From the great gender pension chasm to shifting food shopping habits and women afraid of investments – here are our favourite must know money stories this week to help you get your head around your personal finances. 

Women miss out in “great gender pension chasm” 

Women’s private pension pots in the UK are worth 35% less than those of their male colleagues by age 55, according to a major government study. 

The data shows that, on average, for every for every £100 accumulated in men’s private pensions, women have just £65, leading to the possible loss of thousands of pounds of retirement income. 

Lower overall earnings, time off for childcare and other caring duties, along with the greater numbers of women in the part-time workforce, are all thought to be factors of the imbalance. 

While previous studies have revealed a gender pension gap, this is the first time the Government has revealed the true scale of the problem, reports Miles Brignall for The Guardian. 

The pensions minister, Laura Trott, said: “The success of automatic enrolment has transformed the UK pensions landscape and brought millions of women into pension saving for the very first time. However, while the participation gap has closed, the wealth gap persists. 

“The publication of an official annual measure will help us track the collective efforts of government, industry and employers to close the gender pensions gap.” 

Massive shift in food shopping habits 

There has been a significant shift in our food shopping habits since the pandemic, based on data compiled by analyst firm Kantar, reports Daniel Thomas for BBC News. 

Based on Kantar’s findings, the BBC identified five ways shopping habits changed due to soaring food prices and the cost-of-living crisis.  

• Shoppers now have less frequent supermarket visits, but data shows higher volume of sales – indicating higher spending overall.  
• The shift to online has slowed with only 11.7% of UK grocery spending online, down from 15.4% in February 2021. While many older people gave up shopping online after the lockdowns, people also enjoy taking a trip out to shops and seeing other people now. 

• Shoppers are swapping established brands for cheaper supermarket own-label products to combat food prices and their fastest rate rises in 45 years. 
• Sales at discounters such as Aldi and Lidl have soared, as customers look to save. 
• Shoppers are increasingly turning to loyalty schemes for discounts, as supermarkets revamp their loyalty cards to offer in-store or personalised deals. 

Three in four women too nervous to invest 

74% women do not invest and are therefore missing out on building wealth and long-term financial security, according to investment firm Wealthify. 

By comparison, 58% of men said they are not investors, suggesting men are less nervous about dabbling in the stock market, writes Ruth Emery for MoneyWeek.  

However, Wealthify data shows 61% of women have definite future savings goals, compared to only 49% of men.  

The research found that women did not invest because they were too nervous, lacked confidence and did not know where to start, ultimately preferring to leave their money in cash savings accounts instead.  

Kalpana Fitzpatrick, digital editor of MoneyWeek says: “But with interest rates on these accounts lagging behind inflation, it means they are not only losing out on the power of compounding, but they are also missing out on potentially hundreds of pounds in returns over the long-term.” 

Findings from another survey by Boring Money reveals a £599bn gap between men and women’s holdings in stocks and shares, ISAs, investment accounts, and private pensions. 

Photo Credits: Pexels

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Investing your money is a great way to build wealth over time, but what happens when you have consumer debt?

Should you still be investing, or should you focus solely on paying off your debt?

In this blog post, we’ll explore the pros and cons of investing while in debt, in order to help you determine whether or not it’s the right decision for you. 

The most important thing to remember about investing when you’re in debt is not to start investing unless you can afford to do so while also making your debt repayments in full.

Failure to keep up with credit card, loan or mortgage payments can seriously affect your credit rating and ability to use credit in future.

It is trickier at the moment with the Bank of England base rate higher than in recent years too, making debt more expensive to take on.

Beyond that, here are some of the pros of investing while in debt. 

1) Time is on your side 

Time is on your side when you’re young and have a long investment horizon.

Investing while carrying debt can be a wise decision if you have a long-term horizon, as it allows you to take advantage of compound interest and earn higher returns that can cover the interest you’re paying on your debt.

However, you may need to take on more risk and invest in higher-risk assets like stocks or real estate. 

2) Diversification 

Investing your money in a variety of assets such as stocks, bonds, and real estate can help diversify your portfolio and spread out your risk.

This can help protect you from potential losses and minimise the impact of any one investment performing poorly. 

3) Take advantage of market opportunities 

Investing while in debt can also allow you to exploit emerging market opportunities.

For example, if the stock market experiences a dip, you can invest your money at a lower price and earn higher returns once the market bounces back. 

Drawbacks

While investing has some pros, there are also many cons of investing while in debt. Some of the cons will now be explored. 

1) Increased risk 

Investing always involves some level of risk. If you’re in debt, the risk of investing can be even more significant.

This is because if you lose money on your investments, you could end up in an even worse financial situation than you were in before. 

2) High-interest debt 

If you have high-interest debt, such as credit card debt, the interest rates on your debt are likely to be much higher than the returns you could earn from low-risk investments.

This means that any money you invest may need to earn more returns to cover the interest you’re paying on your debt, making it difficult to achieve a positive return. 

3) Missed debt payments 

Investing can require a significant amount of money, and if you’re using money that you would have otherwise used to pay off your debt, you may end up missing debt payments.

Doing this can result in additional fees and penalties and damage your credit score, making it harder to access credit in the future. 

4) What is the opportunity cost? 

When you invest money while in debt, you’re essentially using your money for something other than paying off your debt.

This means you’re missing out on the opportunity to pay off your debt faster and save money on interest payments.

Depending on the interest rate on your debt, the potential returns you could earn from investing may not be enough to outweigh the savings you could achieve by paying off your debt. 

5) Psychological stress  

Carrying debt can be stressful, and investing while in debt can add an extra layer of stress.

This is because investing involves risk, and if your investments aren’t performing well, you may feel anxious or worried about your financial situation.  

In conclusion, investing while in debt can be a smart decision if you carry low-interest debt and have a long time horizon. However, if you’re carrying high-interest debt, it’s best to focus on paying off your debt first.

Remember to always consider the risks involved with investing and consult a financial advisor if you’re unsure about your investment decisions. 

Photo Credits: Unsplash

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With the new year kicking in, after a big-budget Christmas break, it’s time to focus on your money matters again.

The cost-of-living crisis and inflation are going nowhere so it’s essential to stay on top of your finances.

Here are some of our favourite stories from around personal finance this week to help you get your head around money.

30 easy ways to earn £1,000s in 2023

For anyone looking to make quick cash after a costly Christmas, Esther Shaw writes for The Sun, coming up with 30 ways to make cash in 2023. Here are some of our favourites from Esther’s list:

• Take part in surveys

Surveys are an easy way to make money in your breaks, typically taking 10-15 minutes to complete. Try free sites like Swagbucks i-Say and PopulusLive. With consistency and discipline, you could earn up to £100 a month.

• Have a wardrobe clear-out

The start of the year is a great time for a spring clean and instead of throwing out clothing, try listing them on sites like Vinted and Depop. You can earn a few £100s depending on the quantity and condition of your items. Look out for any seller-side fees on these sites as they might eat into your earnings.

• Earn rewards for exercising

Kill two birds with one stone when you earn as you walk! Cash in your steps with sites like Sweatcoin and earn almost £5 per 5,000 steps you take.

• Claim the Married Tax Allowance

More than two million couples miss out on claiming this allowance. This could reduce you (and your partner’s) tax bill by up to £252 in the current tax year ending April 5, 2023. To claim, the lower earner must usually have an income below the Personal Allowance of £12,570.

• Turn your car into a billboard

Sites such as CarQuids let you sign up to brand campaigns by advertising with vinyl stickers on your vehicle. You can earn up to £150 a month depending on your model, areas where you drive and park and the type of ad.

Divorce and money- everything you need to know

January, also known as ‘Divorce month’, often sees lawyers receiving the biggest number of splitting up queries each year. With a divorce comes discussions around the couple’s financial positions.

John Fitzsimons writes for MoneyWeek, all the things you need to know if you’re splitting up, including:

Mortgage: Your property will be the trickiest asset involved in the division. You can choose to sell the property and divide the proceeds or one partner can buy out the other. Discuss with your lender, who may help you out by offering payment holidays or other allowances.

Savings and Investments: Savings can be easily transferred from one account to another. However, with investment transfers, there will be fees and taxes you must be aware of, such as the Capital Gains Tax. For joint account holders, it is worth informing your bank to avoid any misuse of account funds.

Pensions: The most commonly overlooked aspect of a divorce, has several options for dividing pensions such as pensions offsetting, pensions sharing or attachment orders.

Divorces have additional costs like lawyer fees, filing fees, child arrangement needs that will need to be considered.

Credit card rates hit record highs as Britain goes on a borrowing binge

Lauren Almeida writes for The Telegraph as average credit card interest rates jump 4.2% from last year.

Credit purchases spiked before Christmas with consumers spending £1.2 billion in November, triple the amount spend in October, according to the Bank of England.

This increase came despite a fall of 0.4% in November retail sales with the cost-of-living surging.

With higher interest rates burdening their debt repayments, borrowers have lesser time before interest is charged. Experts are now urging borrowers to use cheaper options as they reach closer to the end of their interest-free periods.

Nationwide found that one-third of the purchases in 2022 were processed with credit cards or ‘buy now, pay later’ schemes.

Shoppers are left with little choice other than spending further on credit interests after low cash savings following the pandemic and high-Christmas budgets.

Photo by Gabrielle Henderson on Unsplash

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Investing for beginners: the fear of missing out (FOMO) is real with all the talk about investing on various social media channels.

Once pandemic restrictions lifted and life began returning to normal, the worry of not being included snuck back up on us as if it has never disappeared during lockdown.

And this extends to our money and investing too, especially in the past two years.

A third of investors surveyed by Barclays Smart Investor said social media was a core influence, while one in three (30%) said their investing decisions were influenced by FOMO.

Wanting to dig deeper into the idea of investing FOMO, we’ve spoken to one young investor, Helena Slater, about her journey into investing.

Even if FOMO has negative connotations, on the positive side for Helena, it was actually the reason why she started investing seriously, despite having had an ISA from the age of 18.

How Helena got started with investing

Helena works in financial services. The moment she began her career, she noticed her peers would talk about their investments, what strategies they use, what stocks are performing well, and which ones aren’t.

The more they talked about it, the more Helena felt left out and wanted to be included in the conversation.

She says: “I did become quite envious of these conversations, I wanted to be able to join them. These conversations encouraged me to consider investing.

“However, I will say that listening to people’s suggestions is one thing, but you do need to discover what investments work for you.

“For example, some people might go for riskier investments, while I know I’d like to go for more low-risk, long-term investments such as index funds, which are generally considered safer.”

We all had that one person at work boasting about an investment that did really well during lockdown – it is natural to experience FOMO but be wary not to let that fear control your investment decisions.

Helena says it’s important to do your research before you make decisions, especially if it’s based on word of mouth.

Where does Helena get her investing ideas?

Every day, Helena looks at financial publications and finds what expert fund and wealth managers are suggesting. After that she does her own research, though she admits her parents originally steered her in the right direction.

She says: “The reason why I tend to trust my family when it comes to investing is because we have a similar financial mentality where we put saving at the forefront. Whenever we get paid, we instantly pay ourselves by paying our savings, paying our investments, and then the rest goes on whatever we want.

“I learned from a young age about that saving and investing mentality. I do trust their investment advice. They are also perhaps invest more for the long term and that’s a method that I know and respect.”

She already has quite a strong idea about the sectors and companies that she’s focused on investing in, for example sustainable products or emerging markets, and she feels comfortable sharing her investments with her family.[HS1] 

“My brother and I have really open conversations about where he’s investing, how well his investments are doing and the companies that he’s monitoring at the moment, he’s very much a retail investor.

“I’m the only one out of my female friendship groups who actively invests. I’ve discussed investing with my friends before to encourage them to invest, especially if they have a lump sum that’s just sitting in a savings account, but they’re often slightly less willing to take the potential risk of investing.”

Investment platforms

Helena uses three investment platforms: HSBC, Vanguard and AJ Bell.

Initially, her parents helped with setting up an HSBC account when she was 18, but she admits that at that time she didn’t really understand investments, and had only a very cautious investment ISA.

She also uses Vanguard for long-term investing, and has some money in its LifeStrategy 60% Equity Fund, “which has just been good for my investing for the long term – just leaving it, and letting it do its thing,” she says.

On a more active basis, she uses AJ Bell. She says: “I opened an account with AJ Bell, as it has many positive aspects, including low fees. The literature that the company provides on a day-to-day basis, including fund suggestions is very informative too.

“They go into quite a lot of depth as well about those suggestions and why to do it. I get quite a lot of recommendations, which I really like, and they have a huge plethora of funds in their platform. There hasn’t been a fund that I couldn’t find on it yet.”

Photo by Karolina Grabowska from Pexels

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Introducing savvy mother, Carina Parry, who is investing to ‘future-proof’ and improve family finances just like yours.

In a world where women have fought hard for their financial independence, the unpleasant truth is that there are still far too few women investors.

A quick look at the data suggests that investing is still seen as something that men primarily do. For example, just 10% of women have a stocks and shares ISA, compared to 17% of men, according to a report by data firm Kantar.

Given the imbalance, Mouthy Money sought out three female investors to find out their motivations for investing to improve family finances, and to see if they could offer any advice to the budding female stock pickers out there.

In our first interview of this three-part series, we speak to Carina Parry on why she’s investing for her and her family’s future.

Improve family finances and investments 

Women mention their family substantially more when talking about finance, including children, parents and significant others, according to research by Kantar.

Carina Parry is considering investing for her son’s future and has a sharp focus on her family life when it comes to dealing with her finances.

She says: “For me, investing is about the future. When I hear the word ‘investing’, that’s what I’m thinking about, my future. I’ve just had a baby, so now I have a different mentality around it.”

A few years ago, after receiving a bonus from work and speaking to her dad about the money, Carina made her first ever investment. Several years have passed and she has seen that investment grow.

“Whereas before investing to make money had been an abstract idea, I’ve now personally seen positive results from it. This has encouraged me to get more involved and learn more.”

During lockdown Carina managed to save a pot of money that she now intends to invest for her future.

She says: “I’m looking into junior ISAs  (JISAs) and Junior stocks and shares ISAs for my son, it seems a bit ridiculous because I’ve not even got my finances sorted yet, but at least I can give him a bit of a head start.”

Investment information

When it comes to investments, Carina relies on her family for information, specifically from her dad and brother.

She says: “Maybe that’s a female thing, that you don’t discuss your finances as much.

“It’s my dad and my brother who I know have made investments, so I lean on them for information. I have also tried to speak to a couple of my male friends who work in finance, but everyone holds their cards quite close to their chest, they don’t want to give you any recommendations in case it’s unsuccessful and falls on them!”

Her family has been a primary source of information for investments, as well as main contributors to her financial education – an education that was built “from a young age.”

She admits she hasn’t really spoken to her friendship group really seriously about a wider investment: “I’m sure other people do, but it’s not something that comes up regularly. I think money in general is quite a difficult topic sometimes.”

Investment platforms

Carina uses Hargreaves Lansdown for her investments, a platform recommended to her by family.

“For someone like me, who isn’t confident when it comes to investing, the platform is a safe pair of hands.

“For the foreseeable future, especially now I’ve had a baby and don’t have that much time, I would look to stick with them. I’ve also been looking at the app Plum, but still haven’t decided on changing.

“Part of the barrier to investing is this idea of how much money is going to make it worthwhile. So, for the for larger sums, Hargreaves Lansdown is a good choice, as I can put my savings into an account within the platform, that seems like a preferred direction for me.

“But in terms of daily, weekly, monthly, if I can make small savings that actually can work harder for me, then something like Plum’s app seems perfect and less scary.”

Investing into pensions

Men in their 60s will on average retire with three times more in savings, compared with women of the same age, a report by consultancy Mercer estimates.

Two in five (40%) of women are also worried about running out of money in retirement, Kantar’s research shows.

This is mostly due to the gender pay gap leaving women with less pension savings in work, and the fact that women have been targeted with messages to save and not invest, according to the research.

Carina has a workplace pension, but she is considering investing into a bigger pension fund.

She says: “It’s very much start of the road at the moment. It’s only recently that I’ve actually started thinking about making my pension work harder for me, and tying these things together on my investment learning curve.”

Starting to invest

When she first invested, Carina was excited by it and felt like it was a positive. She admitted that being guided by her family made the whole process a lot easier.

However, now that she’s thinking about it “afresh,” she feels more hesitant, as there’s a lot more at stake.

She says: “Future proofing for me and my family is what’s driving my intention to start investing now.

“Also, I find it quite frustrating because investing is not rocket science, yet I feel clueless about where to make investments and where to start.  It’s a mixture of apprehension and a bit of frustration.

Historically it’s felt a bit like a ‘boys club’, with investors being portrayed in a certain way. As a female and a mum, the stereotyped male investor is unrelatable. However this seems to be changing with more female focussed information being available.

Photo by Mateus Campos Felipe on Unsplash

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If you are experiencing stock market panic, our latest blog explains why it might pay to keep calm and carry on.

If you are an investor in the stock market, you’ve probably seen that your investment portfolio has taken a hit recently.

Rising prices, climbing interest rates and fears over the bubbling Russia-Ukraine conflict have spooked investors, which is why shares have been jumping lately.

Stock market panic – fight or flight?

Those of you who have been investing for some time will have probably grown accustomed to market downturns and so-called “corrections”, and realise it is a necessary evil.

For those of you who are newer to investing, seeing such erratic moves in your investments can be unnerving.

However, in this article I am going to show why you shouldn’t panic about skittish share prices and why it pays to keep calm and carry on.

Get realistic

It’s important to first understand the realities of the global stock market in order to set healthy expectations for your investment portfolio.

The reality with the stock market is that it is consistently moving in ebbs and flows throughout the days, months, years, and decades.

It can be sensitive to world events, such as Brexit and the Covid-19 pandemic, which can affect how shares prices act.

These world events also tend to affect different stock markets in different ways. For example, Brexit had a much greater negative impact on the UK stock market than, say, the US market.

Put simply, there will be times when you are doing well – i.e. having a stock portfolio full of positive returns – and times when you are not doing so well.

But as an investor, you have no choice but to take the good with the bad.

The good news is the data shows us that when you zoom out and look at stock market performance over the long-term, the chances of you making a profit are very good.

However, it is always important to keep in the forefront of your investing mind that past performance is not indicative of future returns.

It’s also important that you don’t panic and run a mile at the first sign of trouble.

Keep calm

Keeping cool and calm when the stock market becomes volatile is the one of the best traits you can have as an investor.

When we act on emotion, such as fear or greed, things rarely work out well.

Trying to time the market by “buying the dip” or selling out as soon as things get hairy is a sure-fire way of losing money.

As Warren Buffet, perhaps the world’s best-known investor, once said: “The stock market is a device transferring money from the impatient to the patient.”

Succeeding at investing means being patient and sticking with your investment strategy. Chopping and changing your plan every two minutes and trying to second-guess which direction share prices will move is rarely a good strategy.

In fact, it will only tire you out, complicate your investing journey and most likely lead to worse investment returns.

Therefore, from one long-term investor to another, the best thing we can do right now is to keep calm and carry on.

Photo by Andrea Piacquadio from Pexels

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Mouthy Money Your Questions Answered panelist, Laura Suter, answers a reader’s question about how to save and invest money on a starting salary.

Question: I’m a young, recent graduate from university and just started my first job where I earn £20,000. I’d like to put away some of my salary each month into investing, but I don’t know where to start or how it works to invest nowadays. Do you have any tips?

Answer: Regular investing – so putting aside money each month – is an ideal route for first time investors like yourself, because it means you can invest a small amount each month into the market and get used to investing.

You can easily set up a direct debit that will automatically transfer the money into your investment account each month (maybe on payday) and then set up regular investing on your platform, which will automatically buy the funds or shares you’ve chosen.

Many investment platforms will allow you to start from as little as £25 or £50 a month, which you can then build up as you get more confidence and more spare cash.

And even if you’re putting away small sums your savings can quickly add up. If you put away £50 a month over 10 years, assuming investment returns of 5% a year after fees, you’d build up a pot of £6,910, while over 20 years you’d end up with £19,175.

A big advantage is that that you don’t have to remember to save and invest your cash each month. Another benefit is that you don’t try to time the market and pick the best point in the month to invest, which is notoriously tricky to do accurately and is an easy trap for first-time investors to fall into.

Drip-feeding your investments each month also provides an in-built protection mechanism during periods of volatility. This is something called ‘pound cost averaging’ and means you should suffer fewer extreme lows in your portfolios if markets fall.

However, charges are one area you need to watch out for. If you’re only investing £25 a month you need to make sure you’re not investing in lots of different funds, as it will cost you a dealing fee each time. You will save money in fees with lots of investment platforms if you opt for regular investing, as many offer a discount to usual dealing fees for signing up to the service.

On AJ Bell Youinvest, for example, you would usually pay £9.95 when you buy or sell shares, but this is reduced to £1.50 if you’re doing so through regular investing.

In order to set up regular investing you’ll need to think about what you want to invest in. It can feel daunting for first-time investors to know what to put their money into or how to navigate markets, but loads of tools, information and guidance have been developed in recent years to make it easier to get going. From curated lists of ‘favourite’ funds to one-stop-shop funds that invest in lots of different assets, there’s lots of options for newcomers.

If you don’t feel confident picking which countries or sectors to invest in you can defer asset allocation decisions to a professional. You can buy so-called ‘all in one’ funds that spread your money between different country’s stock markets and across various asset classes, with an option of having more or less in stock markets versus bonds, gold and cash, depending on your risk appetite.

The Vanguard LifeStrategy funds are one option and investment platforms often offer their own versions too.

Alternatively, first-timers could buy a cheap ‘tracker’ fund, which mimics the performance of a broad global index, such as the MSCI World. Fidelity World Index is one option for this, which has a low annual cost of 0.12%.

If you decide to go down the route of picking your own investments, you need to make sure you understand what you’re buying, and why you think it will make money – whether it’s a fund or a share.

All too often investors are lured in by the promise of high returns or invest because a friend has recommended it, but you need to make sure you understand how the investment works and all the risks before you commit your money.

Once you have set up your investments you want to make sure you’re not checking your account every day, as doing so can mean you end up trading too much. You should be buying investments for the next five or 10 years, not five or 10 days, so you don’t want to be chopping and changing too much.

Apart from anything else the cost of trading will eat into your returns. But becoming too obsessed with the ups and downs in your investments can also mean you panic if they fall one day, meaning you sell and lock in losses.

Laura Suter, head of personal finance at AJ Bell

The opinions expressed in this article should not be construed as financial advice. All investments carry risk, and you can get back less than you invested.

Have you got a burning money question? Ask your question here

Photo by Austin Distel on Unsplash

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Mouthy Money talks to graduates who tell us in their own words what their experience of entering the job market feels like during the pandemic

In our new series, we talk to students who graduated during the pandemic to see what’s their experience of entering the job market has been during one of the biggest crises of the century. Read the first instalment here.

The pandemic put a heavy strain on graduates – to find jobs in a climate that didn’t have any available. Now with the National Insurance tax increase and inflation, the future of the younger generation can seem uncertain at times.

David* graduated in 2020 in the UK. He explains his experience as an international student in the UK, his opinions on how the university helped him prepare for the job market, and how the pandemic changed the course of his life.

Find out more: If you’re 18 – 29, we want to hear from you! By taking our quick survey, you’ll be in with a chance of winning a £100 shopping voucher from your choice of Amazon, John Lewis or M&S – plus four £20 vouchers up for grabs too.

1. Tell us about your university experience? Did the university prepare you for the job market?

I studied chemical and environmental engineering, then I did an energy and environmental engineering masters. I like to think about my university experiences through two separate entities that had a direct impact on me.

There were the student services, practically speaking the university’s administrative side. And then there was the chemical engineering departments. The Faculty of Engineering was top class at my university.

However, the administrative side of the university in student services is different – it’s really built around helping UK-born students, and not internationals.

They have services for international students, but all they do is really give you advice, they don’t help you. And they don’t know how to give you advice, because every country is different when looking for a job.

I want advice that’s adapted to where I come from, and how do I look for a job? What do I need? Is there a list of registered sponsors? No one taught me that.

I would have liked to be helped more by the student services to enter the job market.

I would have liked to stay in the UK, but then the pandemic started, and companies stopped hiring. I think there’s actually a year or two where you’re allowed to stay in the UK and work so, you don’t need to get a registered sponsor for visas. But with the pandemic things have changed practically speaking. I did come at the worst time to be in the UK.

2. How do you feel about the current job market in the UK or in Morocco?

In the UK I’m hopeless. It is a highly developed country, but I think at least for us internationals, I don’t think there’s much hope unless you’re excellent or at the top.

In Morocco I actually have a lot of hope. But that’s because I can see internally who’s working in the sector now. I can see what people are starting up and I can see that businesses are opening, I can see the government doing things and planning. I’m hopeful for the job market because I know that we’re going to start shifting our economy towards the industry of chemicals and pharmaceuticals, which is what I want to do. We’re going to have Covid vaccine manufacturing plants in Morocco. Super fun.

3. Are you thinking of going back to the UK anytime soon?

I’d like to visit the UK, but I don’t think I want to go back right now. I’d like to be able to visit the UK and just spend money and have fun living there.

If someone would give me a job, then that’s excellent. I’d go tomorrow, but it’ll have to be a really good job with a lot of benefits for me to give up my current job.

4. Have you ever considered investing some of the money you earn now as a full-time employee?

If you’re talking about bitcoin and stock markets, nope, it’s basically gambling, let’s call it what it is. It has added no value to the world. It’s not good. But investing in something useful, like investing in an idea, that’s what I actually tried to do.

My first job was as a chemical engineer in a small team in Marrakesh, I was making 8,000 dirhams a month (around £650), and I didn’t spend it because of the pandemic, so I saved up quite a bit of money.

I started thinking about an idea that I did my master’s dissertation on, which was turning waste, agricultural waste, and plastics and stuff into gasoline, diesel. And I took 20,000 dirhams (around £1,600) that I had saved up, and I spent it all on this idea and I built a system and I tested it.

Investing in my own skills and my knowledge, I built something with my own hands.

But it turns out that I couldn’t make diesel. I didn’t think about the full scope of what I was doing or about the legal aspects because you’re not allowed to just sell diesel. Instead, I started making charcoal, which was pretty good, but very expensive. I stopped and I lost the 20,000 dirhams.

But that’s okay because I learned a lot and I became a charcoal expert. You don’t necessarily need to do something in your 20s to prove that you can be a leader. And for sure, it adds up as an experience.

*Name changed to preserve anonymity

Photo by Jason Goodman on Unsplash

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UK adults are anxious about their money, as our own Mouthy Money study shows three quarters (75%) are concerned about the rising cost of living as inflation continues to rise.

The survey from the latest Mouthy Money Matters Index shows more than half (55%) of Brits are worried about how they would cope when faced with a large, unexpected bill.

People are particularly worried about the rising cost of living in the UK as the price of essentials are driven up, according to the data.

Inflation and unexpected bills

One respondent expressed their concerns, commenting that: “The poorest and most vulnerable in society are being forced more and more into poverty.”

Another added: “It infuriates me that interest rates are kept so artificially low while inflation is at least 3%, so that the value of my carefully-accumulated savings is eroded every day.”

Edmund Greaves, co-editor at Mouthy Money says: “I think, inflation, the general cost of living going up in prices is a big, big worry at the moment for all of us and that’s reflected in the research.

“There is starting to creep in worries about Bank of England rate rises. If you have debt on a credit card, and the Bank of England suddenly shoves the interest rates up, then your monthly payments are going to go up.

“And that’s the same with a mortgage as well. If you’re not on a fixed mortgage deal, it’s going to hit your mortgage, and you’re going to end up paying more money not just every month, but over the life of the mortgage.”

His advice is to lock in and new fixed-rate deal for your mortgage, and make sure that you’re not suddenly paying extra money in three months’ time, just for having not been proactive.

Readers listed items such as food, petrol and clothes as areas that they were particularly anxious about paying for, whilst one in three (36%) readers revealed that inflation will mean they won’t have enough to pay for the basic daily essentials.

Greaves expects general supermarket, local shopping, and delivery prices to go up because of supply difficulties, with less concerns about services such as Netflix. “It’s physical goods, stuff you’re buying and using, which I think people need to be worried about, as it is the supply chain crisis which is ultimately squeezing demand.“

Savings and investing habits

The Mouthy Money Index also highlights that:

• a third (33%) of Brits say they have less money left over at the start of the month than they did before the pandemic
• and nearly half (48%) of UK adults saying they have become more concerned with how much they earn since the pandemic began.

However, other notable trends that have started with the pandemic are that more people want to build up a savings buffer (45%), followed by paying down debts (28%), and investing (24%).

Greaves adds: “We’re also seeing a rise in people taking more agency with their employment, so that’s not being willing to just accept what an employer tells you, what they’re going to give you.

“I think people should be given the opportunity to have more money in their pocket, and decide what they spend it on, and how they spend it, rather than, existing in some sort of low inflation, low wage growth environment where everybody just gets stagnant and doesn’t feel better off every year.”

“With things like investing and saving, people seem to be getting more savvy about the idea that saving accounts are not going to do your money any good because it’s always going to devalue, because inflation is what it is.”

How can you protect yourself financially from price hikes?

There are a few simple ways you can protect your finances from unexpected bills and inflation, such as:

• haggling over energy or gas bill prices
• cut unnecessary costs such as unused gym subscriptions
• sell things or clothes you don’t use anymore on websites such as eBay or Depop
• postpone big purchases until the lorry driver shortage will end (it is estimated that the shortage situation will get better after January)

When it comes to saving more the most important thing to do is make sure you have an emergency cash buffer and avoid bridging any budget gaps with debt. Once you’ve built up a buffer it is good to start saving for the long-term by:

• move your money from your savings account to an Investment ISA tax wrapper
• investing money in stocks and shares
• Make sure you’re contributing as much as possible to a pension
• Open up accounts such as a Lifetime ISA (LISA) if you’re saving for your first home

Photo by cottonbro from Pexels

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New Mouthy Money contributor Nick Daws, blogger at Pounds and Sense, tells us why he’s ditching NS&I Premium Bonds for better returns elsewhere.

Premium bonds are a hugely popular savings option. Between February and March 2021, according to Moneysavingexpert.com, the amount invested in them jumped by a record £2.16 billion.

On the face of it, you can see the attraction. Premium bonds don’t pay interest but every month lucky winners receive tax-free prizes of between £25 and £1 million. 

The annual prize rate is currently 1%, which though historically low is still better than most savings accounts. You can get your money back any time and it’s guaranteed by the government. You also have a (very) slim chance of winning a big prize every month.

So, what’s not to like?

Well, for one thing, although the prize rate is 1%, the majority of premium bond savers won’t receive that. The reason is this is the average is skewed by the small number of very large prizes, which statistically you’re very unlikely to win. 

The more bonds you have, the closer to the average your winnings are likely to be. But the reality is that most premium bond holders won’t earn the rate quoted (and may make nothing at all).

A better measure of what you’re likely to make in a year is the median. The way to think about this is that if you put all holders with a certain number of bonds in line from those winning least in a year to most, the median would be right in the middle. 

Half will earn more than this (or the same) and an equal number less. The median is therefore a measure of what you can expect to win with ‘average luck’. 

The clever folks at MoneySavingExpert.com created a Premium Bond probability calculator using this approach to reveal how much you’re likely to win per year, with average luck, with any given holding.

With £10,000, the MSE calculator shows that on average you’d win just £75 a year, equivalent to an annual return of 0.75%. Obviously, you might have better than average luck, but over half of all holders will have the same or worse.

You do of course have a chance of winning a big prize, but it’s important to be realistic about this. For example, your chances of winning the million-pound prize any month are around one in 50,000,000,000. 

By comparison, the chances of winning the multi-million jackpot in the UK National Lottery (‘Lotto’) are about 1 in 45,000,000 – so over a thousand times better!

At one time I had £30,000 of premium bonds. Initially I won several prizes, all £25, but then Ernie seemed to forget about me. In the last year I held them my average return dropped below 0.50% (at the time the prize rate was 1.4%). 

Many people report similar experiences, though the time you’ve held bonds shouldn’t affect their chances of winning. I decided enough was enough and sold up.

My recommendation

If you’re lucky enough to have up to £50,000 (the current maximum for premium bonds), my first advice today would be to put enough in a top-paying easy-access account to cover your outgoings for three months in case of emergencies. 

After that, unless you’re likely to need the money in the next few years, I’d strongly consider investing the rest – maybe in a low-cost tracker fund or robo-advisory service like Nutmeg, Moneybox or Vanguard. 

This is what I did, and over the last four years my investment has grown by over 50%. While there are never any guarantees, in the longer term, for most people, investing in stocks and shares is likely to outperform an equivalent premium-bond portfolio several times over.

Nick Daws writes for Pounds and Sense, a UK personal finance blog aimed especially (though not exclusively) at over-fifties.

Disclaimer: I am not a qualified financial adviser and nothing in this post should be construed as individual financial advice. Everyone’s circumstances are different. It’s vital to evaluate any investment opportunity carefully and take professional advice as appropriate. All investments carry a risk of loss.

Image courtesy of NS&I

The post Goodbye, Ernie. Here’s why I sold all my Premium Bonds appeared first on Mouthy Money.