INVESTMENTS (THEORY, PRODUCTS, NEWS) Archives - Page 3 of 15

Please Fasten Your Seatbelts

Dominic Thomas
April 2025 • 2 min read

Sit Tight

What the global markets are currently experiencing is not new. It is only different in the sense that it’s utterly pointless and caused by one particular individual. That in itself suggests that ‘the system’ is very flawed and if I could change it I would – but I can’t and neither can you.

Our regulator would want you to know that a 10% fall has happened – it hasn’t yet, but frankly by the time you read this, it may have done. Knowing that doesn’t help. In fact, I would argue that you are better off switching off the news and social media and not looking at your portfolio at all. It’s not good for your mental health or any sense of wellbeing.

Your financial plan is designed for the long-term – the rest of your life. It is not designed for the next year, but for every year. We believe, because of the wealth of evidence from history, that markets rise and fall very suddenly, often for poor or misguided reasons. However, they always recover, given enough time (which is key). I do not like seeing the valuation of funds drop any more than you do – I can assure you. In fact, I am pretty certain I’m far more fed up with it, as it is so needless.

“Sit tight” is very easy for me to say, but it’s very hard to do, I know that. However, we have been through similar events before, lots of them. It’s never comfortable and often feels like “this time it’s different”. It is certainly different having an idiot as a President, but there are lots of similarly foolish and vile men (and some women) running countries around the world. It’s part of our lives and something we each contend with. Yes; Trump is unpredictable (other than in his capacity to lie) but even so, there is a limit to his real power. You are invested in companies around the world, many of them trade with each other and are interconnected, something that Trump will never understand. No economy is an island of penguins.

Yes, this is concerning, anyone who has invested in the last month has taken a hit on value, but it will recover. You still own and hold the same ‘stuff’, it’s just that the perceived value is lower than it was at the start of January. Attempting to ‘time the market’ is only ever easy in hindsight and requires at least two decisions, to exit and to re-enter. Neither are easy and from experience most fail to get even close (and if they do, to be honest it’s nothing more than luck as they can never repeat their achievement).

Your portfolio is global, hugely diversified and very low cost. Values will rise again once we have got through this period of self-inflicted insanity. Sadly, I have nothing good to say about the current President of the United States, or his cabinet and supporters. To me they look, speak, sound and smell very much like a fascist dictatorship, certainly it shows all the signs and actions of one in its infancy. I can only hope that his premiership and his regime ends very suddenly before the allotted time. He has no sense of decency and no understanding of history. The sooner he is gone the better.

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Please Fasten Your SeatbeltsJemima Thomas2026-03-24T16:31:09+00:00

Sanctions, sanity and sanctuary

Dominic Thomas
April 2025 • 5 min read

Sanctions, sanity and sanctuary

You are old enough to know that the world is fairly mad. Nations are often run by fairly despicable people, sometimes elected into power, sometimes they simply take it. At some point in life (for some this might be their entire lifetime) an opinion is formed about ‘others’ who are used as the excuse for many ills and failures. The truth is a victim of agenda and despite the cold epitaphs of November Remembrance services, nothing is really learned other than to repackage misery.

We take it as a sad reflection of “man’s inhumanity to man” that some people don’t and won’t get on, invariably due to holding a different opinion about religion or politics or both. In a capitalist world, withholding money and trade (or making it harder for both) is a way of attempting to coerce a required behaviour. This may have worked in the 1980s with sanctions imposed against South Africa; whether it has worked elsewhere is debatable. Yet it remains a rather obvious tool.

Idealists (which I am prone to myself at times) may well argue that the power of withholding custom or money from some companies may help nudge them towards better behaviour. Trying is arguably better than doing nothing.

In the investment world, screening out companies (or even countries) is not without its challenges. One man’s freedom fighter is another man’s terrorist. Perspective and narrative are up for grabs and twisted to suit.

The war in Palestine, which is horrendous, poses challenges. For some to criticise Israeli politics is to be antisemitic, which is, in my opinion, utterly daft. Anyone who has paid attention to history, knows the misery and horrors inflicted upon Jews for centuries, particularly in the last World War with the holocaust. It is more than understandable that Jewish people would wish to defend themselves. However, any reasonable person, would not consider the atrocities in Gaza anything remotely reasonable but rather more ironically fascistic.

When Government fails to address a problem, individuals are left to find ways that they might express their concern, and investors reduce or completely withdraw from particular sectors or countries. We are all investors; most people simply don’t know how things really work. If you have a final salary pension (lucky you!) then you may not be aware that money doesn’t simply appear, it is the consequence of investment in property, debt and shares in companies. You do not get to select the investment and given the size of the scheme and pressure on it to provide a guaranteed income for your lifetime and your spouse’s, there isn’t really that much invested into shares due to the need for predictable income and an inflation linked one at that.

Some protest groups have taken to highlighting “investment into Israel” or ammunitions and defence companies that supply Israel (amongst many others). They call for a ban on such holdings as an attempt to influence the behaviour of the companies and Governments concerned. I have sympathy with the sentiment, but as a member of such a scheme you don’t get to choose how and what the pension is invested in and it is enormous. The Local Government Pension for England and Wales for example stood at £354,047,000,000 (£354billion) at the end of 2023. This is a scheme where more is paid out (in pensions) than paid in (contributions by employed members). Roughly 51% of the LGPS is invested in shares. Interesting (for me) the investment costs for 22/23 were £1,726,500,000 which is about 0.4876% of the portfolio (so your portfolio – if arranged by us – gets lower investment costs than the massive pension schemes).

In 2022/23 there were 6.49million members of the LGPS, up from the previous year by 0.1million. Active members (people employed and contributing) amounted to 2.09m (32%); deferred members (former employees not yet taking their pension) 2.39m (37%) and 2.0m people (31%) drawing a pension. To say getting this balance right is difficult would be an understatement.

So, to exclusion … well one article I saw claimed that “81 local government pension funds have known complicit investments” and that £12,214,286,216 was the sum involved. Don’t forget that the value will fluctuate wildly each day (they are shares). These include Amazon and Google, I’m going to guess that you use these services so would be deemed complicit too. If I may infer that roughly half of the LGPS is invested in shares (£180bn or so) then the focus (£12.2bn) is on about 6% of the shares held (by value) – or 3% of the total value of the LGPS.

I’m not going to pretend that this is an easy problem and telling the Board of LGPS to divest itself of £12bn into other shares is either a wise, good or bad thing. Will it make any difference? Is 3% of something an issue that normally causes you distress and guilt? How much of your tax is spent on things you don’t agree with or approve of? Do you write to your MP about it?

£12bn is a lot of money, it should be enough to make most of us stop and think, but when presented as 3% – does that alter your perspective?

Sadly, the world is a chaotic, messy and often nasty place. My privileges of living here in the UK (amongst many others) are not lost on me. I don’t have the answers for the crisis, which is both decades and centuries long. Flexing an economic muscle has its appeal, but quite how much this particular issue is of significance I am afraid that I’m unable to say.

Members of final salary (Defined Benefit) pensions are not able to select funds, but of course are able to lobby the Board about their concerns. For those of you with an investment-based pension, we can discuss screening policy at any time.

If you are seeking a personal opinion, then I would say that lobbying is a good approach to the problem, but it isn’t an easy or straightforward process. Arguably, UK Government (or broader) sanctions might have more of an impact. Demonstrated by the fact that Mr Musk’s remarks and gestures have not gone unnoticed and have resulted in a dramatic change in Tesla’s valuation.

References:

https://lgpsdivest.org/
https://lgpsboard.org/index.php/membership23

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Sanctions, sanity and sanctuaryJemima Thomas2025-04-08T11:14:04+01:00

Market turbulence

Dominic Thomas
March 2025 • 3 min read

Market turbulence

If you have followed the news, you will appreciate that global stock markets have been falling sharply over recent weeks. This is in response to the wave of changes and abandonment of normal policy by the new, rather insane US Government.

Your portfolio will have fallen. It will recover, the question is really how much worse will things get and how long before they recover. To which the answer is, “I don’t know” and nobody knows.

I would remind you that we have seen significant falls in market values every year (on average -15% every year at some point), it’s simply that some years you and the media pay more attention.

You can view your portfolio in our secure portal or on the platform portal that we are using for you, typically Fundment, Nucleus, Parmenion or Transact. However I would caution against doing so regularly as this will merely increase your anxiety, which isn’t good for your health or your financial plan.

Many of us realised that Trump was not someone to be trusted, based on his actions over many years, but despite his very odd decades-long special relationship with Putin, it seems that there are still swathes of Americans who are unable to discern this (even if it smacked them around the face with a kipper). Denial and distortion of facts and reality are in evident supply, unlike truth and justice.

In terms of helpful and reassuring information and our approach to evidence-based investing, JP Morgan produce data about the worst declines in valuation during each calendar year. Admittedly, this is the FTSE All-Share not the global market, but the principles are exactly the same. It’s a chart that you would have seen before in our client magazine Spotlight.

The chart shows the grey bars as the final return for the calendar year since 1986. It shows that of the 39 completed years, 27 (70%) were positive, 12 (30%) were negative. That means that roughly one year in four is negative. The red dots indicate the worst or deepest decline in each of those years. Every year has a ‘crash’. The average drop is 15% and the median (the middle value when all lined up in order) drop is 12%.

This knowledge hopefully provides some comfort about the reality of ‘drops’ each year, but the message is really – don’t panic, stay in your seat. Admittedly you could say “sell it, get me out” but this will actually realise a loss (make it real rather than notional) and it is unlikely that you will re-invest at a point that is any more favourable, if you do that’s probably luck rather than skill.

We have built your financial plan making allowance for these scenarios. Investments do not grow in straight neat lines; they are erratic. The greater the proportion you hold in equities (shares), the more volatile, but also the greater the reward over time. Your plan is designed for your entire lifetime and beyond.

As of now (March 17^th 2025), the global equity market is down -3.75% since the start of 2025. Global Bonds are up +0.85% and a 50/50 portfolio is down -1.73%. The numbers in pounds will look considerably worse than this, they always do because you relate to pounds in terms of your income and spending rather than your capital, but it is healthier to consider it in percentage terms. The chart below shows the Year to Date (YTD) figures for Timeline Tracker 100 (green) 50 (yellow) 0 (red).

Looking at a longer term perspective helps provide some context.

None of us like to see portfolios hit heavily, it is unnerving. As I have said, this is currently down to the politics of the US Government, with proposed tariffs and appointing billionaires to act as parodies of Bond villains providing ‘advice’ to the White House. Personally, I hope that he is removed from office as soon as possible, but it is also clear that the Vice President is perhaps even worse, possessing very little understanding of how the world works.

Generally in life we tend to assume that wisdom is correlated with age. At the age of 78 I find no evidence that Trump possesses any. Mr Vance at age 40 certainly hasn’t acquired any yet.

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Market turbulenceJemima Thomas2025-03-20T16:51:04+00:00

Premium bonds – do you feel lucky punk?

Dominic Thomas
March 2025 • 2 min read

Premium bonds – do you feel lucky punk?

You may remember the character portrayed by Clint Eastwood – Harry Callahan – aka Dirty Harry, who regularly had shoot outs with villains. As he faced them after a shootout and everyone had lost count of the number of bullets that had been fired, he aims his magnum 44 pistol and utters the words “do you feel lucky punk?”. Such was the ‘enlightened policing’ of the 1960s and 1970s …

Like many of you, I have a bit of a soft spot for premium bonds. There is something nostalgic about them; they feel safe (you are essentially depositing money with the UK Government). You have a bit of a monthly gamble, which unlike other forms of gambling, you do not lose your money if you don’t pick the winner (or place). The winnings are also tax-free and frankly who wouldn’t want to win a million British pounds? Besides, a Premium Bond is only £1 – and you can have up to 50,000 of them.

But let’s be honest with ourselves.

There are around 129 billion bonds in the draw each month. Two will win the £1m jackpot. Your chance of holding the winning bond is 1 in 64 billion.

There are a total of 5,902,600 prizes or winners each month. The chance of winning any sum from the smallest of £25 to £1m is 0.004%. Whilst that looks like a lot of winners (nearly six million) the vast majority (98.77%) win £100 or less. There are only 20,371 that win £1,000 or more.

As most people won’t win, they tend to get out of the habit of checking. At the last time of checking since October 2024, there are unclaimed prizes to the tune of more than £92m.

Yes you get to stay in the monthly draw, but chances do not improve unless you hold more than £24,500 of premium bonds; as the chance of winning any prize is 24,500:1 – in other words £25 winnings for £24,500 – each month – so expected winnings of £300 a year or 1.2%. This is not exactly an inflation-beating rate.

The annual prize rate is 1.4% – that’s the total amount of prizes paid in a year across all the deposits. So if inflation is at 3% or more in the real world, then you are going backwards, more so if you hold less than £24,500.

Meanwhile – deposit rates can be achieved of 3-4% without too much fuss at the moment (March 2025).

Do you feel that lucky? 1 in 64 billion lucky? – they haven’t even inflated the £1m winnings. Perhaps like Harry Callahan, you may not really know why you keep “doing it”, but it certainly isn’t about the interest.

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Premium bonds – do you feel lucky punk?Jemima Thomas2025-03-14T16:16:13+00:00

Will Reeves Slash Cash ISAs?

Dominic Thomas
Feb 2025 • 2 min read

Will Reeves Slash Cash ISAs?

Hopefully you will know that I am a fan of having cash, we all need it for ‘liquidity’. In plain English – that means having money easily available without needing to sell anything. This is usually best for your emergency fund. This is a number (sum) that helps you to sleep well at night and quite frankly depends on your life stage. A measure of 3, 6 or 12 months of normal spending is helpful plus planned spending projects (not normal spending) over the next three years.

Keeping more than this in cash will likely erode the value of your spending power. You are likely to be going backwards. You might say “backwards, but at least with certainty – compared to investments” well, that is true in the short term but in the long term, whilst nothing is certain, we have yet to see a period when cash beats shares over 10 years or longer.

So, the news that the Chancellor (Rachel Reeves) is contemplating either scrapping or reducing the Cash ISA allowance from £20,000 to £4,000 may be a surprise for some of you. It’s because in theory holding cash doesn’t really serve anyone very well, least of all the economy, but investing in businesses … well that helps create wealth. That’s why she is considering it.

It would seem that this will only start from the new tax year (if at all) and nobody is expecting her to tell us that you can only hold £4,000 in total in Cash ISAs – which would be highly unlikely. Whilst you may find this an unwelcome change, it’s worth remembering that Cash ISAs always had a lower allowance until the 2015/16 tax year when the allowance became £15,240.

As we are still in the 2024/25 tax year data isn’t up to date, honestly in this digital age, I don’t understand why HMRC are so behind. Anyway, interest rates obviously improved over the last couple of years and more people used Cash ISAs, 63% of contributions to ISAs in 2021/22 were into Cash ISAs. People forget the impact of inflation which is still not within range, and Cash ISAs continue to provide a negative return. Quilter did some research and found that £10,000 into a Cash ISA in December 2012 would now be worth £11,955 but when adjusted for inflation that’s really £7,918. In contrast, the same amount invested into a global shares index fund would be worth £33,526 (£22,221 after inflation).

You may have seen my inflation diagram about a first-class stamp, something we can all relate to and perhaps why there are fewer Christmas and Birthday cards being sent.

1985: 17p
1995: 25p
2005: 30p
2015: 63p
2025: £1.65

Your money has to keep pace with inflation. 10 years races by, but holding your hard-earned money in cash that provides a negative return is only good for short-term projects and emergency funds.

The current ISA allowance for 2024/25 is £20,000. The Junior ISA allowance (for those under 18) is £9,000.

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Will Reeves Slash Cash ISAs?Jemima Thomas2025-02-27T11:05:24+00:00

Geopolitics and Market Volatility

Matt Loadwick
Feb 2025 • 3 min read

Geopolitics and Market Volatility

The stability, or otherwise, and volatility of global stock markets can be affected by a number of factors, which can be both economic and political in nature. In terms of economic factors, both UK and US economies are currently experiencing well-documented inflation, the result of rising costs of goods and services. This leads to increased borrowing costs, and to market uncertainty, as investors get spooked by high costs, and have a tendency to wait for prices to drop before investing.

In the UK, a glimmer of light appeared when the rate of inflation dropped by 0.1% in December compared to November, easing the pressure on Chancellor Rachel Reeves, and going some way to improve market confidence as the odds increase of the Bank of England reducing interest rates early this year. That said, it does feel like the current news cycle in the UK will provide reasons to be cheerful one day, followed by reasons to despair on the following, fuelling further volatility as markets react.

Global stock markets are also influenced by geopolitical events, where often the unpredictability surrounding such events can lead to increased volatility. As an example, the Russian invasion of Ukraine resulted in firms that had strong ties to Russia experiencing a significant fall in share prices.

It is also worth pointing out that politics and economics clearly do not exist in a vacuum, with both influencing each other symbiotically – as politicians drive their economic agenda, markets respond accordingly depending on the success (or otherwise) of their policies …

As the 47^th President of the United States was sworn in for the second time earlier in January, the world is braced for increasing geopolitical uncertainty with a Trump administration once again at the helm. Indeed, they have taken little time to give us a taste of what is to come over the next four years, creating headlines through divisive policies, such as the proposed mass deportations of illegal immigrants, withdrawal from the Paris climate agreement (compounded by plans to increase drilling for oil to promote as a key US export), pardoning the circa 1,500 Trump supporters who were charged over the 2021 US Capitol riots, and far-fetched rumours (we hope) of an interest in invading Greenland.

Such examples certainly give the impression that this administration may cause something of ‘a bumpy ride’ for markets in the coming years, particularly in the context of ongoing conflicts in the Middle-East and Ukraine. This is reflected in research undertaken by Scottish Widows, which suggests that geopolitics and volatility are likely to be among the top concerns for advisers in 2025.

If at some point you were to watch the value of your investments take a temporary drop, it is only human nature to feel a sense of nervousness. In the face of this expected volatility, we at Solomon’s are here as ever to encourage calm, and to ensure that our clients do not lose sight of the importance of planning for the long term.

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Geopolitics and Market VolatilityJemima Thomas2025-02-10T10:02:08+00:00

The Rule of 72

Dominic Thomas
Dec 2024 • 2 min read

The Rule of 72

In the finance world we sometimes use the rule of 72, in truth it’s mainly for examination questions. The purpose of the rule is to establish how long it would take to double your money given a set investment return.

Those with a keen sense of maths will appreciate that returns are very rarely fixed, so the formula has limitations for real-life application.

So let’s take an example of a cash deposit paying 3% a year

72/3 = 24 (years)

An investment with a return of 9% a year would take 8 years (72/9 = 8).

As we enter 2025, those of you holding cash of £100,000 would need to wait until 2049 to see this become £200,000. For those investing and achieving 9% a year, your £100,000 becomes £200,000 in 2033 and £400,000 by 2041 and £800,000 by 2049.

Now for those of you working within financial services, or if you work for the FCA, I am not suggesting investments are 9% a year, this is merely designed to demonstrate the point of the maths and yes I am ignoring inflation. In this theoretical world with predictable results of compounding annual returns we might observe the values over time as shown below. The orange line being a 3% annual return and 9% being the blue line.

So whilst theoretical, there are obvious inferences. Investments offering low returns are often deemed as having less risk… but less risk of what? In the same way that higher returns are considered higher risk. For most people building wealth over time, holding too much in ‘low risk’ / low growth investments will have a detrimental effect over time.

So the questions you need to consider are the timeframe for your goals and how much you need to allocate towards growth (genuine growth assets).

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The Rule of 72Jemima Thomas2025-01-21T15:53:23+00:00

A Widow’s Ruin?

Dominic Thomas
Sept 2024 • 4 min read

A Widow’s Ruin?

The summer often produces plenty of occasions to open a bottle of bubbly as we celebrate various events or are simply enjoying ourselves. Perhaps this summer you have celebrated something, maybe a wedding, an anniversary, a big birthday or one of your family graduating. Champagne is invariably linked with celebration.

Living in the Surrey Hills, a short walk from Denbies, I have come to appreciate some of the English attempts to create Champagne – though of course we cannot call it such as it’s from Surrey not the Champagne region. I’m informed that the geology of the Champagne region of France is shared with Dorking (probably not news to the geologists amongst you). Anyway, perhaps you have your favourite – English, French, Spanish or Italian.

When it comes to naming things properly, I was intrigued by the story of Veuve Cliquot (in French meaning Widow Cliquot) which has now made the transition from a 2009 book by Mazzeo to a musical and now to film and is being retold at selected cinemas, so may be one to catch at home for most people.

The story is of the woman behind this now historic and luxurious brand. Business owners will relate to some of the struggles that she faced and conquered, not least of which were the weather, Napoleonic wars and general misogyny of the day. Women will relate, frankly because things have not moved on anything like as much as they should!

Quite how much is fact or fiction isn’t really that important; the messages of the film are there to be taken. Tenacity, optimism, acknowledgement of an inability to control the things you cannot, acceptance of the reality of things; stoic fortitude ushers in change by remaining true to principles and high standards. This is all beginning to sound a lot like the qualities that investors need to attain isn’t it.

I did not know the story and I was unaware of the meaning of ‘veuve’ – my O’ Level French has never been tested beyond very enjoyable trips to France. Whilst I am a regular consumer of wine, I wouldn’t regard myself as an expert; but I have come to enjoy Champagne over the years!

What I find generally inspiring are the stories behind many well-known companies. The original ‘Founder Story’ has been an often neglected element of most marketing, including our own. As Solomon’s celebrated our silver anniversary this summer, I was reminded that perhaps this is a little more than simply reminiscing. Of course there are many Founders and characters that are entirely unpleasant, which is often a subjective opinion, but sometimes … well not so much. Today, we are in a highly inter-connected world and we are all aware of particular billionaires or multimillionaires who are lacking any of the attributes that demonstrate much humanity.

I will never meet Barbe-Nicole Ponsardin who died in 1866 and I am highly unlikely to meet Mr Musk; but I have formed an opinion about both, based on the values that I hold. Yet this is perhaps the heart of the complexity of ethical, socially responsible or ESG investing. The world is complex, people are many things. To some, holding shares in an alcoholic beverage company is unethical, yet holding shares in Twitter (or whatever he wants to call it) invariably will not be screened out of portfolios. The focus is based on the product rather than those behind them.

How we use or minds, tools, resources, time and money are our unique choices and important to each of us being true to ourselves – however many selves we might each be, have or become. I can tell you that I shall be favouring (revealing my biases) the widow’s Champagne. A young woman who was widowed at 27, took on an embryonic vineyard, battled social norms and obstacles, fought for her own financial independence, eventually turning it into a legacy of quality, used in moments of joy and celebration. Now, that’s something that I think is worthwhile.

Here is a trailer for the new film produced by and starring Hayley Bennett, along with Tom Sturridge, Sam Riley and Ben Miles:

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A Widow’s Ruin?Jemima Thomas2024-09-23T12:32:17+01:00

Abu Dhabi D-I-Y

Dominic Thomas
Sept 2024 • 4 min read

Abu Dhabi D-I-Y

Those who read the financial press may have observed that Bristol-based DIY investment platform Hargreaves Lansdown, which has made the founders incredibly wealthy, has agreed sale to a private equity group. It will give shareholders cash up front and if the buyers are to be believed (careful Dominic), the investment will be long-term (meaning longer than the typical three to five years that a private equity group would normally wait before scuttling the ship). At an eye-watering £5.4bn, there will be plenty to go around for the brokers of the deal.

A shareholder in HL will be offered £11.40 for each share which was described by the Board as “fair and reasonable” (the share price reached a peak of £24.19 in May 2019 and had shrunk back to 2013 levels by April 2024 to £7.18.

Managers at HL will of course now be looking over their shoulders, particularly if they haven’t secured shares in the company themselves. HL is the largest DIY investing platform in the UK, but still three times the price of our favoured platform. Technically it is a DIY service with all risk residing with the investor (unlike an adviser relationship). Meanwhile HL’s own latest data suggest that revenue is up 4% but operating costs have increased rather more (by 14%) and profits are down. They hold over £155bn on their platform, with growth largely coming from market returns (remember this is investor selected funds).

I am sure that the consortium of CVC, Nordic Capital and Platinum Ivy will help many people to invest for their futures, I simply remain unconvinced that this will generally benefit the staff or ‘clients’. Certainly technology is expensive, check that again for regulated technology as AI becomes ever more embedded into trading structures and report generation.

Competition that will likely focus on speed and cost reduction is the logical path ahead and one that HL will need in order to persuade its DIY investors to stay on board. This is probably the crucial aspect that platforms tend to forget. Those who are motivated by low price will always seek a lower price. Those that do not see or understand the value of advice will not pay for it, but may inadvertently pay rather more in the end.

Personally I quite like HL, they enable a lot of people to start investing. They are expensive, often having somewhat questionable ‘relationships’ with some investment companies who are then proffered as “Best Buys”; but nevertheless offer a nice, slick DIY service. The staff I have met all seem perfectly decent. Whether the culture changes and cost-cutting becomes particularly deep remains to be seen. Private Equity firms generally look for a lucrative return for owners not customers.

In summary, if you really want to spend your time fretting about Sharpe ratios, alpha, beta, OCF and the right asset allocation, you can continue to do so. Alternatively, we can do all that and take responsibility for a sum that I can assure you doesn’t even buy me a trip to Abu Dhabi, though perhaps Bristol. Of course I’m simply envious that I didn’t think of it 40 years ago!

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Abu Dhabi D-I-YJemima Thomas2024-08-30T15:05:10+01:00

Your loss is your gain

Daniel Liddicott
July 2024 • 3 min read

Your loss is your gain

You may recall from my recent piece in Spotlight that capital gains tax exemptions have fallen yet again for the 2024/25 tax year. As a reminder, you can now realise gains of up to £3,000 before having to pay capital gains tax (CGT). This allowance was £6,000 last tax year and £12,500 the tax year before that. The reduced £3,000 capital gains exemption affects those of you with General Investment Accounts (GIAs) in particular, as these are not sheltered from CGT, unlike your ISAs and pensions.

It is now more likely than ever that moving funds from your GIAs into your ISAs and/or pensions may result in the need to pay some CGT, at 10% or 20% dependent upon whether you are a basic, higher or additional rate taxpayer. It is important to understand that you only “realise” a gain if investments in your GIA are sold, which is the case if the funds are being withdrawn or moved into an ISA, for example.

The reason for carrying out this strategy year upon year has been to gradually move funds out of the less tax-efficient GIAs into the tax-efficient ISAs and pensions, which are sheltered from paying tax on any future capital gains.

A key factor that we can use to help you to reduce or, in some cases, completely remove the need for you to pay CGT on gains within your GIAs is to register any losses made in previous tax years. You can actually register losses made in any of the previous four tax years, to be used to offset against any gains that you make in future. And you can carry these valuable losses forward indefinitely until used. Example incoming:

You can now “realise” gains of up to £7,000 without any CGT payable.

Unfortunately, these losses are not automatically registered with HMRC. You can do this either in your tax return for 2024/25 if you usually submit these, or you can write to HMRC instead. We are putting together a guide and letter template that you can use to send to HMRC to register losses to make the process as easy as possible.

We are currently looking back through the previous few tax years to determine who has made losses that can be registered and used moving forwards – if this is you, you should expect to hear from us in the next few months.

Whilst, generally speaking, falling valuations of your investments is a negative experience, we can help you to make the most of these. Your past loss can become your future gain.

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Your loss is your gainJemima Thomas2025-01-28T10:03:08+00:00

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