Investing Insiders Weekly #5

Top Story

WINTER FUEL WHIPLASH: The government has U-turned on its winter fuel payment plunder

Remember the uproar last year when millions of pensioners were told the £300 payment was being abruptly slashed? Unsurprisingly, that won’t be happening again this year. The payment has gone from being limited to people on a benefit called Pension Credit (for people on a very low income) to anyone with an annual income of less than £35,000.

✔️The good news: Millions more people will be eligible for the payment this winter, so if you’ve been worrying about elderly relatives or yourself felt the pressure without the payment last Christmas, you may be able to breathe easy this year.

❌The bad news: Inevitably, these decisions come with hefty costs for the government, which are often recouped through stealth tax rises. Keep your eyes peeled in the upcoming spending review. It’s also still a ‘cliff-edge’ cut off, meaning people with incomes slightly over the threshold will just miss out.

💡The takeaway: Millions more pensioners will benefit from a £300 one-off payment this winter, but it’s still a strict cut-off that will leave some feeling hard done by. Make sure your relatives and friends know whether or not they will qualify.

One Minute Market Fix

All eyes are on the UK so far this week as it released its latest wage/unemployment data…and it wasn’t great. Unemployment has just hit its highest level in nearly four years, hitting 4.6%, while wage growth has contracted. Stock markets in the UK and Europe have responded tentatively.

Regulator Latest 

LIFTING THE BAN: FCA to allow the sale of ‘exchange-traded notes’

🤓In a nutshell: The UK regulator (The FCA) is considering lifting the ban on selling crypto ETNs to regular investors.

ETNs track the price of a particular cryptocurrency, such as bitcoin. They basically let you invest in crypto without actually buying the actual crypto.

They are currently only available to professional investors, but regular investors have not been able to buy them since 2021. But that could all be set to change…

Chart That Made Us Look Twice

Source: Fidelity

When stock markets are wobbling all over the place, it can be tempting to stash your money safely into a regular savings account rather than keeping it invested.

But a new chart from Fidelity shows the true disparity between investing in shares and holding money in cash long-term.

The chart uses dollars, but the same principle would apply with pounds. 

If you put £1,000 into cash and invested another £1,000 into the MSCI World Index in the year 2000, you would have returned around £800 on your cash holdings over 25 years… but almost £5,000 on your investments.

Platform Watch 👀

Antonia Medlicott shares – Which stocks & shares ISA do I use and why?

If you’ve ever wondered which Stocks and Shares ISA I personally use, this is for you.

Let’s start with the basics: A Stocks and Shares ISA is a type of account that lets you invest your money without paying tax on your profits. You can invest up to £20,000 each year, and any growth or income you earn inside the account is tax-free. It’s one of the most powerful tools UK investors have.

Now, onto the question: Which platform do I use for my main ISA?

I use InvestEngine. While I hold several ISAs for research purposes, this is the one where I put most of my money.

Here’s why:

• Low fees: Over time, high fees can really eat into your returns. InvestEngine is one of the lowest-cost providers out there, especially if you pick your own investments.
• ETF-only platform: ETFs (Exchange Traded Funds) are simple, low-cost funds that give you exposure to lots of companies in one go. It makes diversification easy.
• DIY control: I choose my own investments, and the platform makes that super straightforward.

What about performance? My DIY portfolio is currently up 31%, compared to just 14% on the equivalent managed option. That’s the power of lower fees and picking the right mix of funds.

Who is InvestEngine best for? If you want to:

• Keep investing costs low
• Choose your own funds
• Build a long-term portfolio

…it’s a strong option.

If you’re brand new to all of this, we have a free guide to help you get started with Stocks and Shares ISAs – including how to choose funds and what to watch out for. You can grab the guide here.

Insider Edge: What Smart Money Is Watching

Should you overpay your mortgage, invest, or pay into your pension? 

It’s a common dilemma homeowners face. 

There’s no ‘right’ answer, but, if you have a low mortgage, putting a spare £20,000 into your pension could have the biggest payoff long-term.

If you have a 25-year mortgage with a balance of £250,000 at 4.57% interest, putting a £20,000 lump sum payment down could save you £42,500 in interest over your mortgage term.

Putting the money into a stocks and shares ISA earning 6% interest over 25 years would give you around £86,000 – around double the savings.

But, of course, investing does come with risk.

If you put the £20k into your pension, you immediately get 25% tax relief, boosting your savings to £25,000. Over 25 years growing at 6% a year, that’s more than £107,000.

You can check your own situation by using our free calculator.

Rate Of The Week 💵

Savings rates are continuing to be slashed left right and centre this week. BUT…

You can still bag a 4.85% interest rate on a cash ISA with CMC Invest – PLUS a 0.85% bonus for the first 90 days, taking it to 5.7% for your first three months.

The catches: You must be a UK resident to apply, and you must be a new cash ISA customer with CMC.