Latest news with #Bestinvest
Telegraph
28-05-2025
- Business
- Telegraph
Farage isn't the first leader to promise tax breaks for couples. They all failed
In 2015, then-prime minister David Cameron introduced a marriage allowance letting one spouse transfer £1,260 of their personal allowance to the other, although this is not a significant tax break – saving only up to £252 in tax per year. To claim the benefit, the lower earner must have an income below the personal allowance and the higher earner must be a basic-rate taxpayer. Across the Atlantic, Donald Trump has promised a $1,000 'baby bonus' in the hope of boosting the birth rate. But such policies have had mixed success. Some experts question whether financial giveaways are the best way to support young families, although other countries such as South Korea and Hungary have successfully used tax reforms to increase the birth rate. Jason Hollands, of the stockbroker Bestinvest, said: 'Bolstering the tax benefits of being married might play a part in addressing this but needs to be considered against other options to help people have larger families, such as making childcare more affordable.'
The Independent
07-05-2025
- Business
- The Independent
UK savers told to ‘move fast' ahead of expected interest rate change
Savers in the UK have been urged to take action to secure the best returns on their money as interest rates are forecast to start falling. The Bank of England is widely expected announce a cut to interest rates on Thursday, with experts warning savers to 'move fast' if they want to find the best deal for their savings. Many providers are still offering competitive rates, meaning there are several savings accounts available on the market at 4.5 per cent or more. The Bank's base rate stood at a 16-year high of 5.25 per cent until mid-2024, seeing several cuts towards the end of the year and into 2025. It now stands at 4.5 per cent – still much higher than the 0.1 per cent seen in 2020 and 2021 – and is expected to be cut further. Economists have said that a further quarter-point cut to 4.25 per cent on Thursday is a near-certainty. Looking to the next decision, which will come around 19 June, some even say the figure could be dropped to 3.5 per cent. Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, the online investment platform, said: 'A rate cut isn't the best news for savers. Savers have enjoyed bumper savers rates in recent years, but that picture has changed since the summer of 2023 when savings rates hit their peak. 'With savings rates now firmly in retreat mode amid expectations of further rate cuts, those that want to preserve their return must move fast by securing the best deal possible while interest rates remain on the higher side. 'This is particularly important for anyone with money idling in a current account or an old savings account offering a dismal return. Research by financial data provider Moneyfacts shows that the average easy access savings rate is currently 2.78 per cent, which will inevitably drop following a cut to the bank rate. The top-returning providers are the market include investment apps like Chip and Sidekick, both with accounts paying 4.76 per cent. But Ms Haine says savers should also be wary of their Personal Savings Allowance (PSA), which has been frozen at £12,570 since 2016. This has meant more savers have found themselves paying tax on the interest they earn, lowering the overall return for them. To offset this, the money expert recommends considering a tax-efficient savings strategy that also includes steps such as taking advantage of the tax-free ISA allowance and topping up pensions. These are two key ways to boost returns and also avoid a higher tax bill on them. Despite the impact on savers, the likely rate cut will also bring some positive news for personal finances in the UK. Ms Haine's comments: 'A fourth interest rate cut would be great news for households hoping for further respite from punishingly-high borrowing costs. 'Those with large mortgages that need to be refinanced, or heavy debts, would be relieved by the potential for easing borrowing costs, though savers may feel disappointment at the prospect of a lower return on their savings pots.'
The National
07-05-2025
- Business
- The National
It might be time for investors to look past the US stock market
After years of dominating global markets, the US stock market has suddenly gone haywire. The S&P 500 index returned more than 20 per cent in each of the past two years and some kind of slowdown was inevitable, but not like this. The sell-off began in earnest on April 2, when US President Donald Trump unleashed his 'Liberation Day' trade tariff blitz and wiped 20 per cent off US share values. His 90-day pause on April 9 triggered a relief rally, reducing this year's S&P 500 losses to only 5 per cent, but it's been a bruising experience and given Mr Trump's haphazard strategy, investors don't know what to expect next. Many investors will have outsize exposure to the country's fortunes after its stellar run of the past 15 years, but is it finally time to look past America? Others may be wondering whether now is a good time to pick up US shares at a reduced point but here's a word of warning. They're still not cheap, with the S&P 500 trading at about 20 times forecast earnings, a premium to the MSCI All Country World Index at 16 times. Like many, Jason Hollands, managing director at investment platform Bestinvest by Evelyn Partners, is wary of the US. While some of the 'valuation froth' has been removed, Wall Street is still far from cheap and is 'lurching from day to day'. Company earnings forecasts have yet to catch up with the likely impact of tariffs, he adds. 'Even with baseline tariffs of 10 per cent, there is going to be some form of negative impact. Despite the talk, no deals have been announced.' The trade war threatens to disrupt supply chains, while freight disruption could fuel inflation, and Mr Trump is still talking tough on China. Investors should brace themselves for a volatile summer, Mr Hollands says. 'It is way too soon to assume the current de-escalation rally is an all-clear for US markets.' Instead, he recommends diversifying. 'The waning of the 'American exceptionalism' theme may provide an opportunity for a more balanced approach to global investing. Europe is now back on my radar,' Mr Hollands says. Tony Hallside, chief executive at Dubai-based investment brokers STP Partners, says the US is in a spot but hasn't lost its way entirely. 'Unemployment is still near historic lows and corporate balance sheets are broadly strong.' Yet he's also wary, given 'elevated valuations, geopolitical frictions and an increasingly complex monetary policy path', as Mr Trump pressures the US Federal Reserve to cut its funds rate from today's 4.5 per cent. Mr Hallside also says the S&P 500 suffers from 'concentration risk'. 'The Magnificent Seven tech stocks account for more than 30 per cent of the index, skewing valuations and masking broader market softness. 'The US is not broken but it may not be where value lies today.' Instead, he sees opportunities in Europe, where inflation is cooling and the European Central Bank (ECB) has cut rates to only 2.25 per cent. 'That's supportive for equities, particularly cyclicals and small caps,' Mr Hallside says. Japan also looks compelling as corporate reforms drive shareholder value. Emerging markets could shine if the dollar weakens, he adds. Paul Jackson, global head of asset allocation research at fund manager Invesco, is now underweight US stocks as valuations still look stretched and a recession potentially looms. 'There are better opportunities elsewhere, notably China and Europe.' Europe could benefit from the ECB's easier monetary stance. 'The ECB is well ahead of the Fed on rate cuts, which could boost asset prices,' he says, but adds there's a risk that US tariffs could still export inflation back to Europe. Mr Jackson also sees promise in the UK, where valuations are closer to historical norms. 'The UK stock market has outperformed the US so far during 2025,' he says. UK interest rates are relatively high at 4.5 per cent but with Mr Trump going relatively easy on UK tariffs, the Bank of England may be able to cut rates more aggressively without triggering inflation, he says. Mr Jackson flags the Japanese yen as 'extremely cheap at the moment'. 'That's good news for overseas investors but brings the risk that stock prices will underperform as the yen recovers.' The S&P 500 has clawed its way back from its post-Liberation Day lows but market jitters will remain, says Vijay Valecha, chief investment officer at Century Financial. Europe is benefitting from monetary easing and valuations are attractive, but the continent still faces tariff risks. 'Key export sectors like industrials, cars and luxury goods could face serious earnings pressure if Trump does introduce 20 per cent tariffs on the EU.' The UK stands out for its dividend income. 'The FTSE 100 is expected to return £83 billion [$110.46 billion] to shareholders in 2025, with a total cash yield of 5.2 per cent, including share buy-backs. UK markets are less vulnerable to tariffs and could benefit from more interest rate cuts,' Mr Valecha says. He highlights the relative value of Japan, South Korea and India. Japan trades at a trailing P/E of only 17.8, below its three-year average, while Korea and India are also attractively valued and delivering positive returns. 'All three are proving resilient,' he says. Mr Valecha sees long-term promise in emerging markets, driven by dollar weakness and global capital rotation. 'In the coming years, a significant shift in global economic momentum away from the US and towards Asia and Europe can be expected.' However, Chris Beauchamp, chief market analyst at trading platform IG, believes it's too early to write off the US. Yes, it may look expensive, but there's a reason for that. 'This reflects the fact that companies generate higher earnings, so their shares cost more as a result.' The US has delivered spectacular returns and corrections are part of the deal. 'If you want to benefit from those gains, you also have to accept what we are going through today,' Mr Beauchamp says. A recession is possible, although Mr Beauchamp suggests it may be more like the brief Covid-triggered downturn of 2020 than the deep crash of 2008. 'If US share values fall, inflation is driven out and public sector spending is cut, that could drive flows into the private sector and unleash the next rebound. It's a process the US has been through again and again.' Mr Beauchamp notes that after the election, markets priced in post-Trump euphoria. Today, it's apocalypse. Investors need to keep their nerve both through the ups and the downs. 'The US commands 70 per cent of global market capitalisation, so you can't just ignore it. Ultimately, there is no safe-haven in equities. Investors just have to stick it out,' he says.
The Independent
24-04-2025
- Business
- The Independent
Six ISA mistakes to avoid this tax year - from choosing the right account to tracking your fees
A new tax year has started, giving savvy savers and investors a fresh £20,000 annual allowance to put in an Individual Savings Account (ISA). It is important, however, to choose the most appropriate ISA and investments for your strategy - otherwise you could end up with an inappropriate product that doesn't match your risk appetite, or even loses money. Laura Suter, director of personal finance at AJ Bell, said: 'Anyone who has an ISA will know they are a great way to protect your savings and investments from tax, and to grow your wealth over time. But even the savviest of savers can slip up when it comes to the rules or make some common ISA mistakes that may cost them.' Here are seven ISA mistakes to make sure you avoid when making use of your tax-free allowance. ISAs to choose from - so it can be easy to pick the wrong one for your savings or investments. Ms Suter said: 'It might be that you've opted for a cash ISA, but you're saving for the long term and an investment ISA would be a better option. 'Or you may have picked a stocks and shares ISA to save for the deposit for a first home, but you could have benefitted from the government bonus available on the Lifetime ISA. Equally, if you're saving for your child you will want to at least consider a junior ISA, rather than automatically saving the money in your own ISA. 'Not every option will be right for you, and you need to check the details of each account.' The key here is long-term, says Camilla Esmund, senior manager at interactive investor, because both stocks and shares and cash ISAs hold an important place in the savings and investing landscape. 'There is no denying the allure of cash, and that it will indeed be suitable for some people's financial goals and circumstances. If in doubt speak to a financial adviser, but our research illustrates that over the long term, it is costly to ignore the stock market as it gives your money more chance to grow over time. Inflation erodes the value of cash over time, and cash rates fluctuate.' It is human nature to leave things to the last minute but Jason Hollands, managing director of Bestinvest, says the earlier you open an ISA during the year, the more time your money has to grow or earn interest tax efficiently. He said: 'If you don't have a big chunk of cash available now, then why not consider saving regularly through a monthly direct debit? This is a very good discipline, which is both easier on your cash flow situation and for investors can help iron out the effect of market ups and downs.' With frozen personal tax thresholds, the more you can shelter from the taxman through savings, the better. It is importance to diversify your investments when using a stocks and shares ISA as you don't want all your money in the same type of company or region. But there is a downside to too much diversification. Mr Hollands added: 'I've seen DIY investor portfolios with up to 75 funds. You want high conviction in your holdings, with each able to make a meaningful contribution to returns. There isn't a magic number on how many funds should be held but given each will typically have exposure to anywhere between 30 and 1000 underlying investments, you can achieve reasonable diversification with half a dozen funds providing they are all doing slightly different things.' With his own personal rule being to set an upper limit of no more than 20 funds in total, he added it 'forces you to think about what you already own and whether you still have conviction in these' when considering adding new funds. 'If you conclude you are confident in what you already own, then just top up existing holdings rather than constantly adding new ones,' he said. Not reviewing your current portfolio Along the same lines, don't forget to periodically review what you already hold. Just because something made sense last year doesn't mean it's still the right fit. Some parts of your portfolio may even be underperforming so it is important to understand why that may be. Nick Winter, financial planner at Quilter, said: 'That doesn't mean you should constantly tweak your portfolio in response to short-term market noise. Your ISA should be built around your long-term goals, and making small changes every time the market moves often does more harm than good. The best results tend to come from staying the course with a well-diversified plan rather than trying to time the ups and downs.' Panicking about market downturns Stock markets will have their ups and downs but cashing out too early can mean missing out on a market rally. James Norton, head of retirement and investments at Vanguard Europe, said: 'Successful investors are those who manage to ride out the market falls, remain focused on their goals and stay invested for when markets recover. 'Of course, it helps to stay informed about market news but try not to let it dictate your decisions. Major global events have historically impacted stock markets, but they recovered from these shocks and went on to reach new highs.' Norton warns that while downturns can be scary, reacting emotionally can lead to poor decisions, such as selling your investments at a loss. You may not be able to control the markets but you can have a say in how much you pay. Fund and platform fees can easily eat into your profits if not checked. Suter added: 'Paying some fees is part and parcel of investing, but one ISA mistake to avoid is paying out too much in charges, as ultimately this will eat into your returns. There are some easy ways to cut your costs, without cutting the investments or service you get. The first is to make sure you're not buying and selling investments too often. With lots of platforms each time you buy and sell it will cost you money. Having more than one platform you use for investing can also see fees stack up - so make sure the accounts you use are serving the right purpose in a cost-effective manner. When investing, your capital is at risk and you may get back less than invested. Past performance doesn't guarantee future results.
