Investing Insiders Weekly #10

Top Story

The government is encouraging more savers to invest with a package of reforms…

Chancellor Rachel Reeves raised the roof at her second Mansion House speech, where she announced quite literally dozens of changes to financial services. 

Here’s a quick round-up of some of the key announcements…

Mortgage guarantee scheme made permanent: The government confirmed the introduction of a permanent mortgage guarantee scheme, which lets lenders get a government-backed guarantee to insure them against a portion of their potential losses on mortgages with a high loan-to-value.

💡Our view: Good news for homeowners / homebuyers who don’t have a huge deposit, as lenders may be more willing to give them the mortgage they need. However, not enough in isolation – the government needs to consider other ways to improve housing affordability.

Government to launch investment advertising campaign: It will be backed by banks and financial firms, who will ‘highlight the opportunities of investing’ to customers in a bid to get more people investing in the stock market.

💡Our view: If this helps to educate Brits on the benefits of investing – and the potential risks – that can only be a good thing, and getting banks involved could hugely increase the positive outreach. 

But the government must focus on the needs and views of savers rather than making it about boosting the economy – a motive behind its recent investing push.

FOS decisions could be appealed to the FCA: Consumers (you) and firms could be able to request that the Financial Ombudsman Service – which deals with complaints between finance firms and customers – must refer its decision to the FCA to ensure it is meeting the rules.

💡Our view: A good thing if it means consistency among FOS decisions. The FOS has, for a while, acted largely as its own judge, juror and executioner, and that probably isn’t good for anyone. 

However, the government has also suggested that the FOS should stop publishing all of its upheld decisions – we don’t see this as a good thing, as transparency is key, and it feels like a step backwards on that front. 

Investors can access private markets in ISAs: Savers will be able to access private markets via their stocks and shares ISAs for the first time ever, through ‘long-term asset funds’. These are a new type of product to make this sort of investing easier for regular investors.

💡Our view: A double-edged sword. On the one hand, this is great news for seasoned investors who want to tap into the potentially larger returns that private markets have to offer. Private markets have historically outperformed public investments like stocks, bonds etc. This should make it both easier to invest and will mean returns are tax-free.

BUT… as always, with high reward comes high risk. Private markets are complex, it’s difficult to get your money out once invested, and they are notoriously NOT transparent, as the rules for these markets are not the same as with public investments.

If you are considering investing in private markets, make sure you do plenty of research and fully understand what you are investing in first.

In other news…

Protection pay-outs hit record high: The Association for British Insurers has released new data showing the insurance industry paid out a record £8 billion in protection claims last year.

Protection insurance is still vastly under-used, despite its relatively low cost. According to Aviva, over half of its customers pay £20 or less a month for their cover.

What is protection insurance? Protection insurance pays out money in the event something happens to you, like you’re diagnosed with a serious illness or you have an accident. Some insurance also pays money to your dependents if you die.

Types of cover include:

• Income protection: Pays a percentage of your salary if you’re unable to work due to illness or injury.
• Term life insurance: Pays a lump sum for something specific, like a mortgage.
• Critical illness cover: Pays out a lump sum if you’re diagnosed with a specified illness.
• Whole of life insurance: Pays out a lump sum to family members or dependents if you die.

According to the ABI, £1.3 billion was paid out in critical illness claims in 2024, with cancer being the most common reason.

It’s worth considering protection if you have dependents or have bills to cover that you would need to keep paying if you lost your source of income. 

💡Shopping around can help, use our round up of the best life insurance polices to find the right deal.

Savings Tip of the Week: Are Premium Bonds Worth It?

Are you hanging on to some Premium Bonds? Millions of people still hold this beloved savings account – but recent rate cuts have raised questions about whether they are still worth it.

The odds of winning are now a rough 22,000 to 1, with a prize rate of 3.6%, which lags many of the top-paying savings accounts.

There are currently 1,289 savings accounts that beat inflation (currently 3.6 per cent), making them a better home for your cash than Premium Bonds.

One benefit of Premium Bonds, though, is that the prizes earned are tax free, so they are worth considering if you have maxed out your ISA allowance.

Deal Of The Week 💵

You could earn up to £2,000 in cashback by switching to Interactive Investor’s Self Invested Personal Pension (SIPP). The minimum cashback is £100.

The offer ends on July 31, so if you are thinking of switching, this could be worth considering.

See how it compares to other providers in our round up of the best SIPPs. 
The catch: You must deposit £10,000 into the account to qualify.