Investing

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

October 5, 2021

My Investments Update – October 2021

Nick Investing, Everything Else travel, events 4 Comments

As regular readers will know, I recently started posting monthly updates about my investments. These (partly) replace the ‘Coronavirus Crisis Updates’ I was posting from March 2020. You can read my September 2021 Investments Update here if you like

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 is currently valued at £21,046. Last month it stood at £21,690, so that is a fall of £644. That is obviously disappointing, but as the value rose by £675 the previous month, I am not going to lose any sleep over it. Most equity-based investments had a rocky ride in September, with my BestInvest SIPP also taking a hit. Stock market investments in general should be regarded as medium- to long-term, and you have to expect some ups and downs in the short term.

Apart from my main portfolio, I also have a second, smaller pot using Nutmeg’s new Smart Alpha option. This pot also fell in value in September. It is now worth £2,633 compared with £2,710 last month. That’s a fall of £77, though again the value is still higher than it was two months ago. Here is a screen capture showing performance in September 2021.

As I said above, September was a disappointing month for stock market investors generally, and Nutmeg is far from alone in seeing falls. I make no claim to being an expert on the markets, but from what I read this has resulted from various developments that have worried investors, including the withdrawal of fiscal stimulus packages as we come out of the pandemic and a rise in the inflation rate.

The drop in September is still nothing like what happened in March 2020 – at the start of the pandemic – when the value of my Nutmeg portfolio fell by a third in just a few weeks. On that (admittedly worrying) occasion, the value of my investments swiftly bounced back and turned into a good overall profit for the year. I remain optimistic that something similar will happen again as the UK and world economies get back on a more even keel.

So, especially if you are a new investor, I would strongly advise you not to panic. Remember that if you sell up you are simply crystallizing any losses rather than giving the markets a chance to recover. Personally I am considering investing more in my Nutmeg account now while valuations are down. Obviously I am not offering that as financial advice, just sharing my own thoughts and plans at this time.

Anyway, you can read my full Nutmeg review here (including a special offer at the end for PAS readers). If you are still 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 pretty amazed by the difference the risk level you choose makes.

As regular readers will know, 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 £20.79 in revenue from rental and £87.14 in capital growth, for a total return of £107.93. Here is my current statement:

As I have noted before, Assetz Exchange has had a big influx of new members, meaning all available investments were quickly snapped up. At the same time, some of the new projects that were due to launch were delayed. Only a small number of new projects went live on the platform in the last month, so I haven’t added any more to my portfolio.

To control risk with all my property crowdfunding investments nowadays, I am investing relatively modest amounts in individual projects. I don’t therefore put more than around £100 into any one project. As you can see, I have a well-diversified portfolio with Assetz Exchange comprising 21 different projects. This is a particular attraction of AE in my view. 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 if you like. You can also sign up for an account on Assetz Exchange directly via this link [affiliate].

Another property platform I have some investments with is Kuflink. They appear to have been doing well recently, with new projects launching almost every day. I currently have just over £2,000 invested with them, quite a large proportion of which comes from reinvested profits. To date I have never lost any money with Kuflink, though some loan terms have been extended once or twice. On the plus side, where 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. As mentioned above, these days I invest no more than around £100 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 (such as this one). 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

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 being IFISA-eligible.

I’d also 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, I have another article on the always-excellent Mouthy Money website. This was for their Meet the Blogger feature. They asked me a number of thought-provoking questions, including what personal finance tip I would give a younger version of myself and what I would do if I was made Chancellor for the day! You can read my answers here.

Finally, it’s not investment-related, but I did just want to mention an act of kindness that saved me several hundred pounds last month, and a lot of anxiety too 🙂

I drove up to Yorkshire for a family reunion with my sisters Liz and Annie (and Liz’s family, who live there). I went just before the fuel crisis broke, and found myself marooned when all the local petrol stations closed after running out of fuel.

I was staying at Hewenden MIll Cottages near Bingley (the cover image shows the bungalow I booked this time). When I explained my predicament to the owners, they immediately said I could stay as long as I liked free of charge until the situation improved. I don’t mind admitting I was almost reduced to tears by the unexpected kindness. I ended up staying for three extra days – double the length of time I originally booked (and paid for).

So I wanted to take this opportunity to publicly thank Janet and Susan and family for their kindness, and give Hewenden Mill Cottages another plug. As some of you may remember, I last went there two years ago and was bowled over by the quality of the accommodation and the stunning location (see sample photo below).

You can read my original review of Hewenden Mill Cottages here. It is the best self-catering accommodation I have ever stayed in, and I am obviously even more impressed now. If you want a short break (or longer) in beautiful Bronte Country, I very much doubt you will find anywhere better. They also host some retreats and residential courses.

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

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September 14, 2021

What Are the Benefits of Opening a Junior ISA for Your Child?

Nick Saving Money, Investing sponsored post, families 4 Comments

Updated 21 May 2024

Today I’m looking at a savings product that will be relevant mainly to the parents among you

A Junior ISA (sometimes abbreviated to JISA) is a savings product aimed at under-18s (and more specifically at their parents/guardians). These accounts allow money to be stashed away tax-free for a child until their 18th birthday. After this the money becomes the child’s to do with as they wish. The JISA account turns into an ordinary ISA at this time, thus retaining its tax-free status.

What Types of JISA are There?

There are two types of JISA: the Cash JISA and the Stocks and Shares JISA.

A Cash JISA is basically just a tax-free savings account. Interest is normally paid annually. According to the MoneySavingExpert website, the best-paying Cash JISA provider at the time of writing is Coventry Building Society, who are paying 4.95%. However, this is only available if you open an account in a branch or by post. If you want to open an account online, the best paying Cash JISA currently comes from Tesco Bank or NS&I, both paying 4%.

With a Stocks and Shares JISA, as the name indicates, the money is invested in the stock market. This offers the potential for greater returns, but with a higher degree of risk in the short term especially. I will say more about Stocks and Shares JISAs below.

As with adult ISAs, there is an annual limit to how much you can put into a Junior ISA. In the current (2024/25) tax year this is £9,000. You can put all of this into a Cash JISA or a Stocks and Shares JISA, or divide it between the two. You can switch providers as often as you like, but can only hold one of each type of JISA at any time.

Only a child’s parent or guardian can open a Junior ISA for them, but others including grandparents, friends, other relatives and the child him/herself can contribute. But it is important to be aware that (barring exceptional circumstances) all the money and interest in the account will be locked away until the child’s 18th birthday.

Which JISA is Best?

You won’t be surprised to hear that there is no simple answer to this.

If you want to avoid any risk of losing money, a Cash JISA is the way to go. Under the Financial Services Compensation Scheme (FSCS) the money will be completely safe so long as it’s invested with a UK-regulated provider and you have no more than £85,000 with that institution. Every year a known amount of interest will be added. The only risk you are taking is that the money won’t grow at the same rate as inflation.

On the other hand, if you are investing for at least a five-year period, there is certainly a case for putting at least some money into a Stocks and Shares JISA – and if it will be for ten years or more, the case becomes even more compelling. Over a five-year period stocks have outperformed cash in the great majority of such periods, and in almost all periods of ten years and over.

So if you are opening a JISA for a young child or infant, where the money may be invested for up to 18 years before it can be accessed, a Stocks and Shares ISA is very likely (though not guaranteed) to produce better returns than a Cash JISA. Of course, there is nothing to stop you hedging your bets and putting some money into one of each type.

What About Child Trust Funds?

Any child under the age of 18 born before January 2011 would have had a Child Trust Fund (CTF) opened for them by the government.

The government gave every child born between 1 September 2002 and 2 January 2011 a £250 voucher (£500 in the case of some low-income households). Parents could top up their child’s CTF themselves if they wished. The scheme ended in 2011 when CTFs were replaced by Junior ISAs. Unfortunately the government does not make a contribution towards these!

As with Junior ISAs, the money in a CTF could be placed in a Cash CTF or one where the money was invested in stocks and shares. Although new CTFs are no longer issued, there are many young people who still have one and will be able to access it on their 18th birthday. The first CTFs matured in September 2020, when the oldest account-holders turned 18. The last will mature in 2029. On maturity, a CTF can either be cashed in or transferred into an adult ISA.

Unfortunately the interest rates currently paid on Cash CTFs are generally very low indeed. So if your child has one, there may be a case for transferring it to a better-paying Junior ISA. Most JISA providers allow transfers from CTFs (or other JISAs), and it is certainly worth looking into this if your child has a low-interest-paying Cash CTF.

The Nutmeg Junior ISA

Regular readers of Pounds and Sense will know that I am a fan of of the Nutmeg investment platform and have a fairly large amount in an account with them. My money is invested in the form of a Stocks and Shares ISA. You can read more about this if you wish in my Nutmeg review or one of my regular investment updates such as this one.

Nutmeg do not offer a Cash JISA but they do offer a Stocks and Shares JISA. So if you are thinking of opening one of these for your child (maybe in addition to a Cash JISA) in my view they are well worth checking out.

With the Nutmeg Stocks and Shares JISA you have the same range of investment options as their adult ISA. These are discussed in detail in my Nutmeg review, but in brief they include Fully Managed, Smart Alpha, Socially Responsible and Fixed Allocation. My own investments are in the Fully Managed and Smart Alpha categories, and I am very happy with how both have been performing. But you should, of course, check the terms and conditions (and charges) carefully when deciding which is right for you.

Note that, unlike an adult ISA, in a Nutmeg JISA you cannot have different ‘pots’ within the same JISA wrapper. So you will need to pick your preferred option from one of the four mentioned, though you can change this any time later if you wish. You can also set a risk level between 1 and 10 and again you can change this at any time. You can read my recent blog post about Nutmeg risk levels here. My general advice, though, is that if you’re investing over a period of at least five years, it may pay not to be too cautious. In addition, if you choose to invest in a Nutmeg Junior ISA via my refer-a-friend link, you can get six months free of any charges.

Of course, Nutmeg are not the only providers of Junior ISAs. Some other possible options include Hargreaves Lansdown and BestInvest.

Closing Thoughts

If you are a parent or guardian, opening a Junior ISA is one of the best gifts you can give your child (or children).

The money will grow tax-free and can’t be touched until they are 18, when they can withdraw it or keep it as an ISA. It may provide a much-needed lump sum at a time when they are setting out in the world and really appreciate a financial leg-up. A JISA will also give them an early introduction to saving and investing, and form a valuable part of their financial education.

The main selling point of JISAs is, of course, their tax-free status. Admittedly this is not as big a deal with Cash JISAs as it used to be, as nowadays almost everyone has a tax-free Personal Savings Allowance of up to £1,000 and other tax-free allowances as well. As a result, interest on savings is usually paid without any deductions. So there may be no immediate tax advantage to investing in a Cash JISA if a non-JISA savings account pays better interest.

In the case of a Stocks and Shares JISA the tax-free status may be more significant, as it also gives exemption from dividend tax and capital gains tax (CGT) both of which have had their tax-free allowances slashed by the government.

Either way, though, money saved in a JISA will carry on growing tax-free forever (until it’s withdrawn) – so even if there is no immediate tax advantage, there may well be in years to come. This applies to an even greater extent if the young person stays invested on reaching maturity rather than immediately withdrawing all their money.

According to the This is Money website more parents open Cash JISAs than Stocks and Shares JISAs. As a money blogger, however, I would definitely think about opening a Stocks and Shares ISA for at least part of your child’s JISA allowance. That applies especially if it is more than ten years till their 18th birthday. As mentioned above, over almost any given ten-year period, stocks and shares have outperformed cash. And the longer timescale allows the inevitable ups and downs in the stock markets to even out. If you put all the money into a Cash JISA, by contrast, it is quite likely that the value of your child’s account will not keep up with inflation.

As always, if you have any comments or questions about this 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. Everyone’s circumstances are different and what is right for one person may not be appropriate for another. It is essential to do your own ‘due diligence’ before investing and seek help from a qualified financial services professional if in any doubt how best to proceed. All investing carries a risk of loss.

This post includes affiliate links. If you click through and make a purchase (or perform some other defined action) I may receive a fee for introducing you. This will not affect in any way the product or service you receive.

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September 8, 2021

Top 10 Personal Finance Podcasts (Infographic)

Nick Making Money, Saving Money, Investing reviews, infographic 4 Comments

Today I am sharing some information about personal finance podcasts. This is not a subject I previously knew very much about, so I am grateful to my friends at All Finance Tax for supplying the excellent infographic and some of the other info below.

What is a Podcast?

A podcast is like a series of radio programmes on a particular theme or topic, from politics to cycling. You can subscribe for free using a suitable app on your smartphone (or other internet-enabled device). You can then listen whenever and wherever you like, via headphones, earphones, through speakers, in the car, on the train, and so on.

Podcasts are a booming medium and one of the major trends of the last five years. There are now podcast shows on nearly every topic you can think of. And with the rise of both independent and conglomerate podcast production studios, it seems likely this new medium will be in our lives for many years to come.

In the same way people were once passionate about certain radio shows, podcasts have the same dedicated followings, thanks to hosts who become familiar audio friends. Some even run live events. As a medium, podcasts are incredibly accessible, with few barriers beyond an internet connection and a smartphone or other device that can stream audio. No matter where you are or what you’re doing, podcasts offer content that educates, inspires and entertains. If you have never listened to a podcast before, the BBC Sounds podcasts page is one good place to start.

How to Listen to a Podcast

The easiest way to find and listen to podcasts is by using an app on your smartphone.

If you have an iPhone, it will have a built-in app called Apple Podcasts. This works very well and allows you to search for and subscribe to any of a huge range of podcasts. All you have to do then is open the app any time you want to listen and choose the episode you require.

Android owners can use the free Google Podcasts app. You can download this from the Google Play Store if you don’t have it already. It is not as user-friendly as the Apple app and doesn’t have as many features, but will certainly get you started. There are also other free or inexpensive apps you can download from Google Play such as the highly-rated Pocket Casts or Castbox.FM.

Finance Podcasts

One genre with a surprisingly large, dedicated listenership is finance. While to some that might sound a dry, unpromising subject, the podcast medium has enabled content to be reinvented with an unexpected, creative approach.

With hosts ranging from seasoned finance professionals to novice FIRE (financial independence) enthusiasts, podcasts allow people who would never previously have been interested in finance – or perhaps even have been intimidated by the topic – to access valuable information presented in an engaging, inclusive way.

All Finance Tax rounds up the top finance podcasts in the infographic guide below. Find out about the must-listen shows, including podcasts about:

Entrepreneurship
Billionaire case studies
Female-led finance
Personal and couples’ finance
Start-ups
And more!

With snapshots of real reviews plus the best episodes to start with, this resource will help you find the right show for your personal interests and needs regardless of your outlook on finance. Read on for the full list of finance podcasts to start your listening journey!

Many thanks again to my friends at All Finance Tax for their help with this article. I have listed below all the podcasts recommended in the infographic, with links to their homepages (or another website) where you can find out more. You can also listen to the podcasts on the web via these pages, though using an app on your smartphone (as discussed earlier) may be more convenient generally.

Couple Money Podcast

Money for the Rest of Us

So Money with Farnoosh

The Investor’s Podcast

The Creative Rebels (Podchaser page)

Planet Money

One more I would add is the Ask Martin Lewis podcast from BBC Radio Five Live. Martin is, of course, a well-known personal finance guru (and founder of the hugely popular MoneySavingExpert website). Although I can take or leave his TV shows, his podcasts are less gimmicky and include valuable, accessible advice on all aspects of personal finance (not including investing).

As always, if you have any comments or questions about this post, please do leave them below. I’d also love to hear about any personal finance podcasts not mentioned above which you enjoy and recommend!

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

September 3, 2021

My Investments Update – September 2021

Nick Saving Money, Investing 4 Comments

Regular readers will know I’ve been posting ‘Coronavirus Crisis’ Updates since March 2020. These covered my investments and also more personal matters. You can read my August 2021 update here if you like

As I said in that update, since Freedom Day in England has now happened, with the scrapping of most restrictions, it no longer seems appropriate to go on publishing Coronavirus Crisis updates (though the virus hasn’t gone away, I know). So I shall now be publishing monthly investment-only updates, with more personal updates as and when seems appropriate.

Let’s get straight on then. 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 well in August. It is currently valued at £21,690. Last month it stood at £21,015, so that is a rise of £675 (Nutmeg is now showing values including pence as well, but for simplicity I am not including this).

Apart from my main portfolio, I also have a second, smaller pot using Nutmeg’s new Smart Alpha option. This pot also did well in August. It is now worth £2,710, compared with £2,625 last month. That’s an increase of £85 or just over 3%. Here is a screen capture showing performance in August 2021.

You can read my full Nutmeg review here (including a special offer at the end for PAS readers). If you are still 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.

You might also like to know that during September 2021 Nutmeg is running a special promotion on Junior ISAs (JISAS). If you open one of these for a child with Nutmeg (or transfer an existing Child Trust Fund) you will automatically be entered into a free prize draw to win £9,000 (this tax year’s full JISA allowance). For more information click on this link. I am also planning to write a blog post about this soon.

Since I opened my account, my portfolio has generated £15.65 in revenue from rental and £47.65 in capital growth, for a total return of £63.30. Here is my current statement:

To a degree Assetz Exchange has been a victim of its own success. They had a big influx of new members, meaning all available investments were quickly snapped up. At the same time, some of the new projects that were due to launch were delayed. In the last month, however, a small number of new projects went live on the platform, so I am pleased to say my £1,000 (and a bit more from dividends received) is now fully invested.

To control risk with all my property crowdfunding investments nowadays, I am investing relatively modest amounts in individual projects. I don’t therefore put more than around £100 into any one project. As you can see, I already have a well-diversified portfolio with Assetz Exchange comprising 21 different projects. This is a particular attraction of AE in my view. You can actually invest from as little as 80p per property if you really want to proceed cautiously.

Another property platform I have some investments with is Kuflink. They appear to have been doing well recently, with new projects launching almost every day on the platform.

I have a well-diversified portfolio of loans with Kuflink paying annual interest rates of 6 to 7.5 percent. As mentioned above, these days I invest no more than around £100 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 (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!).

In August two more PAS readers signed up with the low-key sideline-earning opportunity mentioned in previous updates. They will have received their initial £100 reward payments about now. I still have a few more invitations available if anyone else would like to take advantage.

This 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.

The company has changed its terms somewhat for new members. You now get a larger £!00 initial reward 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 like going down the mines). So the £100 in effect compensates you for your time, and once it’s done you continue to get £25 a month for no effort at all. The company is constantly developing its offering, partly in response to feedback from PAS readers. They recently launched a new mobile-friendly website 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). They also recently incorporated an Open Banking app so that members don’t have to provide their online banking info to the company, as some people were concerned about this.

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.

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 the techniques 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.

Finally, I have a couple more articles on the always-excellent Mouthy Money website if you’d like to check them out. One is titled How Much Do You Really Need to Retire Comfortably? And the other sets out The Best Discounts and Freebies for Older People. I particularly enjoyed researching that one!

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

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

August 3, 2021

My Coronavirus Crisis Experience – August 2021 Update

Nick Investing, Everything Else events 6 Comments

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 July 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, the value of my main portfolio remained pretty steady in July. It is currently valued at £21,015. Last month it stood at £21,045, so that is a slight drop of £30.

Apart from my main portfolio, I also have a second pot using Nutmeg’s new Smart Alpha option. This pot is now worth £2,625, compared with £2,635 last month, so a small decrease again. Here is a screen capture showing performance in July 2021.

Although it’s a little disappointing both portfolios are down slightly, over the last six months (and longer) both are still well up overall, so I’m certainly not going to lose any sleep over this. This is a long-term investment and some ups and downs are to be expected. In 2021 the overall trend has been mainly upwards, so I hope and expect this to be resumed soon.

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.

.As regular readers will know, 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 £11.57 in revenue from rental and £52.29 in capital growth, for a total return of £63.86. Here is my current statement:

As I said last time, to a degree Assetz Exchange has been a victim of its own success. They have had a big influx of new members, meaning all available investments were quickly snapped up. At the same time, some of the new projects that were due to launch were delayed. As a result I still haven’t invested all the money in my holding account. One new project did come on stream last week, so I put £100 into that.

My colleagues at Assetz Exchange assure me that more new projects are coming very soon. They are also limiting how much members can invest in the first few weeks of any new launch, so that everyone has a fair chance to purchase shares. And as time goes on more members may opt to offer their shares for sale on the exchange, opening up additional buying opportunities.

I am investing relatively modest amounts in new projects as they come onto the platform, so I don’t therefore put more than around £100 into any one project. As you can see, I already have a well-diversified portfolio comprising 20 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].

I haven’t mentioned my trial investment on European loan crowdfunding platform Nibble for a while, so thought I should remedy that this month. This has been proceeding without any issues and my initial test investment of 20 euros has accrued income of 0.65 euros, corresponding to an annual interest rate of 9.7 percent (see screen capture below).

I get weekly updates from Nibble confirming how much interest has been added to my portfolio. Based on my experiences to date I am considering investing a more substantial sum with them soon. My full review of Nibble can be found here.

Finally, in July 2021 two more PAS readers signed up with the low-key sideline-earning opportunity mentioned in previous updates. They will have received their initial £100 reward payments about now. I still have a few more invitations available if anyone else would like to take advantage.

The company has changed its terms somewhat for new members. You now get a larger £!00 initial reward 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 your time, and once it’s done you continue to get £25 a month for no effort at all. The company is constantly developing its offering, partly in response to feedback from PAS readers. They recently launched a new mobile-friendly website 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). They also recently incorporated an Open Banking app so that members don’t have to provide their online banking info to the company, as some people were concerned about this.

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 the techniques 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

The big news in July – in England at any rate – was that so-called Freedom Day took place as promised on 19th July 2021. Most of the legal restrictions on our lives, including mandatory masks and social distancing, were lifted from that date.

Since then – to the surprise of many experts and pundits (though not me) – new case numbers have been falling steadily week on week. Hospitalizations and deaths were slower to fall, but are now starting to follow the same path.

It is of course far too soon to say that the pandemic is over – and Covid is, in any event, likely to remain with us in some form for the foreseeable future. But it is all very encouraging, especially in the face of predictions from doom-mongers such as Professor Neil Ferguson that daily case numbers could reach 100,000 or even 200,000 as a result of restrictions easing.

In my view it is now high time we got back to something close to normal life and learned to live with the virus. But while out and about I notice that people generally are still being ultra-cautious. That is particularly the case in shops and supermarkets, where I should say that four out of five people are still wearing masks (though the numbers without are slowly increasing). On trains I would say it is about two in three, though on a couple of occasions when I travelled in the evening recently (after 7 pm) mask-wearers were in a minority.

I don’t use buses so can’t comment about them. At my local gym and swimming pool, however, almost nobody is wearing a mask now. Assuming that the numbers keep going in the right direction, I hope that more people will find the confidence to ditch the masks. It is wonderful to be able to see smiles and happy faces again after all this time!

In July I took a rail trip to Swindon to visit my old friend Jeff, who at the start of this year moved to Wiltshire. Unfortunately we chose what was probably the hottest day of the year. The whole round trip involved seven trains from three different train companies. So I can report that by far the best company for aircon, wifi, drinks/snacks service, and general all-round comfort, was Great Western Trains. Second were Cross Country, and last were West Midlands Railway. I travelled on three WMR trains in total and I don’t believe any of them had working aircon (one seemed to have the heating turned on despite the fact that the temperature outside was over 30). WMR had also by far the worst wifi, something I’ve experienced on many occasions before. I think West Midlands Mayor Andy Street should be turning his attention to improving this service rather than indulging in virtue-signalling gestures like offering passengers free masks. That aside, I did of course enjoy seeing Jeff again and also visiting Swindon for the first time. I would happily go back there, but hopefully on a cooler day!

As I said last time, I recently subscribed to Britbox and have been making good use of this. I really enjoyed watching all three series of the original House of Cards trilogy featuring Ian Richardson. I remembered the original series the best, but thought the second series (To Play the King) was equally good. I didn’t like the last series (The Final Cut) quite as much. It was never going to be quite the same without Michael Kitchen or Colin Jeavons, and I thought the ending was a bit of a let-down. But if you haven’t seen them before, I highly recommend watching all three.

Last week Britbox added Dennis Potter’s Lipstick on Your Collar (see image below) to their platform. I am very much enjoying watching this again almost 30 years since it first aired. I am a huge fan of Dennis Potter’s work and think he is probably our greatest-ever TV writer. His masterpiece was undoubtedly The Singing Detective, but Lipstick on Your Collar runs it pretty close. As with The Singing Detective, the series intersperses the action with lip-synched musical numbers, in this case classic 1950s rock ‘n’ roll. It has drama, comedy, great characters and some amazing music. What more could you possibly want?!

As I mentioned last time, now that Freedom Day has happened, this will be my last Coronavirus Crisis Update. I plan to continue with my monthly investment updates, and will also do more personal/general ones as and when the occasion arises.

I do hope you have enjoyed these monthly updates and found them of value. I have enjoyed writing them, and find it interesting looking back over them now as a sort of diary of the pandemic. I have listed them all below for convenience.

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

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

What's the Difference Between Income and Accumulation Funds?

July 19, 2021

What Is the Difference Between Income and Accumulation Funds?

Nick Investing pensions, retirement 4 Comments

If you invest in funds rather than individual stocks and shares, you’ll almost certainly know that in many cases you can choose between two options, income or accumulation. Today I thought I’d explain what this difference is and share a few thoughts on the subject. I will be referring to my own experiences in this regard.

But to start by answering the question in the title, the difference between income and accumulation Funds is basically as follows:

Income Funds pay any income generated by your investments as, well, income. The money will appear in your account ready for you to withdraw (or reinvest). Or it may simply be paid directly into your bank account if you prefer.

Accumulation Funds, on the other hand, use any income generated by your investments to buy more units in the fund concerned. Your holding in an accumulation fund (and its value) should therefore build over time. But you won’t typically receive any income from the fund.

You might therefore think that if you want to draw an income from your investment, an income fund is the way to go. In practice it’s not as simple as that, though. For one thing, if you want to withdraw money from an accumulation fund, you always have the option to sell some of your holding, and there can be significant advantages to proceeding this way.

I will discuss this in more detail below, focusing on my personal pension as an example. Of course, everyone’s circumstances are different, so the decisions I took (and am still taking) may not be right for you. But I hope it will give you food for thought.

Why My SIPP is Mostly in Accumulation Funds

Regular readers will know that for some years I saved for my pension in the form of a SIPP (Self Invested Personal Pension). I use the Bestinvest platform for this and have always researched and chosen my investments myself. My SIPP currently has 14 funds in it. You can see a screen capture below.

As you can see, most of these are accumulation (Acc) funds with a couple of income (Inc) funds. While I was building my pot it seemed sensible to put most of my money into accumulation funds.

I am not by any stretch claiming that this is a ‘model portfolio’ that anyone else should emulate. I picked these funds based on recommendations I read in the press (and online) at the time, and there may well be better options now. I aimed to diversify as broadly as possible across different market sectors, geographical areas, investment types, and so on.

I put my SIPP into drawdown three years ago and now take £200 a month from it. I did consider switching to income funds at that time, but after careful thought (and research) decided against this.

The small number of income funds in my portfolio don’t typically generate enough to cover my monthly withdrawals. So each month I log in to my online dashboard and sell the necessary amount from whatever fund I pick that month. I must admit there is nothing very scientific about this. I typically just sell from funds I already have large holdings in.

Obviously having to do this every month is a minor hassle. However, in my view it has advantages as well. If you hold mainly income funds, the money they generate will vary from month to month. Sometimes there might not be enough to cover your monthly drawings, meaning you would still have to sell some funds anyway. Conversely, there might be months when more income is generated than you need, so you would end up with ‘spare’ money sitting in your account and not working for you.

Overall, then, I like having my SIPP money in accumulation funds because each month I can sell enough to cover my drawings that month, no more and no less. All the rest of the income that is generated by my accumulation funds is automatically reinvested.

Interestingly, despite the fact that my annual withdrawals amount to almost 6% of the value of my portfolio, the overall value of my SIPP has continued to grow since I put it into drawdown three years ago (see graph below). I am not convinced that would be the case if I had switched to income funds across the board.

The standard advice is that you should withdraw no more than 4% of your portfolio each year to try to preserve its value. I have actually been taking nearly 50% more than that in the middle of a pandemic, and yet the overall value has still gone up by almost £4,000 in the last year alone. Obviously past performance is no guarantee of what may happen in future, but it is certainly food for thought.

Further Thoughts

Of course, pension funds aren’t the only sort of investment where this applies. You could, for example, be investing in a tax-free ISA, and again face the choice between income and accumulation funds. If you are aiming to build a pot, there is (of course) a strong argument for going with accumulation funds. But even if you want an income, the arguments above on behalf of accumulation funds still apply.

One further consideration is tax. If you are investing via a SIPP or ISA (or some other tax-efficient wrapper) this obviously won’t be an issue. But if you’re investing outside one of these, you do need to be aware of the tax implications.

With an income fund it’s fairly straightforward. The money you receive will count as taxable income (or taxable dividends in some cases) and be taxed accordingly.

With an accumulation fund, it’s more complicated. The income that is rolled up and reinvested is known as a ‘notional distribution’ and you will still be liable to pay tax on it at the appropriate time. This is explained in more detail in this excellent article from Shares Magazine.

As I say, investing outside a tax-efficient wrapper can be complicated, especially with accumulation funds. I would therefore recommend taking professional advice if you find yourself in this position. Ideally, though, ensure all your money is invested within a tax-free wrapper (SIPP, ISA, etc.). You won’t then have to worry about tax at all!

I hope you have found this post of interest. Whether you agree or disagree with my approach, I’d love to hear from you. Please leave any comments or questions below as usual.

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

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July 7, 2021

My Coronavirus Crisis Experience – July 2021 Update

Nick Investing, Everything Else events 4 Comments

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.

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.

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:

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.

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),

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).

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.

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

June 2, 2021

My Coronavirus Crisis Experience: June 2021 Update

Nick Investing, Everything Else events 4 Comments

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 🙂

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.

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:

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!

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!

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.

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

May 26, 2021

What Is An IFISA And Why Might You Want One?

Nick Saving Money, Investing reviews, property 5 Comments

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.

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.

Kuflink are currently offering up to £4,000 in cashback for new investors via my link. Please see my full review for more information.

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 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!

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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May 14, 2021

How Much Difference Does Risk Level Make With Nutmeg Investments?

Nick Investing 10 Comments

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.

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 Level	5-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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