the impact of inflation is generally very small – usually only a couple of percent each year. However, that can add up over time. For example, in the UK, £1,000 in the year 1980 would have the same value as over £4,000 today.

Over the last year, the impact has been even more dramatic. Inflation rates in the UK are now at the highest they’ve been for over 40 years, with the CPI measure of inflation now running above 10%.

It has never been more important to consider inflation when planning your savings or loans.

What Impact Does Inflation Have on Savings?

Unfortunately, inflation is not good news for savers. It means that the cash you’ve built up and set aside will be worth less when you eventually spend it than it was when you first saved it.

In part, that’s why you’ll receive interest as a return on your savings. Savings are a mechanism for you to lend your money to banks and financial institutions, and the interest you get is your compensation for doing so.

You can straightforwardly compare the interest rate on your savings and the current UK inflation rate to see if your money is overall worth less or more over time. For example, if the headline inflation rate is 10% and you’re being offered 5% interest then you know you’re effectively losing 5% in value each year.

Sadly in the current economic reality, it’s almost impossible to find a savings interest rate higher than inflation, so most savers will have to accept the reality that they’ll be losing value year-on-year.

What Can Savers Do About It?

For those that need the security or guaranteed access that comes with a savings account, the unfortunate answer is that there isn’t much you can do about inflation. It’s important to be aware of it so that you can plan your future considering its impact, but sadly there’s nothing you can do to avoid it.

If your time horizons are a bit longer and you’re comfortable with a level of risk, then there are a variety of other investments that promise returns higher than the rate of inflation (for example, by investing in stocks and shares, or physical assets like gold). By their nature, they do come with a significantly higher level of risk and volatility than a savings account does. They may be suitable if you’re planning to save for a long time period (5 years+) and are willing to ride some ups and downs in the meantime.

Inflation alone shouldn’t lead you to take on risks with your savings that you otherwise wouldn’t, but it should help you understand the real returns that different savings products might offer. And if you’re determined to outpace inflation in the long run then savings accounts are likely not to be the best place for your money.

What About Debt?

High levels of inflation are much better news if you’re already holding significant debt. The force of inflation will gradually erode the value of the debt you have outstanding so that you end up effectively owing less money to the bank (or other lending institution). The £ value amount will stay the same, but the value of the money you use to pay off the debt will decline.

You’ll be paying interest to the bank to compensate them for their loss of value, but if you manage to get an interest rate lower than the inflation rate then you’ll be doing well overall. This is the case for many UK residents who took out long-term loans before the recent surge of inflation.

Inflation alone is not a reason to get yourself in debt (the banks will almost certainly have a better projection of future inflation rates than you do!), but it’s one to keep an eye on when thinking about the debt you already have.

Planning for the Future

Inflation is critically important when you’re planning for your financial future. This is most obviously the case when thinking about retirement. If you have more than a few years of working life remaining then money will almost certainly be worth less when you do come to retire.

When looking at retirement planners or pension benefits make sure you keep track of whether the numbers have been adjusted for inflation or not. If they haven’t, then keep that in mind and adjust your plans accordingly.

 

Many thanks to my friends at Money Marvel for an interesting and eye-opening article. Do check out the Money Marvel website for a wide range of personal finance information, advice and resources.

As always, if you have any comments or questions about this article, or the effects of inflation more generally, please leave them below.

This is a sponsored guest post.

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

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My Investments Update April 2023

My Investments Update – April 2023

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Here is my latest monthly update about my investments. You can read my March 2023 Investments Update here if you like

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

As the screenshot below for the year to date shows, my main Nutmeg portfolio is currently valued at £20,632. Last month it stood at £20,680 so that is a modest fall of £48.

Nutmeg main portfolio April 2023

Apart from my main portfolio, I also have a second, smaller pot using Nutmeg’s Smart Alpha option. This is now worth £3,170 compared with £3,162 a month ago, a (very) small increase of £8. Here is a screen capture showing performance since the start of this year.

Nutmeg Smart Alpha April 2023

As you can see, this has been a roller-coaster month for both my Nutmeg pots, though overall the dial hasn’t moved very much. My Smart Alpha portfolio has done a bit better than my main portfolio and I might be tempted to switch more of my money into it, though there clearly isn’t a massive difference in performance between them.

The net value of all my Nutmeg investments has fallen this month by £40 or 0.17% month on month. That is obviously a little disappointing, but both pots are still comfortably up on where they were at the start of the year. And their total value has risen by £1,890 (7.77%) since mid-October last year.

Of course, all investing is (or should be) a long-term endeavour. Over a period of years stock market investments such as those used by Nutmeg typically produce better returns than cash accounts, often by substantial margins. But there are never any guarantees, and in in the short to medium term at least, losses are always possible.

  • Also, as you may know, both my Nutmeg pots have quite high risk levels (9/10 main, 5/5 Smart Alpha). If you haven’t yet seen it, you might like to check out my blog post in which I looked at the performance over time of Nutmeg fully managed portfolios at every risk level from 1 to 10 . I was pretty amazed by the difference risk level makes, with higher-risk ports over almost any period of three or more years in the last ten generating significantly better overall returns. If you are investing for the long term (and you almost certainly should be) choosing a hyper-cautious low-risk level might not be the smartest strategy. The one exception is if you plan to withdraw your money shortly and don’t want to risk losing too much if there is a sudden downturn.

You can read my full Nutmeg review here (including a special offer at the end for PAS readers). If you are looking for a home for your annual ISA allowance, based on my overall experience over the last seven years, they are certainly worth considering. They offer self-invested personal pensions (SIPPs) and Junior ISAs as well.

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

Since I opened my account, my AE portfolio has generated a respectable £108.37 in revenue from rental income. As I said in last month’s update, capital growth has slowed, though, in line with UK property values generally.

At the time of writing, 6 of ‘my’ properties are showing gains, 4 are breaking even, and the remaining 16 are showing (small) losses. My portfolio is currently showing a net decrease in value of £26.97, meaning that overall (rental income minus capital value decrease) I am up by £81.40. That’s still a reasonable rate of return on my £1,000 and does illustrate the value of P2P property investments for diversifying your portfolio. And it doesn’t hurt that with Assetz Exchange most projects are socially beneficial as well.

  • Obviously the fall in capital value of my AE investments is a little disappointing. But it’s important to bear in mind that unless and until I choose to sell the investments in question, it is largely theoretical. The rental income, on the other hand, is real money (which in my case I have chosen to reinvest in other AE projects to further diversify my portfolio).

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

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

Another property platform I have investments with is Kuflink. They continue to do well, with new projects launching almost every day. I currently have around £2,500 invested with them in 18 different projects. To date I have never lost any money with Kuflink, though some loan terms have been extended once or twice. On the plus side, when this happens additional interest is paid for the period in question.

My loans with Kuflink pay annual interest rates of 6 to 7.5 percent. These days I invest no more than £200 per loan (and often less). That is not because of any issues with Kuflink but more to do with losses of larger amounts on other P2P property platforms in the past. My days of putting four-figure sums into any single property investment are behind me now! Nowadays I mainly opt to reinvest the monthly repayments I receive from Kuflink, which has the effect of boosting the percentage rate of return on the projects in question

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

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

  • Until 31 May 2023 Kuflink are offering enhanced promotional rates of up to 9.73% (gross annual interest equivalent rate) for their Auto-Invest products (IFISA-eligible). There is limited availability for this offer and it may be withdrawn any time before 31 May 2023 if the limit is reached. For more information, click here [affiliate link].

Last year I set up an account with investment and trading platform eToro, using their popular ‘copy trader’ facility. I chose to invest $500 (then about £412) copying an experienced eToro trader called Aukie2008 (real name Mike Moest).

In January 2023 I added to this with another $500 investment in one of their thematic portfolios. I also invested a small amount I had left over in Tesla shares. My original investment of $1,022.26 is today worth $1,113.72, an increase of $91.46 or 8.95%. in these turbulent times I am very happy with that.

eToro April 2023

As I said last time, my big success was investing in Tesla at the right time, as their share price has risen by over 86%. If only I had put more than $19 into this!

My copy trading portfolio with Aukie2008 is well in profit. My most recent investment in Oil Worldwide, having started well, is still down fractionally (some might say this serves me right for investing in fossil fuels!). But I am certainly not going to worry about that at the moment.

You can read my full review of eToro here. You may also like to check out my more in-depth look at eToro copy trading. I also discussed thematic investing with eToro using Smart Portfolios in this recent post. The latter also reveals why I took the somewhat contrarian step of choosing the oil industry for my first thematic investment.

  • eToro also recently introduced the eToro Money app. This allows you to deposit money to your eToro account without paying any currency conversion fees, saving you up to £5 for every £1,000 you deposit. You can also use the app to withdraw funds from your eToro account instantly to your bank account. I tried this myself recently and was impressed with how quickly and seamlessly it worked. You can read my blog post about eToro Money here.

I had two more articles published in March on the always-excellent Mouthy Money website. One is Some Ways to Save Money on Council Tax. Along with fuel bills and mortgages, council tax is many families’ single largest item of expenditure. There are various ways you may be able to reduce this bill (or even avoid it altogether), though. In this article I go through a range of methods, including household-based, income-based and property-based.

My other piece was Always Wanted to be in the Movies? Let TV Studios Use Your Home for Money. Clearly this opportunity won’t work for everyone. But if you live in a place with features that might be in demand by a TV or film production company, you can potentially make hundreds or even thousands of pounds. And as I say in the article, you definitely don’t need to live in a stately home. Studios need all types of properties – from two-bed terraces to penthouse flats, country cottages to 1970s-style bachelor pads!

Speaking of Mouthy Money, you might also like to read my in-depth blog post about this personal finance website which I wrote in March. It’s called (without any great originality, I know) Have You Seen Mouthy Money?

As you may know, I am nowadays contributing two articles a month to Mouthy Money, so you’ll understand that I have good reason for wanting to promote it 🙂 But that aside, it is an excellent resource for anyone interested in money-making and money-saving. I always look forward to reading the articles by my fellow contributors. Shoestring Jane is a particular favourite of mine. With Easter on the horizon, I highly recommend her latest article, How to Have a Frugal Family Easter.

Several of my other Pounds and Sense blog posts from March are no longer relevant due to deadlines passing so I won’t bother listing them here. You might perhaps like to read Two Places You Really Shouldn’t Turn for Tax Advice (and One You Definitely Should), though. This is an update of an article I wrote a while back, but it’s on a subject I feel quite strongly about and is still 100 percent relevant.

Finally, as I write this update there are just two days left to the end of the financial year on 5 April 2023. That means you have just two days remaining to make use of your 2022/23 tax-free ISA allowance before it is gone forever. With other tax-free allowances already set to be slashed in the years ahead, it’s more important than ever to make the most of this one while you can. Here’s a link to my recent blog post on this subject.

That’s all for today. I hope you and your family are coping in these challenging times. Don’t forget to check out the government’s Help for Households website, which sets out various types of financial assistance you may be entitled to and is regularly updated.

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

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

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

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Win £250 when you open a Plum Stocks & Shares ISA

Win £250 When You Open a Plum Stocks and Shares ISA!

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Updated 19 April 2023

If you’re looking for a home for your 2023/24 Stocks and Shares ISA allowance, this special promotion from money-management app Plum could provide a solution, with a chance of winning a £250 prize as well!

Plum is designed to help you set money aside painlessly for any purpose – from holidays to major purchases or simply for a ‘rainy day’ fund. It is one of a range of apps that make use of so-called Open Banking. This allows third-party apps to access your financial information (read only) – so long as you provide the necessary authorization, of course – and perform certain transactions on your behalf, if you choose to set up a direct debit.

Plum offers four levels of account. These are the free Plum Basic and the paid-for Pro, Ultra and Premium. The Basic account is (as stated) free of charges. Plum Pro costs £2.99 a month, Ultra costs £4.99 a month, and Premium costs £9.99 a month. The Pro, Ultra and Premium accounts offer a wider range of features and higher interest rates in interest-bearing ‘Pockets’. This is further discussed on the main Plum website.

The current promotion is specifically for people who open a Stocks and Shares ISA with Plum, so in this post I will be focusing on that. But first I should answer the most basic question…

  • Capital at risk if you invest

What is a Stocks and Shares ISA?

The term ISA is short for Individual Savings Account. ISAs are savings and investment products where you aren’t taxed on the interest you earn or any dividends you receive or capital gains you make, in accordance with ISA rules. An ISA is basically a tax-free ‘wrapper’ that can be applied to a huge range of financial products.

With ISAs you don’t get any extra contribution from the government in the form of tax relief as you do with pensions. But – except in the case of the Lifetime ISA – you can withdraw your money at any time (subject to any provider rules about the term and notice period required) and you won’t be taxed on any earnings.

All adults aged +18 who are registered for tax in the UK have an annual ISA allowance, which is the maximum amount you can invest in ISAs in the year concerned. In the current financial year (2023/24) this is a generous £20,000. But you cannot carry over this allowance into a new tax year, so it really is a case of use it or lose it!

There are four main ISA categories: Cash ISA, Stocks and Shares ISA, Innovative Finance ISA (IFISA) and Lifetime ISA (LISA). You can divide your £20,000 ISA allowance among these in any way you choose, though the most you can invest in a Lifetime ISA in a year is £4,000. Note also that you are only allowed to invest in one ISA in each category per year.

The Plum Stocks and Shares ISA

Investing in a single company can be risky, so if you have a Plum Pro account (or higher), the app enables you to invest your money across a range of well-diversified funds. These contain a mixture of shares from thousands of different companies, plus other assets like bonds. So if one investment doesn’t perform well, it should only affect a small portion of your overall portfolio.

Some examples of the themed funds on offer to Plum investors include:

Tech Giants – Allows you to invest in technology shares like Facebook and Apple.

Balanced Bundle – With 60% shares and 40% bonds, this fund offers a balanced combination of shares and bonds.

Future Planet – Invests in shares of companies within an index which is weighted towards companies that meet positive carbon and environmental levels.

Retirement 2050 – Investments that will pay out money for investors planning to retire in or within approximately five years after 2050.

The Medic – Shares of healthcare, pharmaceutical and biotechnology companies.

Once you have deposited your money with Plum, you can choose which funds to invest in from the range available. There are up to 21 funds on offer, though some are only available to customers with a Plum Premium account.

You can start investing with as little as £1, up to the annual ISA maximum of £20,000 (in the current tax year). Subject to these limits, you can deposit or withdraw as often as you like, with no hidden fees or charges. If you have already invested your £20,000 maximum ISA allowance, or have invested in another S&S ISA in the current tax year, you can still invest with Plum in a GIA (general investment account) but obviously this will be liable for tax charges.

  • Plum also offer personal pensions. A Plum Self Invested Personal Pension (SIPP) lets you consolidate existing pension policies and invest in risk managed or other well diversified global funds. Capital at risk. Pension and tax rules apply.

£250 Prize Promotion

As an additional incentive to start investing with Plum, anyone opening a Plum Stocks & Shares ISA before 12 noon on 30th April 2023 will be entered into a prize draw to win £250.

Any existing customers who already have an active Stocks & Shares ISA with Plum will also be automatically entered into the draw. An active Plum Stocks & Shares ISA is defined as a customer account with a current subscription to Plum Pro (or above) at the time of competition close, and where no fees or ID verification remain outstanding at that time. Note also that to open a Plum Stocks and Shares ISA you must be over 18 years old and tax-registered in the UK.

No purchase is necessary to enter this prize draw, but to finish opening your Plum Stocks & Shares ISA, the company may need to perform a KYC (Know Your Customer) check. Note that all outstanding checks must be completed before the competition’s end date (see above) for your entry to be included. So if you are going to do this, it is probably best to apply sooner rather than later.

One lucky winner will be selected at random and notified within five working days of the competition close date (see above). The prize of £250 will be paid into the winner’s Primary Plum Pocket within 10 working days of the competition close.

Closing Thoughts

If you are looking for a home for your 2023/24 Stocks and Shares ISA allowance, a Plum S&S ISA is certainly worth considering. It offers a simple, straightforward method for investing in a range of themed and well-diversified funds. As such, it may be particularly suited to people who are new to investing and/or those who don’t want to spend many hours researching specific investments themselves.

Furthermore, as stated above, you can start with as little as a pound and withdraw your money at any time without giving notice or paying extra fees (as with all stock market investments, some fees and charges are payable).

In addition, as a Plum account holder you will enjoy all the other features and benefits of the app too, including interest-paying ‘pockets’ you can use to set money aside for specific purposes such as holidays. See the main Plum website for full details.

And, of course, there is that potential £250 prize to be won as well!

  • Capital at risk. The value of your investments can go down as well as up.

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

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

Disclosure: This post and others on Pounds and Sense includes affiliate links. If you click through and make a purchase or perform some other qualifying transaction, I may receive a commission for introducing you. This will not affect in any way any fees you are charged or the product or service you receive.

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My investments update March 2023

My Investments Update – March 2023

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Here is my latest monthly update about my investments. You can read my February 2023 Investments Update here if you like

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

As the screenshot below of performance for the year to date shows, my main Nutmeg portfolio is currently valued at £20,680. Last month it stood at £20,817 so that is a fall of £137.

Nutmeg main portfolio March 2023

Apart from my main portfolio, I also have a second, smaller pot using Nutmeg’s Smart Alpha option. This is now worth £3,162 compared with £3,174 a month ago, a small drop of £12.

Here is a screen capture showing performance since the start of this year.

Nutmeg Smart Alpha March 2023

The general profile for both portfolios is similar, with rises in the first half of February followed by falls in the last fortnight or so. The total value of both portfolios has fallen by £149 or 0.62% month on month. That is obviously a little disappointing, but both are still comfortably up on where they were at the start of the year. And their total value has risen by almost £2,000 (8.61%) since mid-October last year.

Of course, all investing is (or should be) a long-term endeavour. Over a period of years stock market investments such as those used by Nutmeg typically produce better returns than cash accounts, often by substantial margins. But there are never any guarantees, and in in the short to medium term at least, losses are always possible.

You can read my full Nutmeg review here (including a special offer at the end for PAS readers). If you are looking for a home for your annual ISA allowance, based on my overall experience over the last seven years, they are certainly worth considering. They offer self-invested personal pensions (SIPPs) as well.

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

Since I opened my account, my AE portfolio has generated a respectable £103.38 in revenue from rental income. As I said in last month’s update, capital growth has slowed, though, in line with UK property values generally.

Even so, it’s not all bad news. At the time of writing 15 of ‘my’ properties are showing gains, 2 are breaking even, and 8 are showing losses (two fairly substantial). My portfolio is currently showing a very small net increase in value of £0.31, meaning that overall (rental income plus capital gains) I am up by £103.69. That is still a decent rate of return on my £1,000 and does illustrate the value of P2P property investments for diversifying your portfolio. And it doesn’t hurt that with Assetz Exchange most projects are socially beneficial as well.

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

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

Another property platform I have investments with is Kuflink. They continue to do well, with new projects launching almost every day. I currently have around £2,500 invested with them in 18 different projects. To date I have never lost any money with Kuflink, though some loan terms have been extended once or twice. On the plus side, when this happens additional interest is paid for the period in question.

My loans with Kuflink pay annual interest rates of 6 to 7.5 percent. These days I invest no more than £200 per loan (and often less). That is not because of any issues with Kuflink but more to do with losses of larger amounts on other P2P property platforms in the past. My days of putting four-figure sums into any single property investment are behind me now! Nowadays I mainly opt to reinvest the monthly repayments I receive from Kuflink, which has the effect of boosting the percentage rate of return on the projects in question

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

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

  • You may like to know that until 31 May 2023 Kuflink are offering enhanced promotional rates of up to 9.73% (gross annual interest equivalent rate) for their Auto-Invest products (IFISA-eligible). There is limited availability for this offer and it may be withdrawn any time before 31 May 2023 if the limit is reached. For more information, click here [affiliate link].

Last year I set up an account with investment and trading platform eToro, using their popular ‘copy trader’ facility. I chose to invest $500 (then about £412) copying an experienced eToro trader called Aukie2008 (real name Mike Moest).

In January I added to this with another $500 investment in one of their thematic portfolios. I also invested a small amount I had left over in Tesla shares. My original investment of $1,022.26 is today worth $1,102.18, an increase of $79.92 or 9.43%. in these turbulent times I am very happy with that.

eToro March 2023

As you can see, my big success has been investing in Tesla at the right time, as their share price has risen by over 85%. If only I had put more than $19 into this!

My copy trading portfolio with Aukie2008 is still well in profit, though it has fallen a bit in the last week or two. My most recent investment in Oil Worldwide, having started well, is now down fractionally. But I’m certainly not going to worry about that at the moment.

You can read my full review of eToro here. You may also like to check out my more in-depth look at eToro copy trading. I also discussed thematic investing with eToro using Smart Portfolios in this recent post. The latter also reveals why I took the somewhat contrarian step of choosing the oil industry for my first thematic investment.

  • eToro also recently introduced the eToro Money app. This allows you to deposit money to your eToro account without paying any currency conversion fees, saving you up to £5 for every £1,000 you deposit. You can also use the app to withdraw funds from your eToro account instantly to your bank account. I tried this myself recently and was impressed with how quickly and seamlessly it worked. You can read my blog post about eToro Money here.

I had two more articles published in February on the always-excellent Mouthy Money website. One is Make Extra Money Renting a Room. This is an ‘old school’ method for making some extra cash, but none the worse for that. If you have a spare room (or rooms) in your home that you don’t mind letting out, you can generate a steady income by doing this. And under the government’s Rent a Room Scheme, you can make up to £7,500 a year tax-free.

My other piece was How to Become a TV or Movie Extra. This opportunity won’t make you rich but can certainly generate a useful sideline income and provide a lot of fun into the bargain (as I can testify from personal experience!).

My other Pounds and Sense blog posts from February include How to Make More Money From National Grid Powersaving Events. This opportunity is only open to you if you have a smart meter – but if so, you definitely need to see this 🙂

I also recommend reading (if you haven’t already) Are You Making the Most of Your Annual ISA Allowance? With the 2022/23 tax year ending in just a few weeks, it really is a case of ‘Use it or lose it’ now for your £20,000 tax-free ISA allowance. With other tax-free allowances already set to be slashed in the years ahead, it’s more important than ever to make the most of this one while you can.

Also in February I revealed how you can Get Your Will Written Free of Charge in March. And finally, do see as well Keep in Touch With Pounds and Sense, as this explains how to ensure you never miss another PAS blog post in future!

That’s all for today. I hope you and your family are coping in these challenging times. Don’t forget to check out the government’s Help for Households website, which sets out various types of financial assistance you may be entitled to and is regularly updated.

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

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

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

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Are you making the most of your annual ISA allowance?

Are You Making the Most of Your Annual ISA Allowance?

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In just a few weeks (5th April 2023) it will be the end of the financial year. And that means if you want to make the most of your 2022/23 ISA allowance, you will need to take action soon.

As you may know, ISA stands for Individual Savings Account. ISAs are saving and investment products where you aren’t taxed on the interest you earn or any dividends you receive or capital gains you make. An ISA is basically a tax-free ‘wrapper’ that can be applied to a huge range of financial products.

With ISAs you don’t get any extra contribution from the government in the form of tax relief as you do with pensions. But – except in the case of the Lifetime ISA – you can withdraw your money at any time (subject to any rules about the term and notice period required) and you won’t be taxed on it.

Everyone has an annual ISA allowance, which is the maximum amount you can invest in ISAs in the year concerned. In the current financial year (2022/23) this is a generous £20,000.

There are four main ISA categories: Cash ISA, Stocks and Shares ISA, Innovative Finance ISA (IFISA) and Lifetime ISA (LISA). You can divide your £20,000 ISA allowance among these in any way you choose, though the most you can invest in a Lifetime ISA in a year is £4,000. Note also that you are only allowed to invest in one ISA in each category per year.

Let’s look at each ISA type in a bit more detail…

Cash ISA

Cash ISAs are like standard savings accounts, except the interest you receive doesn’t incur tax.

While interest rates for cash ISAs have been rising over the last few months, they are still pretty unexciting. According to the Money Saving Expert website, the best rate for an instant-access cash ISA is 2.91% with Shawbrook Bank. With inflation currently running at 10.1% that means even in the best-paying cash ISA your money will still be losing spending power when invested this way.

What’s more, the Personal Savings Allowance (PSA) means that basic-rate taxpayers can earn up to £1000 in savings interest without paying tax anyway (higher-rate taxpayers get a £500 tax-free allowance and additional-rate taxpayers earning over £150,000 a year nothing at all).

And as if that wasn’t enough, you can actually get higher rates of return from instant-access accounts that are NOT cash ISAs. For example, at the time of writing Money Saving Expert say the best rate on offer for an instant-access savings account is 3.11% from Cynergy Bank.

As a result of these things, cash ISAs have lost much of their appeal, unless perhaps you’re in the relatively small group of people who have to pay interest on their savings. But if interest rates continue to rise, they may of course become more attractive again. In addition, money invested in a cash ISA remains tax-free year after year, so if in years to come interest rates on cash ISAs rise, the benefit of having money in one will increase as well.

Nonetheless, I decided not to invest any of my ISA allowance in a cash ISA this year, as I have (in my view) better uses for my money. You might see this differently, of course 🙂

Stocks and Shares ISA

Stocks and shares ISAs are a good choice for many people saving long term. Over a longer period the stock market has outperformed bank savings accounts, often by a considerable margin. You do, though, have to expect some ups and downs in the value of your investments in the short to medium term.

You can opt for a standard stocks and shares ISA offered by a wide range of financial institutions and let them choose your investments for you. Alternatively you can use self-investment platforms such as Hargreaves Lansdown to choose your own investments from the wide range of shares and funds available.

Innovative Finance ISA

IFISAs are on offer from a growing range of peer-to-peer (P2P) lending platforms. P2P platforms allow people to lend money to businesses and private individuals and get their money back with interest as the loans are repaid. If you invest in the form of an IFISA all the interest you receive from P2P lending is paid tax-free, otherwise it is taxed as income (though interest from P2P lending does qualify for the Personal Savings Allowance of up to £1,000 a year, mentioned above).

Peer-to-peer platforms generally offer more attractive interest rates than bank and building saving accounts (or cash ISAs) – from around 3% to 12% or more. They aren’t covered by the same guarantees as the banks and are therefore riskier, though. And if you need your money back urgently there may be delays and/or extra charges to pay.

Nonetheless, in the current climate of low-interest savings accounts and volatile stock markets, growing numbers of people are looking to IFISAs as a home for at least some of their savings.

One such option I have used myself is Kuflink, a P2P property investment platform. They offer an IFISA with automatic diversification over a 1, 3 or 5 year term (you can also choose your own self-select loans within an IFISA wrapper). Note that until 30 May 2023 Kuflink are offering an enhanced promotional rate of up to 9.73% a year (gross annual interest equivalent rate) for their Auto-Invest offers. You can read my full review of Kuflink here..

Another potential IFISA option (which I am using myself this year) is Assetz Exchange. They prioritize lower-risk property investments, which you can invest in through a self-select IFISA. You can read my full review of Assetz Exchange here.

Lifetime ISA

Lifetime ISAs or LISAs are a new-ish initiative from the government to encourage younger people to save. They do have one big drawback for many readers of this blog – you have to be under the age of 40 (though over 18) to open one.

LISAs are designed for two specific purposes: buying your first home and saving for retirement. How they work is that you can pay in up to £4,000 a year (lump sums or regular contributions) and the government will top this up with another 25%. As long as you open your LISA before the age of 40 you will continue to receive the bonuses on your contributions until you reach 50.

So if you pay in the maximum £4,000 in a year, the government will top this up to £5,000. If you pay in the full £4,000 every year from the age of 18 to the upper limit of 50, you will therefore get a maximum possible bonus from the government of £32,000.

LISAs are therefore somewhat different from the other types of ISA mentioned above, but nonetheless any money you invest in one comes out of your annual ISA allowance (currently £20,000). So if you pay the maximum £4,000 into a LISA this year, that comes out of your £20,000 ISA allowance, leaving you with ‘just’ £16,000 to invest in other sorts of ISA.

Your money will grow without any tax deductions in a LISA, and you can also withdraw without having to pay tax. However, there are certain restrictions. In particular, you can only use the money in your LISA for one of two purposes: paying a deposit on your first home or saving for retirement. While you can access your money for other reasons, you will then lose 25% of the total, including your own contribution and the government bonus along with any investment growth. That means in many cases you will get back less money than you put in.

Summing Up

The 2022/23 ISA allowance is a generous £20,000 and offers the potential to save a lot of money on tax, assuming you are lucky enough to have this amount to save or invest. But, very importantly, it cannot be rolled over. So if you don’t use your 2022/23 ISA allowance by 5th April 2023 at the latest, it will be gone forever. It is therefore important to attend to this now and ensure you get as much benefit as possible from this valuable tax-saving concession.

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

This is a fully updated post from last year.

Disclaimer: Please note that I am not a professional financial adviser and cannot give personal financial advice. You should do your own ‘due diligence’ before making any investment, and seek professional advice from a qualified financial adviser if in any doubt how best to proceed. All investments carry a risk of loss.

Note, also, that posts on Pounds and Sense may include affiliate links. If you click through one of these and go on to perform a qualifying transaction at the website in question, I may receive a fee for introducing you. This will not affect any fees you may be charged or the product or service you receive.

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What Are Smart Portfolios on eToro?

What Are Smart Portfolios on eToro?

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In my post today I’m focusing on the trading and investment platform eToro. I originally reviewed eToro in this post.

eToro is a Israeli fintech company based in Cyprus. The company also has registered offices in the UK, US and Australia. It is a hugely popular platform with 25 million customers from over 140 countries across the world.

eToro is regulated and authorised in the UK by the Financial Conduct Authority (FCA) and is covered by the Financial Services Compensation Scheme (FSCS). That means if eToro were to go bust any deposits with them up to £85,000 would be protected. Of course, the FSCS doesn’t protect you if you lose money simply due to your investments performing poorly.

eToro offers a wide range of investment products, from individual shares to cryptocurrencies, commodities to ETFs, currency pairs to copy trading. Today, though, I’m focusing on investing in thematic portfolios (referred to on eToro as Smart Portfolios). I recently invested in one of these myself and will talk more about this later. But before that, let’s start by answering the most basic question…

What Is Thematic Investing?

Thematic investing is a term you are likely to hear a lot more in the coming months. I know for a fact that at least one other major investment platform is planning to roll out this option soon.

There is no generally accepted official definition of thematic investing. It has some similarities with sector investing, but is more wide-ranging. To quote Wikipedia, ‘Thematic investing is a form of investment which aims to identify macro-level trends, and the underlying investments that stand to benefit from the materialisation of those trends.’ Thematic funds and portfolios tend to span a variety of sectors and pick companies within those sectors that are relevant to the chosen theme.

Thus, a healthcare-themed fund might invest in pharmaceutical companies, hospital companies, health insurance companies, nursing homes, surgical equipment manufacturers and other high-tech and information technology companies operating in the healthcare field.

Thematic investing involves assembling a collection of companies in an area you predict will generate above-average returns over the long term. Themes can be based on a concept such as ageing populations or the switch to renewables, or a narrower sub-sector such as robotics or driverless cars. Obviously, if the trend in question continues, a fund or portfolio based on it is likely to do well.

Thematic Investing on eToro

eToro offers a growing range of thematic portfolios you can invest in. As mentioned above, they are referred to on the platform as Smart Portfolios.

Most Smart Portfolios are created and managed by experts on the eToro investment team, taking into account factors such as balance, exposure, potential yield, risk and so on. In addition, there are some created and managed by eToro’s partners, including specialist investment firms and high-profile investors such as Warren Buffet.

An important question for investors is whether these portfolios are actively managed or passive. In fact, eToro say it’s a mixture of both. On the one hand, Smart Portfolios are not generally updated on a daily basis. However, they are regularly rebalanced and fine-tuned by the eToro investment team. Rebalancing is a means of ensuring that each portfolio is regularly realigned to match the original asset allocation plan and optimized for best results. Rebalancing periods differ from portfolio to portfolio, with details about this on each portfolio’s info page.

Some examples of eToro Smart Portfolios are listed below:

  • Cloud Computing
  • Crypto Portfolio
  • Renewable Energy
  • Dividend Growth – high-dividend-yielding companies
  • Cannabis Care – medical marijuana
  • Metaverse Life – virtual worlds
  • China Tech – technology leaders in China
  • Diabetes-Med – diabetes care stocks
  • Oil World Wide – long oil industry
  • Travel Kit – travel and leisure

The minimum investment in an eToro Smart Portfolio is $500 (about £416 at the time of writing). The reason for this is that when you invest in a Smart Portfolio, eToro automatically duplicates all trades in proportion to the size of your investment. eToro has a minimum investment size of $1 and if a trade would work out less than that pro rata it will not be executed. Setting a minimum investment of $500 therefore ensures that there are enough funds to open all the positions needed for the investment.

When assets that are eligible for dividend payments are held via a Smart Portfolio, these dividends are added to the portfolio’s cash balance. When the portfolio is rebalanced, these sums are then reinvested in the portfolio’s holdings.

How to Invest in an eToro Smart Portfolio

Before you can start investing, you will of course need to register for an account with eToro and deposit some funds with them. I talked about this in my original eToro review. I also recommend opening an eToro Money account (as discussed in this blog post), as this will speed up the process and ensure any costs are kept to a minimum).

Once you have done this, you can check out eToro’s range of Smart Portfolios by clicking on Discover in the left-hand menu of your dashboard when logged on. When you do this and scroll down a bit, you should see a section like the one below…

Click on View All and you will be taken to a page listing Smart Portfolios in various categories. The top one is Most Popular. When I tried this today, the section concerned looked like this…

Most popular Portfolios

Again, you can see all the portfolios in this category by clicking on View All. Further down the page are sections for other categories, including Tech Focused, Crypto Based and Created by Partners. There is also a filter tool allowing you to search for Smart Portfolios covering particular interests – from utilities to medical technology, cryptocurrencies to media services.

Once you have found a Smart Portfolio you want to invest in, all you need to do is go to the page for the SP in question and click on Invest in the top-right-hand corner. A pop-up box should then appear…

SP invest box

You can of course change the amount in the top box if you want to invest more than the minimum $500.

One other choice you have to make here concerns the Stop Loss figure. If the value of your portfolio falls below this, the Stop Loss will automatically close your investment and return the remaining money to your eToro balance. You can set this figure anywhere between 5% and 95%. My top tip is not to set this figure too high, as even a brief ‘wobble’ will then trigger the stop loss and crystallize your losses. Personally I wouldn’t set this figure any higher than 70% ($350 with a $500 investment). But it’s your decision, of course, based on your tolerance for risk.

Once you are happy with the settings, click on Deposit Now and your investment in the Smart Portfolio in question will be made.

  • If any of the above sounds at all daunting, don’t forget that everyone on eToro also gets a $100,000 virtual portfolio to practise with. You can invest using this virtual money to see how the process works and what returns you make.

My Experience with eToro Smart Portfolios

On 4th January this year (2023) I invested $500 in the Oil Worldwide smart portfolio. This SP focuses on the world’s leading oil-related companies, oil-related ETFs (exchange traded funds) and direct oil price derivatives.

I know this might seem rather a contrarian choice in these eco-aware times, but it seems to me that oil will still have a vital role to play in the world economy for many years to come. Plus the big oil companies are making huge profits at the moment, so I figured I might as well grab a share of that!

In addition, with oil companies currently out of favour with (some) investors, I thought there might be value to be found investing in this sector. These are large, successful companies, and they are increasingly diversifying from ‘black gold’ to renewables as well. And finally, this particular SP has a good recent profit record on eToro (much better than most crypto portfolios, for instance).

Obviously I have only been invested for just over a month to date. Even so, the value of my SP has risen to $513.62 at the time of writing, an increase of 2.66 percent. I am quite happy with that. In any event, I’m looking on this as a long-term investment so won’t be judging it yet.

Closing Thoughts

If you are looking for an interesting – and rather different – investment opportunity, thematic investing with eToro Smart Portfolios is certainly worth considering. They allow you to back your opinions on probable trends in the years ahead, and profit if the trends in question do indeed come to pass.

Of course, as with all investing, there is never any guarantee you will make money. And you could lose money if trends falter or go into reverse. In addition, unexpected events can torpedo any trend – just look what happened to the leisure and tourism industry in 2020 when the pandemic struck. It’s therefore essential to diversify your investments as much as possible and avoid the cardinal sin of putting all your investment eggs in one basket.

  • Remember, also, that investing is (or should be) a long-term exercise. The value of your investments can go down as well as up, and in the short- to medium-term at least you could end up getting back less than you put in. Ideally you should have a time-frame of five years or longer for any equity-based investment. In any event, you should avoid investing money you may need at short notice in the next year or two.

Nonetheless, eToro Smart Portfolios are a welcome addition to the platform’s range of investment products. And with eToro’s low fees, easy-to-use website and good social investing features, it’s a site all investors should at least check out.

For more information about eToro, please see my original eToro review and also my posts about copy trading on eToro and the eToro Money app. You can also if you wish sign up directly on the eToro website via this link [affiliate].

I will continue to update Pounds and Sense readers about the performance of my eToro investments in my monthly updates (such as this one).

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

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

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

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My investments update February 2023

My Investments Update – February 2023

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Here is my latest monthly update about my investments. You can read my January 2023 Investments Update here if you like

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

As the screenshot below of performance over the last year shows, my main Nutmeg portfolio is currently valued at £20,817. Last month it stood at £19,898 so that is a rise of £919.

Nutmeg main portfolio February 2023

Apart from my main portfolio, I also have a second, smaller pot using Nutmeg’s Smart Alpha option. This is now worth £3,175 compared with £3,023 a month ago, a rise of £152.

Here is a screen capture showing performance over the last year. As you can see from the ochre line, I topped up this account in February 2022.

Nutmeg Smart Alpha February 2023

Clearly 2023 has started well, with the total value of my Nutmeg investments increasing by over £1,000. The strong start for equities in general in 2023 is due to various factors, including inflation rates world-wide starting to fall, the ending of most Covid restrictions in China, and a growing belief that any post-pandemic recession may not be as severe as was once thought. Of course, the war in Ukraine is still a major concern, but if that is resolved in the coming year it should give markets a further boost.

2023 is still likely to be an uncertain year for investors, with more ups and downs very much on the cards. Nonetheless, with share prices generally still below where they were a year ago, there are likely to be opportunities for investors to capitalize in the months ahead. I shall definitely be looking to invest more in Nutmeg and other equity-based platforms in the coming year.

Of course, all investing is (or should be) a long-term endeavour. Over a period of years stock market investments such as those used by Nutmeg typically produce better returns than cash accounts, often by substantial margins. But there are never any guarantees, and in in the short to medium term at least, losses are always possible.

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

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

Since I opened my account, my AE portfolio has generated a very respectable £96.79 in revenue from rental income. As I said in last month’s update, capital growth has slowed, though, in line with UK property values generally. Even so, it’s not all bad news. At the time of writing 16 of ‘my’ properties are showing gains, 7 are showing losses, and two are breaking even. My portfolio is currently showing a small net increase in value of £13.36, meaning that overall (rental income plus capital gains) I am up by £110.15. That is still a very decent rate of return on my £1,000 and does illustrate the value of P2P property investments for diversifying your portfolio. And it doesn’t hurt that with Assetz Exchange most projects are socially beneficial as well.

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

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

Another property platform I have investments with is Kuflink. They continue to do well, with new projects launching almost every day. I currently have around £2,400 invested with them in 18 different projects (I withdrew £200 in December to help pay for Christmas). To date I have never lost any money with Kuflink, though some loan terms have been extended once or twice. On the plus side, when this happens additional interest is paid for the period in question.

My loans with Kuflink pay annual interest rates of 6 to 7.5 percent. These days I invest no more than £200 per loan (and often less). That is not because of any issues with Kuflink but more to do with losses of larger amounts on other P2P property platforms in the past. My days of putting four-figure sums into any single property investment are behind me now!

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

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

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

Last year I set up an account with investment and trading platform eToro, using their popular ‘copy trader’ facility. I chose to invest $500 (then about £412) copying an experienced eToro trader called Aukie2008 (real name Mike Moest).

In January I added to this with another $500 investment in one of their thematic portfolios. I also invested a small amount I had left over in Tesla shares. My original investment of $1,022.26 is today worth $1,118.62, an increase of $96.36 or 9.63%. in these turbulent times I am very happy with that.

My eToro portfolio February 2023

In any event, I’m looking on this as a long-term investment so won’t be judging it yet. You can read my full review of eToro here. You may also like to check out my recent more in-depth look at eToro copy trading. I shall be publishing a post about my latest investment in an eToro thematic portfolio soon.

  • eToro also recently introduced the eToro Money app. This allows you to deposit money to your eToro account without paying any currency conversion fees, saving you up to £5 for every £1,000 you deposit. You can also use the app to withdraw funds from your eToro account instantly to your bank account. I tried this myself recently and was impressed with how quickly and seamlessly it worked. You can read my blog post about eToro Money here.

I had two more articles published in January on the always-excellent Mouthy Money website. One is A Three-Step Plan to Help Boost Your Finances in 2023. This article actually came out of an online presentation I did a few months ago to a club for older people. I hope you will find the ideas and advice it contains useful.

My other piece was Switch to Profit – How to Make Money Moving Your Bank Account. With the banks now starting to offer switching bonuses again to attract new customers, there are hundreds of pounds to be made by doing this. The article quotes my sister Annie, who is a serial switcher and shares some top tips based on her experiences. Many thanks, Annie!

That’s all for today. I hope you and your family are coping in these undoubtedly challenging times. Don’t forget to check out the government’s Help for Households website, which sets out various types of financial assistance you may be entitled to and is regularly updated.

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

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

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

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What is an eToro Money Account?

What is an eToro Money Account and How Can it Save You Money?

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Regular readers will know that I joined the online trading and investment platform eToro earlier this year and have become a fan of it.

You can purchase a wide range of investment products on eToro, including individual company shares, ETFs, commodities, cryptocurrencies, thematic portfolios, and so on. You can also avail yourself of their popular copy trading facility, where you sign up to automatically copy the trades of an experienced (and hopefully successful!) eToro investor.

My own investments on eToro now comprise a thematic portfolio, a copy-trading portfolio, and a few shares in Tesla (basically because I had a spare $20 burning a hole in my account!). I will write more about thematic portfolios in a future post. Today, though, I want to talk about eToro Money.

What is eToro Money?

eToro Money is a recently-launched e-money account for eToro investors. It can be managed via a mobile phone app. It is free to set up and there are no ongoing charges.

The key attraction of eToro Money is that it allows you to deposit to your eToro investment account without paying the usual currency conversion fee. This can save you up to £5 per £1,000 compared with depositing directly to eToro using a bank debit card.

Essentially what happens is that you deposit to your eToro Money account with your bank debit card using the account details provided. This money then appears instantly in your eToro Money account and you can use it to invest on anything on eToro when you are ready.

When I tried this myself, I was impressed by how straightforward the process was, and in particular the speed with which the money showed up in my account (it really did seem to appear instantly). Using it to invest on the eToro platform was then straightforward. Of course, eToro operates in US Dollars, so I worked out in advance roughly how much I would need to deposit in GB pounds to get the $500 I was aiming to invest (I transferred £430 in total to be on the safe side). The money was then converted at a fair rate with no fees or charges. You can see these transactions listed in the screen capture of the app on my phone below. I have redacted my account name for security reasons.

eToro Money app

You can also use eToro Money to withdraw funds from your eToro account. I haven’t tried this yet, but again eToro promise that the process is instant and I have no reason to doubt that. There are modest fees for withdrawing from eToro and you will still have to pay them, but having an eToro Money account keeps costs as low as possible. As I noted in my original review, eToro’s fees are very reasonable and they don’t generally impose any transaction charges.

Other Features

As well as managing your main (‘fiat’) currency in eToro Money, you can also securely store, send and receive most popular cryptocurrencies. eToro Money incorporates the functionality of the previous eToro Wallet app for cryptocurrencies, while offering additional features as well.

You can also use your eToro Money account to send money to and receive money from friends and family, set up direct debits, manage your household expenses, and so forth.

The eToro Money Debit Card

This is a further benefit of eToro Money some may wish to take advantage of. It is a debit card linked to your eToro Money account which you can use in the same way as a bank debit card to fund purchases, exchange currencies, and so on. They claim to offer market leading exchange rates across the globe.

To qualify for an eToro Money debit card, you must be a member of the eToro Club. Anyone with over $5,000 in realised equity on eToro is eligible for this. Realised equity in this context means the combined value of the available funds in your eToro account plus the original amount invested in all your holdings. So if you have $1,000 in cash in your account and have invested $4,000 in shares and other investments on the platform, you will have $5,000 in realised equity and qualify for a free eToro Money debit card if you want one.

Closing Thoughts

For most users the primary benefit of an eToro Money account will be to eliminate the currency conversion fee when depositing on eToro. It also speeds up the process of depositing to the platform and withdrawing from it.

While eToro Money is not a fully-fledged online banking service, you can also use it to send payments and/or set up direct debits. In that respect, it is a bit like PayPal. Though you will need to know the sort code and account number of the person or business you want to pay. An email address alone (as with PayPal) won’t cut it!

As mentioned above, if you have $5,000 or more in realised equity on eToro you are also entitled to an Etoro Money debit card if you wish. You can read more about this on the eToro Money website.

Overall, I think anyone who plans to invest via eToro should seriously consider opening an eToro Money account to reduce costs and speed up depositing and withdrawing. They will obviously then have the opportunity to take advantage of the other benefits too.

To set up an eToro Money account, the best option is to download the eToro Money app from Google Play (Android) or the App Store (Apple) and follow the instructions in the app. Obviously you should have an account on eToro already in order to use eToro Money.

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

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

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

If you enjoyed this post, please link to it on your own blog or social media:
Investments January 2023

My Investments Update – January 2023

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Happy New Year! Here is my latest monthly update about my investments. You can read my December 2022 Investments Update here if you like

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

As the screenshot below of performance over the last year shows, my main Nutmeg portfolio is currently valued at £19,898. Last month it stood at £20,391 so that is a fall of £493.

Nutmeg main portfolio Jan 2023

Apart from my main portfolio, I also have a second, smaller pot using Nutmeg’s Smart Alpha option. This is now worth £3,023 compared with £3,114 a month ago, a decrease of £91.

Here is a screen capture showing performance over the last year. As you can see from the ochre line, I topped up this account in February 2022.

Nutmeg Smart Alpha Jan 2023

That is a net month-on-month decrease of £584. That is obviously disappointing, but needs to be set against an increase of £785 the month before.

As the charts above clearly illustrate, 2022 was a volatile year for stock market investments generally. The outlook is still uncertain, but according to this article in the Financial Times the majority view is that stock markets overall will remain flat or see a very modest recovery in 2023. But obviously a lot depends on world events. If the war in Ukraine ends and/or China makes a reasonably smooth recovery from the pandemic, things could improve faster. Probably the best strategy, as this article from Forbes puts it, is to hope for the best but be prepared for the worst!

Overall, my Nutmeg investments are down £2,191 or about 8.7% since the start of 2022. To put this in context, though, in 2021 they rose in value by £3,552. And I am still more than £5,600 ahead since I started investing with Nutmeg in 2016. For my main portfolio that represents a return on capital of 39.01% or 57.13% time-weighted. My Smart Alpha portfolio hasn’t been going as long, but it is at least showing a small profit on the total I have put into it 🙂

Of course, the main lesson from all this is that investing is (or should be) a long-term endeavour. Over a period of years stock market investments such as those used by Nutmeg typically produce better returns than cash accounts, often by substantial margins. But there are never any guarantees, and in in the short to medium term at least, losses are always possible.

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

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

Since I opened my account, my AE portfolio has generated a very respectable £91.61 in revenue from rental income. Capital growth has stalled, though, in line with what is happening in housing markets more generally. While some of ‘my’ properties are still showing gains, others are showing losses on capital. Overall my portfolio is currently showing a small net decrease in value of £7.88.

The latter is obviously a little disappointing, although of course capital values are largely academic unless and until you want to sell. The rental income is still coming in steadily without any issues or dramas. As I’ve said before, £91.61 is a decent rate of return on my £1,000 and does illustrate the value of P2P property investments for diversifying your portfolio when equity markets are volatile. And it doesn’t hurt that with Assetz Exchange most projects are socially beneficial as well.

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

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

Another property platform I have investments with is Kuflink. They continue to do well, with new projects launching almost every day. I currently have around £2,400 invested with them in 18 different projects (I withdrew £200 in December to help pay for Christmas). To date I have never lost any money with Kuflink, though some loan terms have been extended once or twice. On the plus side, when this happens additional interest is paid for the period in question.

My loans with Kuflink pay annual interest rates of 6 to 7.5 percent. These days I invest no more than £200 per loan (and often less). That is not because of any issues with Kuflink but more to do with losses of larger amounts on other P2P property platforms in the past. My days of putting four-figure sums into any single property investment are behind me now!

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

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

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

Last year I set up an account with investment and trading platform eToro, using their popular ‘copy trader’ facility. I chose to invest $500 (then about £412) copying an experienced eToro trader called Aukie2008 (real name Mike Moest). My investment has been up and down in the last few months, but it is currently $33 (about £27) in profit. In these turbulent times I am quite happy with that.

In any event, I’m looking on this as a long-term investment so won’t be judging it yet. I am also considering a further investment with eToro, probably in one of their themed portfolios. You can read my full review of eToro here. You may also like to check out my recent more in-depth look at eToro copy trading.

  • You might also like to know that eToro recently introduced the eToro Money app. This allows you to deposit money to your eToro account without paying any currency conversion fees, saving you up to £5 for every £1,000 you deposit. You can also use the app to withdraw funds from your eToro account instantly to your bank account. I tried this myself recently and was impressed with how quickly and seamlessly it worked. You can read my more in-depth article about eToro Money here.

I had two more articles published in December on the always-excellent Mouthy Money website. One addressed the question of whether you can Save Money by Cancelling Your TV Licence. I looked at what this entails and what TV you are still permitted to watch without a licence. I also set out some ways you may be able to save money on your TV licence if cancelling altogether is a bridge too far for you.

My other piece was Why We All Need to Be a Bit More Branson! The title is obviously tongue-in-cheek. But the article sets out my strongly held view that – in these challenging times especially – we can all benefit from being a bit more entrepreneurial. I really enjoyed writing this one, I must admit!

Last month I updated my post about the Warm Home Discount, which this year is being increased from £140 to £150. The eligibility rules are changing somewhat, and I shall probably be one of the people who misses out, which is clearly disappointing. But on the plus side, most people won’t now have to apply for this benefit – if you are eligible, the grant should be applied automatically to your bill by your energy company.

  • The government’s Help for Households website has a helpful summary of all the financial assistance currently available and is regularly updated.

My other posts from December included What Are The Best Video Calling Tools for Older People? and an expert guest post on the subject Why a Passion Investment Could be the Way Forward in Times of Economic Uncertainty. I found the latter quite an eye-opener, as it includes important info about Capital Gains Tax (CGT) I wasn’t previously aware of. The article also sets out some reasons to consider ‘passion investments’ such as fine wines or vintage cars, due to the tax advantages they can confer.

Finally, I published My Top 20 Posts of 2022, which I hope you will check out as well!

That’s all for today. I hope you and your family are coping in these undoubtedly challenging times, and wish you a happy, healthy and prosperous 2023.

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

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

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

If you enjoyed this post, please link to it on your own blog or social media:
My Top 20 Posts of 2022

My Top 20 Posts of 2022

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As is customary for bloggers at this time of year, here are the top twenty posts on Pounds and Sense in 2022, based on comments, page-views and social media shares. They are in no particular order. I have excluded any posts that are no longer relevant.

I hope you will enjoy revisiting these posts, or seeing them for the first time if you are new to PAS.

All posts in the list below should open in a new tab/window when you click on the link concerned.

  1. Ten Reasons Over-50s May Need an Independent Financial Adviser
  2. Can You Still Make Money From Matched Betting?
  3. Nibble Review – A New European Crowdfunding Platform Open To Everyone
  4. How to Cut Your Motoring Costs
  5. Kuflink: My Review of This P2P Property Investment Platform
  6. How to Save Money by Saving Energy
  7. Nutmeg Review: My Experiences with this Robo-Adviser Investment Platform
  8. Make a Sideline Income Renting Out Your Driveway or Garage
  9. How to Reduce Your Water Bills
  10. Could You Be a Holiday Let Landlord?
  11. Will You Get the Warm Home Discount?
  12. Is It Time for Investors to Look Again at Crowdlending/P2P Platforms?
  13. Spotlight: eToro Trading and Investment Platform
  14. How to Start Copy Trading With eToro
  15. Twenty Great Ways to Make Extra Money From Home
  16. What Are the Best Video Calling Tools for Older People?
  17. Three Ethical Investment Options for You to Consider
  18. Get a Free ETF Share Worth up to £200 With Wealthyhood
  19. Why a Passion Investment Could Be the Way Forward in Times of Economic Uncertainty
  20. How to Track Investments With Microsoft Excel

I’ll be taking a break from blogging over the festive period (though I’ll still be around on Twitter and Facebook). I’ll therefore close by wishing you a Very Merry Christmas (strikes and cost-of-living crisis permitting) and for all of us a much better new year 🍾

If you have any comments or questions, of course, feel free to leave them below as usual.

If you enjoyed this post, please link to it on your own blog or social media:
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