investment Archives - Mouthy Money https://s17207.pcdn.co/tag/investment/ Build wealth Fri, 16 May 2025 11:35:29 +0000 en-GB hourly 1 https://wordpress.org/?v=6.8.1 https://s17207.pcdn.co/wp-content/uploads/2022/09/cropped-Mouthy-Money-NEW-LOGO-square-2-32x32.png investment Archives - Mouthy Money https://s17207.pcdn.co/tag/investment/ 32 32 Mansion House Accord: How it impacts your pension https://s17207.pcdn.co/pensions/mansion-house-accord-how-it-impacts-your-pension/?utm_source=rss&utm_medium=rss&utm_campaign=mansion-house-accord-how-it-impacts-your-pension https://s17207.pcdn.co/pensions/mansion-house-accord-how-it-impacts-your-pension/#respond Fri, 16 May 2025 11:35:17 +0000 https://www.mouthymoney.co.uk/?p=10781 The Mansion House Accord is an agreement between major pension providers to pour billions of investment back into the UK economy, instead of finding opportunities abroad. Leading pension providers have announced a new agreement, dubbed the ‘Mansion House Accord’ to channel significant amounts of cash into UK investments. The agreement could reshape how pension funds…

The post Mansion House Accord: How it impacts your pension appeared first on Mouthy Money.

]]>
The Mansion House Accord is an agreement between major pension providers to pour billions of investment back into the UK economy, instead of finding opportunities abroad.


Leading pension providers have announced a new agreement, dubbed the ‘Mansion House Accord’ to channel significant amounts of cash into UK investments.

The agreement could reshape how pension funds are allocated, affecting retirement savings for many.

Below is an overview of the Mansion House Accord and its implications for your pension.

What is the Mansion House Accord?

The Mansion House Accord is a voluntary commitment between the Government and 17 prominent pension providers.

Under this agreement, these providers will allocate 5% of their members’ pension funds to unlisted UK investments – those not traded on public stock exchanges – by 2030.

The Government estimates this could unlock approximately £25 billion for UK-based projects.

Additionally, up to 10% of pension capital will be directed toward infrastructure, property, and private equity investments, which may include both UK and international opportunities.

This shift could mobilise up to £50 billion into assets typically inaccessible through mainstream pension funds.

The accord applies exclusively to defined contribution (DC) pension schemes, which are common in workplace pensions. It does not affect defined benefit (DB) or final salary schemes. While most major providers have joined the accord, some notable firms, like Scottish Widows, have not signed on.

More from Edmund Greaves

How does this affect your pension?

The accord will influence the ‘default funds’ offered by pension providers. These are broad, long-term investment options designed to suit most members but not customised for individual needs.

When you join a company pension scheme – usually at the start of a new employment – your pension will likely be automatically invested in the pension provider’s default fund.

If your workplace pension is with a provider signed up to the accord, your savings may be increasingly invested in UK-based projects, such as infrastructure or private equity.

This shift has sparked some concerns. Investments in unlisted assets or UK-focused projects may carry higher risks or deliver lower returns compared to global opportunities.

Historically, pension funds have favoured international investments due to their stronger returns, often bypassing UK assets seen as less attractive.

The Government’s push to prioritise domestic investments is a step back toward ‘financial repression’: a strategy where capital is constrained to local markets, potentially limiting growth due to weaker domestic opportunities or inflationary pressures.

This approach was common in the post-World War II era but largely phased out by the 1970s.

However, there is no mandate forcing pensions into UK investments at this stage. The accord reflects growing Government enthusiasm for keeping capital within the UK, but it remains voluntary for now.

Photo credits: Pexels

The post Mansion House Accord: How it impacts your pension appeared first on Mouthy Money.

]]>
https://www.mouthymoney.co.uk/pensions/mansion-house-accord-how-it-impacts-your-pension/feed/ 0
Trump tariffs: time to flee to an investment safe haven? https://www.mouthymoney.co.uk/investing/trump-tariffs-time-to-flee-to-an-investment-safe-haven/?utm_source=rss&utm_medium=rss&utm_campaign=trump-tariffs-time-to-flee-to-an-investment-safe-haven https://www.mouthymoney.co.uk/investing/trump-tariffs-time-to-flee-to-an-investment-safe-haven/#respond Thu, 13 Mar 2025 11:58:47 +0000 https://www.mouthymoney.co.uk/?p=10667 Trump’s tariffs reignite trade tensions, rattling markets as investors seek safe investment havens As of 13 March 2025, Donald Trump’s administration has reignited global trade tensions with sweeping tariff proposals, leaving investors nervous about falling markets and considering ‘safe haven’ alternatives. During the presidential election campaign, Trump pledged 10-20% tariff on all imports to the…

The post Trump tariffs: time to flee to an investment safe haven? appeared first on Mouthy Money.

]]>
Trump’s tariffs reignite trade tensions, rattling markets as investors seek safe investment havens


As of 13 March 2025, Donald Trump’s administration has reignited global trade tensions with sweeping tariff proposals, leaving investors nervous about falling markets and considering ‘safe haven’ alternatives.

During the presidential election campaign, Trump pledged 10-20% tariff on all imports to the US, with a staggering 60% levy targeting Chinese goods. Now in office, he’s confirmed 25% tariffs on steel and aluminium imports, and a range of other tariff threats still abound.

As a result, investment markets – both in the US and globally – have take fright. Laith Khalaf, head of investment analysis at AJ Bell, explains: “The mighty S&P 500 has taken a tumble and it’s the actions of the US president which look like the main cause. The US index dipped briefly into correction territory this week, defined as a 10% fall from a previous peak.

“Markets have taken fright at the global trade war which seems to be erupting, because that can be expected to dampen global growth while pushing up inflation. US stocks already looked vulnerable to correction unless everything turned out peachy, and the market is now looking at US trade policy and thinking peaches may turn out to be quite thin on the ground.”

The UK faces uncertainty as Trump hints at more tariffs to come, though he’s suggested a deal could spare Britain. The US accepts more than £60 billion of UK exports annually, from pharmaceuticals to cars according to 2023 Office for National Statistics (ONS) data.

But inflation and trade risks aside – UK investors will possibly be looking at their portfolios with concern as markets whipsaw and send numbers down. This could lead many to consider selling assets and looking for so-called ‘safe haven’ alternatives.

Ask our experts your money questions

Safe haven risks

For UK investors and pension holders, Trump’s tariffs spell volatility. Self-invested personal pensions (SIPPs) and global funds, often with high levels of US exposure, could see short-term dips as Wall Street reacts. This is evidenced by recent S&P500 index declines.

Long-term, a trade war could stunt global growth, hitting emerging markets and UK exporters. Yet Khalaf explains that while fleeing to ‘safe haven’ investments might seem like a good idea in choppy market conditions, the long-term effect of running to safety might not be that helpful.

“In the current market environment investors may well be wondering if it’s time to turn to safe havens to add some ballast to their portfolios,” he says.

“We ran some numbers to see how five key safe havens available to UK investors had performed over the last 10 years, though of course, that doesn’t guarantee the same returns will be delivered going forward.

“As the tables below show, there’s been a wide dispersion of returns and protection provided by safe haven investments over the last decade.”

Khalaf continues: “These assets are used by investors seeking a more cautious approach to investing and are usually paired with an equity portfolio to provide some ballast.

“You would normally expect the equity component of a portfolio to perform better over the long term, and true to form, the global stock market has left most safe havens for dust in the last 10 years. A global index tracker has returned 225.1%, compared with the average Cash ISA which has delivered 14.2%, or the typical gilt fund which has produced a return of -5.0%.

“It has been a terrific decade to be invested in the global stock market, in large part thanks to the meteoric rise of the titans of the US technology sector. It’s entirely possible that the next 10 years won’t be as kind to stock market investors, though history still suggests that returns will be superior to less risky asset classes. Looking at 10-year periods going back to 1899, Barclays reckons the UK stock market has beaten cash over 90% of the time.

“While seeking out safe havens in times of turmoil is perfectly reasonable, it’s important not to throw the baby out with the bathwater and jettison the stock market altogether. Indeed, as the figures below show, even safe havens come with risks attached, and it’s actually by diversifying across asset classes that you can take some of the rough edges off each of them.”

Photo credits: Unsplash

The post Trump tariffs: time to flee to an investment safe haven? appeared first on Mouthy Money.

]]>
https://www.mouthymoney.co.uk/investing/trump-tariffs-time-to-flee-to-an-investment-safe-haven/feed/ 0
The ins and outs of investing in gold https://www.mouthymoney.co.uk/investing/the-ins-and-outs-of-investing-in-gold/?utm_source=rss&utm_medium=rss&utm_campaign=the-ins-and-outs-of-investing-in-gold https://www.mouthymoney.co.uk/investing/the-ins-and-outs-of-investing-in-gold/#respond Thu, 04 Apr 2024 09:08:17 +0000 https://www.mouthymoney.co.uk/?p=9879 With gold prices hitting record highs, Richa Ved explores the process of investing in the precious metal Gold has hit a new all-time high of $2,295 a troy ounce this week thanks to global market signals that major central banks could be about to cut interest rates. The precious yellow metal has consistently been making…

The post The ins and outs of investing in gold appeared first on Mouthy Money.

]]>
With gold prices hitting record highs, Richa Ved explores the process of investing in the precious metal


Gold has hit a new all-time high of $2,295 a troy ounce this week thanks to global market signals that major central banks could be about to cut interest rates.

The precious yellow metal has consistently been making the headlines for hitting new record highs since 2022, with a striking rise from around $1,600 per ounce in October 2022 to nearly $2,300 now.

This ‘bullish’ momentum has caused a paradigm shift in narrative around gold as an investment, with investors expecting the prices to continue rising for the next few months.*

Let’s get into what caused the rise, gold’s investment prospects, and what to expect in the near future.

What caused the rise?

Gold is typically seen as a ‘safe haven asset’, known to rise in demand during market volatility and uncertain times. Previously, markets witnessed all-time high gold prices after the 2008 financial crisis and the Covid-19 pandemic.

With promising US economic growth expectations, the gold rush might come as a surprise. Many non-US markets – such as China, the United Kingdom, and a few EU countries – have been key drivers of the gold demand surge.

Several countries have observed high inflationary pressures and slow economic growth in recent months, leading investors to safeguard their portfolios by buying gold as an inflation hedge.

Mouthy Money note: Inflation is the process by which the value of money in your pocket decreases as central banks increase the supply of money in the financial system and too much consumer demand chases too few goods and services. Gold, and other investments, 'hedge' against inflation by sustaining a value despite monetary devaluation.

China’s real estate crisis has pushed Chinese investors’ demand for gold to hedge against economic instability. About half of all gold shipments in January went to Hong Kong and mainland China, according to investment bank UBS.

Now, the anticipation of interest rate cuts, uncertainty posed by the upcoming US presidential elections, and the geopolitical instability due to ongoing global wars and conflicts, have driven investors toward gold.

Types of gold

  • Physical gold: This is a popular, and old school, way of purchasing gold – in the form of bullion bars, coins or jewellery. You receive physical possession of the gold and must arrange for proper storage and insurance yourself.
  • Gold exchange-traded funds (ETFs) or certificates: You can invest in gold through ETFs (funds which hold gold and trade on the stock exchange) or gold certificates (offered by some financial institutions). This will allow you to own gold without possessing the physical metal. Plus, you can make a tax-efficient investment if held in a Stocks and Shares ISA.

You may also invest via stocks of companies involved in gold mining, refining or trading. However, their fluctuations are also dependent on the company’s performance and market conditions.

Pros and cons of investing in gold

Pros

  • Relative liquidity: Gold is generally a liquid asset, and is easy to buy and sell – especially compared to other assets such as property. It is a widely accepted and fungible asset that can be sold to any gold dealer or jewellery store.†
  • Hedging feature: Gold acts as a hedge against high inflation and market instability making it a ‘safe haven asset’ during times of macroeconomic uncertainty.
  • Diversification: Gold helps manage your portfolio’s risk diversification as it is typically not affected by price changes in other asset classes (such as stocks and bonds), and instead, its price moves in the opposite direction.‡
  • Tax advantages: For bullion coins purchased from The Royal Mint, there is no Capital Gains Tax (CGT) applicable to the profit made while selling.

Cons

  • No consistent income: Unlike other assets, gold investments do not offer any consistent yields or dividends – known as income – and can only be profitable with the capital gains on sale.
  • Associated costs: Physical gold comes with associated costs such as storage fees, insurance premiums, brokerage fees etc. ETFs have associated transaction costs while trading too.
  • Complexity, knowledge and research: Gold investing differs from investing in stocks and such markets. It takes time to research and grasp the knowledge of investing in precious metals. Plus, it is important to ensure the gold dealer’s background, deal offered, and quality of gold offered, to avoid any fraud.
  • Future of gold mining and environmental effects: Gold is a rare metal and its demand, supply, and pricing depend on future mining capabilities and remaining gold quantities within the earth. This might change with advanced mining (increased supply), depletion of gold deposits (decreased supply), or environmental side effects of mining.

What to expect

Gold has long been a good portfolio-diversifying investment. With the precious metal continuing to hit all-time highs, the expectation in the market is for gold’s price to keep rising for a while, at least till the end of 2024, as central banks and investors continue purchasing gold. This is by no means guaranteed though.

While the macroeconomic backdrop for gold is looking more promising than ever, you must consult your financial adviser and use a professional research-driven approach before making any investments. You can choose an appropriate gold investment strategy depending on your investment goals, risk tolerance and portfolio composition.

Plus, keep a close eye on signs of any market fluctuations, economic changes, or geopolitical occurrences that could affect your portfolio.

*Investing in gold, as with any other investment, carries risk. The price can go down as well as up so do not invest money you cannot afford to lose.

†Ensure you are doing research into gold prices before looking for a physical buyer and be clear what the best price possible is. Jewellery stores and other phyiscal dealers might not buy gold from you at the exact market rate as they will want to make a profit on the precious metal too.

‡If you are considering investing in gold as part of a wider portfolio it is important to do as much research as possible. If you have complex wealth management needs it is potentially worth considering consulting with a financial adviser.

Photo credits: Pexels

The post The ins and outs of investing in gold appeared first on Mouthy Money.

]]>
https://www.mouthymoney.co.uk/investing/the-ins-and-outs-of-investing-in-gold/feed/ 0
Can Dave Ramsey and the ‘Baby Steps’ get you out of debt and build wealth? https://www.mouthymoney.co.uk/pensions/can-dave-ramsey-and-the-baby-steps-get-you-out-of-debt-and-build-wealth/?utm_source=rss&utm_medium=rss&utm_campaign=can-dave-ramsey-and-the-baby-steps-get-you-out-of-debt-and-build-wealth https://www.mouthymoney.co.uk/pensions/can-dave-ramsey-and-the-baby-steps-get-you-out-of-debt-and-build-wealth/#respond Wed, 26 Apr 2023 10:08:51 +0000 https://www.mouthymoney.co.uk/?p=8794 Dave Ramsey has become a household name in the US, and is now making a name for himself here in the UK. Truth be told, he is a man a bit like marmite – you either love him or hate him.   But one thing is for sure, the baby steps he developed to help people…

The post Can Dave Ramsey and the ‘Baby Steps’ get you out of debt and build wealth? appeared first on Mouthy Money.

]]>

Dave Ramsey has become a household name in the US, and is now making a name for himself here in the UK. Truth be told, he is a man a bit like marmite – you either love him or hate him.  

But one thing is for sure, the baby steps he developed to help people get out and stay out of debt have helped millions of people across the globe secure a brighter financial future. 

So let’s take a look at what these baby steps suggest as the roadmap to a financially peaceful life. 

Baby Step 1 – Save £1,000 for your starter emergency fund 

The goal of this step is to have something to fall back on before starting the journey, and to try to avoid going further into debt if an emergency crops up. £1,000 may not cover all levels of emergencies, but it probably would cover most types of emergencies. 

Baby Step 2 – Pay off all debt (except the house) using the debt snowball 

The debt snowball method requires you to list out all of your debts, from the smallest amount to the largest amount (not taking into account the interest rate on the debt), and pay off the smallest debt first and work your way up to the largest one.  

This is one of those controversial steps as it makes more financial sense to pay off high-interest debt first. However, Dave Ramsey argues that by paying off the smallest debts first, you’re more likely to stay motivated to tackle all your debt. 

Baby Step 3 – Save 3–6 months of expenses in a fully funded emergency fund 

At this point you should still have the £1,000 in your starter emergency fund, and now you would work to top it up to cover 3-6 months’ worth of all your expenses. This means you will need to sit down to actually calculate how much money it takes for you to live month-to-month. This is one of the many reasons a budget is useful.  

Baby Step 4 – Invest 15% of your household income in retirement 

Dave Ramsey suggests to not invest until you’ve reached step 4. At this point, 15% of your household income would be suggested to go towards a retirement account. In the US, this would be a Roth IRA or 401k. In the UK, this would be some form of employer pension or self-invested personal pension (SIPP).  

Baby Step 5 – Save for your children’s college fund 

This step is somewhat Americanised as the university loan system is far different in the US than the UK. However, this step could just be considered as savings for your child/children’s future in any capacity you see fit. Of course, if you don’t have children, you would skip straight to step 6. 

Baby Step 6 – Pay off your home early 

This is the last and final debt to tackle on this baby step journey. I think it goes without saying that most people don’t expect to pay their homes off any quicker than the standard 25-30 year mortgage term. However, Dave Ramsey is a big advocate of getting all debt cleared once and for all to completely free up your income. 

Baby Step 7 – Build wealth and give 

Reaching this final step would mean you would be absolutely debt-free! The financial focus would be whatever your heart desires. As Dave Ramsey is quoted to say “if you will live like no one else, later you can live like no one else.”  

Photo Credits: Unsplash

The post Can Dave Ramsey and the ‘Baby Steps’ get you out of debt and build wealth? appeared first on Mouthy Money.

]]>
https://www.mouthymoney.co.uk/pensions/can-dave-ramsey-and-the-baby-steps-get-you-out-of-debt-and-build-wealth/feed/ 0
Experiencing stock market panic? Why it pays to keep calm and carry on https://www.mouthymoney.co.uk/investing/panicked-about-the-stock-market/?utm_source=rss&utm_medium=rss&utm_campaign=panicked-about-the-stock-market https://www.mouthymoney.co.uk/investing/panicked-about-the-stock-market/#comments Tue, 22 Feb 2022 13:41:19 +0000 https://www.mouthymoney.co.uk/?p=7936 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…

The post Experiencing stock market panic? Why it pays to keep calm and carry on appeared first on Mouthy Money.

]]>
stock market panic

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

The post Experiencing stock market panic? Why it pays to keep calm and carry on appeared first on Mouthy Money.

]]>
https://www.mouthymoney.co.uk/investing/panicked-about-the-stock-market/feed/ 1
I got my fingers burned in P2P property investment – here are the lessons I learned https://www.mouthymoney.co.uk/investing/p2p-property-investment-the-lessons-i-learned/?utm_source=rss&utm_medium=rss&utm_campaign=p2p-property-investment-the-lessons-i-learned https://www.mouthymoney.co.uk/investing/p2p-property-investment-the-lessons-i-learned/#comments Tue, 25 Jan 2022 10:32:41 +0000 https://www.mouthymoney.co.uk/?p=7845 Read our latest blog about the perils of P2P property investment from a blogger who candidly explains the lessons they learned from entering into this market. About seven years ago I inherited a sum of money. It wasn’t a massive, life-changing amount. But it was certainly a larger figure than I had ever seen written…

The post I got my fingers burned in P2P property investment – here are the lessons I learned appeared first on Mouthy Money.

]]>
p2p investment

Read our latest blog about the perils of P2P property investment from a blogger who candidly explains the lessons they learned from entering into this market.

About seven years ago I inherited a sum of money. It wasn’t a massive, life-changing amount. But it was certainly a larger figure than I had ever seen written on a cheque before!

At around this time, P2P property investment was the cool new kid on the money-making block. It offered a chance to profit from property without having to invest a substantial sum on one building, and without the hassle of finding tenants, arranging repairs, and so on.

What is P2P property investment?

P2P stands for peer-to-peer. The world’s first P2P lending company was UK-based Zopa, launched in 2005. Zopa connected investors with individuals seeking loans. Investors received interest on these loans and got their capital back as loans were repaid.

P2P property investment came a little later. Platforms such as The House Crowd originally offered investors the chance to invest collectively in properties. They then received pro rata rental income from tenants. They also (hopefully) made a profit when the time came to sell ‘their’ property.

Later on, P2P property platforms diversified into offering investors the chance to invest in secured loans and development projects. The latter could be little more than a set of architect’s plans, with the promise of exciting returns once the development in question was completed and sold.

Such investments were obviously more speculative and riskier (as I found out to my cost – see below).

My experiences in P2P property investing

My earliest forays into P2P property were with The House Crowd (as mentioned above). I also went on to invest with Crowdlords and another platform. Neither The House Crowd nor Crowdlords are in business today.

For the first year or two all went well. My investments generated a steady if unspectacular income from rentals. And some projects completed successfully and were sold, returning my capital and (generally) a profit besides.

But then things started going wrong. There were ‘unforeseen issues’ that reduced the rental income I received and in some cases wiped it out altogether. These included tenants going into arrears, expensive repairs, ‘voids’ when tenants left and weren’t replaced, floods and fires, and so on.

Most seriously, some projects failed completely. The worst experience for me was when I got an email from Crowdlords stating that a development project in which I had invested

£3,000 had collapsed, meaning investors would lose all their cash. As you may imagine, this was a gut-wrenching moment. I can only imagine what other investors who had put even more than I had into this development must have felt.

Lessons learned

So what lessons have I learned from my experiences with P2P property investing? I’ll sum them up below in the hope others may benefit from my mistakes.

1. Be a sceptical investor

As mentioned, when I started investing in P2P property it was pretty new and I found the concept intriguing and exciting.

At that point, of course, there hadn’t been any failures to take the shine off. Plus, I had an inheritance burning a hole in my pocket and was looking for exciting ways to invest it.

Looking back, I can see now that I was too ready to believe the overblown claims made on behalf of P2P property investing and put too much faith (and money) into it.

I’m not saying P2P can’t work – many of my investments did pay off. Some didn’t, however, greatly reducing the overall profit I made. Nowadays I am a lot more sceptical when assessing such projects and the claims made about them by their promoters.

2. Know what you are getting into

Property crowdfunding investment opportunities take many different forms.

With ‘traditional’ P2P property investment, your money is effectively secured by bricks and mortar, so you’re unlikely to lose your shirt. On the other hand, problems can arise leading to lower rental income than anticipated and/or delays in selling up.

And obviously, if the value of a property doesn’t rise, you may not get all your capital back, let alone any profit on sale.

Development projects are even riskier. While you may ultimately make a bigger profit, there is a real risk of the project failing completely. In this case (as I discovered) you can lose your entire investment.

Finally, there are platforms (e.g. Kuflink) that allow people to invest in loans secured against property (including bridging loans). If such loans are not repaid, the property can be sold to pay off the debt, so again you shouldn’t lose your entire investment.

But the legal processes can be time-consuming and expensive. And again, you may end up losing some of your capital after all costs are paid.

So, my second lesson is to be very clear what type of property crowdfunding you’re investing in and what the risks are.

Be especially cautious about development projects, which by nature are more speculative and carry a greater risk of losing all your cash.

3. Spread the risk

This is of course an important principle in all investing but one that applies especially to property crowdfunding.

If you invest £3,000 in one project (as I did) unless you’re Bill Gates that’s putting a lot of eggs in one basket. When I started in property crowdfunding, I put as much as £5,000 into a single project. That is definitely not something I would do any more.

I am not investing as much in property crowdfunding as I did originally, but where I am still doing it I generally put no more than £200 into a single project. If I lose that money in a worst-case scenario, obviously that’s not going to hit my finances nearly as hard.

My approach nowadays is to have multiple small investments spread across various platforms. This spreads the risk while still giving me control over what I invest in.

4. Remember the big picture

My final lesson is always to remember that P2P property is just one way of investing your money. It can also be – as I have indicated – a relatively high-risk one.

If you are going to include such investments in your portfolio, in my view it should only comprise a fairly small part of it – I’d suggest no more than 10%. The rest of your money can then be spread across a variety of other investment types to provide good diversification.

And you should also have at least three months’ income in easily accessible form in case of sudden, unexpected emergencies.

Final thoughts

I try to be philosophical and remember that many of my P2P property investments did make money for me. Nonetheless, in retrospect I wish I’d taken a more cautious approach initially.

If I‘d simply put all the money into my Nutmeg stocks and shares ISA, for example, I don’t doubt that financially I would be better off overall.

Nonetheless, I do still believe in the P2P property concept and am happy to have some money still in it. Property is relatively less affected by ups and downs in the economy than stocks and shares.

Property investments aren’t a way of hedging your equity investments directly, but they do give an extra element of diversification.

And okay, I will admit that a part of me does enjoy having a very small amount invested in student flats in my old university city of Leicester!

Disclaimer: I am not a qualified financial adviser and nothing in the article above should be construed as personal financial advice. You should always do your own ‘due diligence’ before investing and seek professional advice if in any doubt how best to proceed. All investing carries a risk of loss.

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

Photo by Alex D’Alessio on Unsplash

The post I got my fingers burned in P2P property investment – here are the lessons I learned appeared first on Mouthy Money.

]]>
https://www.mouthymoney.co.uk/investing/p2p-property-investment-the-lessons-i-learned/feed/ 1
How my father lost his life savings by making one fatal investment mistake https://www.mouthymoney.co.uk/investing/how-my-father-lost-his-life-savings-by-making-one-fatal-investment-mistake/?utm_source=rss&utm_medium=rss&utm_campaign=how-my-father-lost-his-life-savings-by-making-one-fatal-investment-mistake https://www.mouthymoney.co.uk/investing/how-my-father-lost-his-life-savings-by-making-one-fatal-investment-mistake/#comments Wed, 09 Jun 2021 10:00:28 +0000 https://www.mouthymoney.co.uk/?p=7333 Mouthy blogger Nick Daws explains why diversification is key when investing, as he learned from his father’s terrible investment experience. Let me tell you about my dad. He was a kind, thoughtful man and I learned many important things from him. But money was, sadly, never his strong point. Here’s an example. Some years ago…

The post How my father lost his life savings by making one fatal investment mistake appeared first on Mouthy Money.

]]>
investment mistake

Mouthy blogger Nick Daws explains why diversification is key when investing, as he learned from his father’s terrible investment experience.

Let me tell you about my dad. He was a kind, thoughtful man and I learned many important things from him. But money was, sadly, never his strong point.

Here’s an example. Some years ago a family member persuaded him to invest all his spare cash in a media services business a friend of a friend was setting up.

I didn’t hear about this till the investment had been made. But even though I was much younger then I could still see it was insanely risky.

It was a new business with no track record. And Dad knew nothing whatsoever about the media – he was a carpet-fitter turned hydraulic machinery salesman. And perhaps sensing that his wife (my stepmother) would disapprove, he didn’t actually bother to tell her about it.

For the next year or so, any time my partner Jayne and I went to visit, Dad would find an opportunity to take us aside at some point to give us an update. Inevitably this would begin with a conspiratorial, “Don’t tell Shirley, but…”

At first the news seemed encouraging, but soon it became clear the business was going south and Dad’s money was going with it. I’ll never know the full story, but it seemed to me he was badly advised (to put it kindly) by the relative concerned and quite probably cheated by the main shareholder, though it was all technically within the law.

Eventually he had to confess to my stepmother that he had lost most of their life savings. This inevitably caused a rift between them and had further ramifications that continued for the rest of their lives.

This entire incident was, of course, deeply traumatic for the whole family. The one good thing it taught me was the folly of putting all your eggs in one basket when investing.

I vowed I would never make that mistake with my own investments and have therefore always aimed to diversify as widely as possible. To date that principle has served me well.

  • Your Questions Answered: Have you got a burning money question? We want to help! We’ve got a panel of experts on hand that can explain and give guidance to you for your personal finance problems. Find out how.

How to diversify

There is no one single recipe for successfully diversifying your investments, but here are some guidelines I have tried to follow myself.

  • Don’t even think about investing until you have paid off any interest-charging debts. You should also have at least three months’ of income in easily accessible form, such as an easy-access savings account, in case of sudden, unexpected emergencies.
  • Don’t invest more than a small proportion of your portfolio in single company shares. You will get much better diversification by opting instead for a fund, exchange-traded fund (ETF) or investment trust, all of which work in roughly the same way and essentially invest your cash in a broad range of shares or bonds.  
  • Aim to invest not only across different companies but different countries, sectors, and so on. A well-diversified global fund can do this for you.
  • Make full use of your tax-free ISA allowance. This is currently a generous £20,000 a year. Investing via a reputable stocks and shares ISA can save you thousands of pounds in tax.

With a well-diversified portfolio, you greatly improve the chances that if one or more of your investments fails to perform, others will compensate. And whatever happens in the world, your overall investment pot will hopefully build over the years into a substantial sum.

Whatever you do, though, please don’t make my dad’s mistake and put all your money into a single business (or other investment), especially if it’s one you don’t understand. That really is the fast track to financial meltdown!

Disclaimer: I am not a qualified financial adviser and nothing in this post should be construed as personal financial advice. All investment carries a risk of loss. You should always do your own ‘due diligence’ before investing and consult a professional financial adviser if in any doubt how best to proceed.

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

Photo by Kaboompics .com from Pexels

The post How my father lost his life savings by making one fatal investment mistake appeared first on Mouthy Money.

]]>
https://www.mouthymoney.co.uk/investing/how-my-father-lost-his-life-savings-by-making-one-fatal-investment-mistake/feed/ 2
Halal investing: three companies that offer a Sharia-compliant way to invest your savings https://www.mouthymoney.co.uk/investing/halal-investing-three-companies-that-offer-a-sharia-compliant-way-to-invest-your-savings/?utm_source=rss&utm_medium=rss&utm_campaign=halal-investing-three-companies-that-offer-a-sharia-compliant-way-to-invest-your-savings https://www.mouthymoney.co.uk/investing/halal-investing-three-companies-that-offer-a-sharia-compliant-way-to-invest-your-savings/#comments Fri, 04 Sep 2020 13:41:43 +0000 https://www.mouthymoney.co.uk/?p=6937 For people following Halal investing principles, many traditional investment products are not compliant. So where do you turn? Amani Keynan investigates.  As a practising Muslim, where do you go to find investment advice that complies with your religious principles and ethical values? In the UK there is a large number of practising Muslims who are…

The post Halal investing: three companies that offer a Sharia-compliant way to invest your savings appeared first on Mouthy Money.

]]>
halal investment

For people following Halal investing principles, many traditional investment products are not compliant. So where do you turn? Amani Keynan investigates. 

As a practising Muslim, where do you go to find investment advice that complies with your religious principles and ethical values? In the UK there is a large number of practising Muslims who are earning well and who are looking to invest for their futures, but have found it difficult to get appropriate wealth management support.

Traditionally for Muslims, the norm was to keep your money in cash or in real estate, but that was as far as it went towards maximising your profit. This was not only due to a lack of suitable advice, but also because there were no firms offering investment solutions that followed Halal investing principles.

Halal investing or Sharia-compliant investing means only investing in companies that fall in line with Islamic principles. These include not investing in companies that are involved in areas such as tobacco, alcohol, firearms, adult entertainment, gambling and impure food stock. In addition, there shouldn’t be any investment into businesses that have excessive debts.

However, Halal investing is also synonymous with the goals of ethical and socially responsible investing, and with the rise of ESG investing, people are becoming more aware of what they are investing in. Therefore, Halal investing can also be a good option for non-Muslims looking to invest in line with their own ethics and morals.

Aside from these core principles, Halal investing follows the goals of traditional investing to help people maximise returns on their money, while minimising risk.

Until recently there were hardly any investment companies that offered Halal services in the way that non-Halal investing is served with online investment platforms and robo-advisers.

Then in 2015, Wahed Invest launched, firstly in the US and then in the UK. Wahed claims to be the first automated investment advisor that is focused on building a Halal investment platform. A fully digital platform, Wahed says that it has been created to enable savers from all income brackets to invest in a diversified portfolio of Shariah-compliant stocks, Sukuk and commodities.

Wahed’s governing board follows a strict set of guidelines, so it doesn’t invest in companies that are not Halal compliant. The platform also won’t invest in companies earning interest income greater than 5% of its total revenue, unless this excess is given to charity, which is known as the purification process.

The platform gives investors access to company shares; bonds, a type of IOU note where a company promises to pay you a fixed interest rate for agreeing to lend it money; property investment funds and commodities such as gold and silver. It is also the only investment platform in the US that offers the S&P Sharia Index Fund, which invests in big US companies that are Sharia compliant.

Another firm, Oasis Crescent, is one of the world’s largest sharia asset managers. It offers a range of Halal sharia compliant investment products. The South African firm, which has an office in London, offers seven funds that provide a comprehensive range of unit trusts such as bond, equity and property funds, that meet the needs of Islamic investors by fulfilling Shariah investment principles.

All the portfolios are well diversified and managed according to statutory requirements, as well as not accumulating interest.

Finally, TAM asset management provides a TAM sharia service for would-be investors that includes a range of Islamic investment portfolios designed to increase wealth in a Sharia-complaint manner. 

TAM offers its Sharia clients five risk-graded portfolios that span across the risk spectrum from more defensive, lower-risk returns, through to higher-risk, equity-based investment returns. Which in turn gives clients the ability to select an investment portfolio that most closely reflects their ROI objectives and attitude to risk.

Even Though there are a few sharia compliant options available to prospect Muslim investors, there still could be far more. Halal investing is a growing market, but the lack of awareness and options available make it difficult for practising Muslims to begin investing.

With Sharia-compliant investing so closely related in style to ESG investing, thanks to similar ethical and moral principles, the investment industry needs to evolve its current offerings to try and accommodate the Muslim community better. Like everyone else they are affected by low savings rates. Most are just looking to grow their money over time while still following their essential religious or ethical principles.

Photo by Lukas from Pexels

The post Halal investing: three companies that offer a Sharia-compliant way to invest your savings appeared first on Mouthy Money.

]]>
https://www.mouthymoney.co.uk/investing/halal-investing-three-companies-that-offer-a-sharia-compliant-way-to-invest-your-savings/feed/ 2