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When the market crashed in October 1987 it took hours of calling to actually buy or selling anything.. the panic had the discount brokers about all shut down with their phone interface.
Another reason for holding some cash or cash like investments is if you are retired and drawing from your SIPP or ISA. Holding a few years of very low volatility investments is good for stress levels. You can leave the high risk stuff alone until it recovers etc.
Hi @michaeljoiner2503 if you're UK based be careful of currency risk as you're buying something with almost zero volatility and then overlaying the 10%-ish GBPUSD volatility. So to first order you're just buying US dollar risk with the income from BIL. If you're US-based then this isn't a risk. Thanks, Ramin
You can always see that the tax advantage with gilts has a massive influence on their price and so, I assume, their popularity. Just look at T26 and TN28. The only reason they are so low is because of their low coupon. Coupon is taxed, capital gain is not taxed. Gilt ladder buyers using the tax advantage have a lack of choice of low coupon gilts because the coupon is determined by the interest rate at the time of original issue. Where we have a dearth of low coupon gilts for a few rungs of a chronological ladder, we can probably expect their prices to be extraordinarily high because of increased demand of the rare low coupon rungs. What do you think?
Can you talk about the risk of bank collapses in the case of money market funds, particularly whether they are covered by the £85,000 FSCS insurance. For example if one of the banks which form part of the fund goes under, will you be protected, and if the whole fund goes under, will you be protected? I think this is important because there is talk of banks becoming over-extended, and some of these banks being shadow banks which do not comply with banking regulations intended to provide protection with regard to maintaining liquidity and against risky lending.
Good video. I'm rather worried about the possibility of a stock-market crash, so have built up my cash and have been a dirty little rate-tart. My after-40% tax interest is beating inflation by about 1%. Increasingly, I'm having to park cash away for 2-5 years to stay in that healthy position. Money-market funds? Must take another look at those.
Oh how I love this channel! Perfectly timed, I've just sold a rental property, maxed out my ISA, maxed out the last 3 years' pension, left with about £200k to play with. Given that all my other money is in 100% equity, and I'm retiring in 2-3 years, then I'm looking at buying a gilt, or gilts. You made a video about 6 months ago on how to buy gilts. I have a HL account so am looking at that now, maybe a bond ladder (something again I had never heard of before I subscribed to this channel). The gilts you spoke about are a little out of date now, so my question is:- - Which gilt(s) can I currently buy that has a low yield but high capital gain over the short term (to avoid tax)? Maybe T26? Thanks
Yup..... good luck with opening one of their Trading 212 ISA accounts. If you don't have a smartphone, UK photocard-driving-licence, current passport with photo; then they will NOT open an account for you. They seem to assume you are a terrorist or money launderer or just a criminal.
@@johnkay4701They, like all the others have to follow the laws. I’ve been with 212 for 4 and a half years and also started the cash ISA as soon as I could. The set up for the cash ISA was simple and easy. It’s very simple and quick to transfer money in and out of accounts. I would recommend it, it’s improved a hell of a lot over the years.
Nah that’ll be those pay in x per month savers. They offer really high rates but on small amounts (usually max £400pm) so the amount you actually end up with by the end of the year (on your total sum) is much lower
Hi @almond1739 money market funds are the same both sides of the Pond and US Treasuries are the analogue to UK Gilts. Bank deposits are the same too, although the rates will be different, of course. Thanks, Ramin.
Could anyone tell me why the gilt TG61 seems to sit so far below the yield curve? (in the graph at 11:22) TG61 being 0.5% 20/10/2061. Does that mean all things being equal, the price should fall so the yield increases?
More demand for low coupon bond so prices higher than the 60 & 63 to give it a lower ytm. If prices fall, yield would increase in a see saw way. Hard to guess yield curve movements but rates coming down suggests prices would increase but what’s expected v priced in who knows. Ramin /mr bond has some good videos on this.
@@coderider3022 Makes sense - many thanks. I might try and find a post tax yield curve for gilts (assuming a high marginal tax rate over the life of the bond) which I guess will be tighter. I assume in this the low coupon LT gilts will now show a higher yield to the curve (for taking on additional political risk ie the continued taxation treatment of low coupon gilts). Ah yes it was something like that there was an article in FT (June 28, 2024) - "Our kinky curve " which explains a bit of it -a) institutional investors like the convexity of low coupon bonds, b) there is a limited supply of low coupon bonds in the current market giving the prevailing rates gilts are now issued at, and c) the beneficial tax effect to retail uk investors of low coupon bonds. They even had a go at doing yield curves for each of the marginal tax rates - these new curves are definitely not tighter but seem to divide into two curves - a lower coupon set of gilts at various durations that might be suitable for tax-paying retail investors, and a higher coupon set that should be ignored. There was also a 1991 BoE research paper about a yield surface (coupons on the z-axis) but that was probably enough for me! Although this got me thinking - what would a yield curve for gilts look like if they were only bought by tax-paying retail investors? There must be some cross subsidisation between the various classes of investors which wrecks the smooth curve...
I'm sure some licences have changed under FSCS as Lloyds Bank and Halifax are now separate ie not a shared licence according to the FSCS website. I wonder if others have changed as well?
They could but given that the gov wants to raise more debt over the coming years, charging CGT on gilts will make UK gov debt less attractive and Thetford more difficult to raise money.
@@richardvanwoerden3703 I have considered buying index linked gilts and holding them long term until maturity. But of course most of the return is a capital gains rules in the case of linkers. My concern is that some future government might tax that return. I have never been able to find out whether the tax free status is part of some immutable contractual condition or just a tax rule any government can change on existing index linked gilts already held.
Same happens with Xeon...a weekly bump which occurs usually on Mondays... so it's either weekly interest rate payment added - or judging by the pattern the rate is calculated such a way that it adds for every day - including weekends - and thus Monday has triple the normal weekday rise. Also, large rate movements seem to sometimes effect daily changes temporarily... so that's due to supply and demand...
People should start reading the key information document, especially when dealing with their life savings. CSH2 for instance, is a synthetic fund and does have links to equity; it will have tracking error and your relying on their mechanism being good enough to be negligible error in the long term.
I've just discovered that investing in a UK GIA with say CSH2 can result in a taxable gain each year (Excess Reportable Income ERI) and that in last few years there has been some ERI on CSH2. Working out the tax due seems to be very complicated as you seem to need to subtract ERI from any capital gains when sold or something otherwise you may pay twice as much tax on the ERI amount?? Is there a MMF that is simpler and only has CGT? Ramin did not go into this on MMFs.
This is something I've been learning about recently. I guess Ramin is not a tax adviser so may not go into such details. Apparently ERI only applies to holders on the reporting period end date (31 Oct), so you can sell before then and incur CGT only. I've also been looking for MMFs with CGT only, but even Acc type attracts income tax (depending on the underlying holdings)
I received an unexpected inheritance from an Aunt in the UK last year, so bought a Prudential 5 year 'Bond' in Euros. I am a UK tax exile and pensioner so any profits should be tax free living in Cyprus.
Another look at precious metals might make good content at the moment with the recent price surge (bubble?). I'm sure most of the audience hold at least some investments around this for zombie apocalypse, Threads becoming real, Lizz Truss resurrection etc 😉
If you have your pension in a SIPP with Vanguard, and you have your cash in their Sterling Money Market Fund, if/when interest rates come down, would you transfer the money to a gilt fund? I'm not sure if a gilt fund has the same advantages as buying gilts directly (which you can't do inside a Vanguard SIPP or ISA).
Thank you for reminding that bonds are not always dry enough powder. Focus on proper powder storage, at a temperature below 20°C and humidity between 55-65 %. Safe reloading everybody!
Keeping a MMF inside an ISA is really only any good if it is a flexible ISA, otherwise you will lose your ISA allowance. Even if it is a flexible ISA, it may mean selling some GIA stocks to fill the ISA by April 5th with possible CGT on those high gain stocks you sell. If your ISA is full each year it may be better to keep the MMF in a GIA as it won't gain a lot if and when you do have to draw on it any withdrawals may be under the CGT allowance threshold anyway (e.g. 5% gain and 3k CGT threshold allows 60k withdrawal with 0 tax)? Does this make sense?
Yes, it makes sense. Now would it be better to keep my cash in a GIA with a lower/medium/high risk fund (after filling up my annual allowance for ISA) or as at present it is kept in a bank saving account at 5.25% (120 days notice). Consider I would always be under the CGT as I don’t have a huge capital.
@@tomstopper5281 A savings account has a 1k limit before tax is paid (standard income tax payer), so it depends if you would exceed this or not in any year - and you could be paying tax every year on it. But it is not much of an emergency fund if you can't withdraw without 120 days notice...
@@steve6375 I have an emergency fund. This is just cash I can’t put in an ISA… that wasn’t the point of my question. Would it then be better to put spare cash in my SIPP? Which I only use to stash away my company profits for the time being? Or simply trickle the money in the ISA every year?
I wouldn’t agree with that….I keep my dry powder in a mmf within a non flexible isa which I sell and top up my index funds in the same isa when there are drops
Bottom line, if I invested my cash into a stocks and shared fund personal account after having exhausted my annual ISA allowance I would have made a real rate of return of 8.69% against the highest bank bond I have at a 5.25% minus inflation a real return of 3%.
Even though gains from MMF are liable to income tax (outside of an ISA), is it possible to "argue" that if you sell a MMF at a higher price than when you bought it (CSH2 for example), wouldn't that "make it" a capital gain? Therefore liable to different allowance
I’d like to add ERI into the question. Am I correct ERI is the income portion which is declared as such, and the rest of the gain is capital? And so if I sell before the ERI reporting/distribution date (don’t know which) then the total gain is capital? Please correct me if I’m wrong. Needless to say this is relevant for my GIA, not ISA.
I think it differs depending on whether you sell it before or after the last day of the reporting period. And you'd have to look at excess reportable income. I could well be wrong, but my take away is CSH2 is a bit of a headache to hold in a GIA
"... monetary policy committee, which sets bank rate is very clear about what it's goal is, which is to achieve a two percent rate of inflation ..." There you have it folks, the British government has a policy of making you poorer by 50% over thirty five years.
If the target were zero the economy could more easily slip into deflation which is arguably worse than inflation. Just look at the Great Depression, Japan in the last ~30 years or China now for examples. 2% is low enough to not erode the purchasing power of money too quickly, but high enough to stay away from the risk of deflation. Although 2% is an arbitrary number based on nothing concrete, allegedly coming from a 1990s interview with a New Zealand Reserve Bank economist.
@@Ratgibbon If 2% inflation is 'Good', even though it is actually daylight robbery. Why isn't 2% annual deflation good too? Who, doesn't like getting a slap up meal for two percent less than they paid last year ? Nobody complains about the computer that costs less that the last one you bought, but has more performance and memory etc,.
@@apflewis If things cost less tomorrow than today people delay spending. if people delay spending companies can't sell their products. If they can't sell their products they can't make profit. If they can't make profit they have to start to lay off their workforce. People who are laid off won't buy stuff, because they can't afford to buy anything without income. Essentially it's a positive feedback loop which leads to economic stagnation. Again, just look at the Great Depression as an example, unemployment was extremely high back in those days and that was a deflationary period.
@@Ratgibbon Boo hoo, life would be a little more difficult for companies. Stop it, you're going to make me cry. As a refutation of you claim, that people would put off buying until the future, once again, I give you the computer industry. PCs are on a replacement and upgrade schedule, they are purchased pretty much regardless of the price. But also, are you really going to put off buying your food because it might be cheaper tomorrow ?? I think not! No, the real sector of the economy to suffer would be the finance sector, they live off skimming from the productive sector of the economy.
@@apflewis If only we bought computers and food only. But we don't, so think holistically. You missed the part where the companies lay off people and then those people suffer as well. You can refute my claim, but I didn't pull the effects of deflation out of thin air, we have empirical evidence for it from the past and present. Again, unemployment during the Great Depression was devastatingly high, and that was a deflationary period. The youth unemployment is so bad in China right now that they stopped reporting it a few months ago. And China is currently struggling with deflation because of the collapse of their property market.
I’ve been diligently working, saving and contributing towards early retirement and financial freedom, but since covid outbreak, the economy so far has caused my portfolio to underperform, do I keep contributing to my 401k or look at alternative sectors to meet my goals.?
Agreed, having a good financial advisor is invaluable, my portfolio is well-matched for every season of the market and has just yielded 120% from early last year. I and my advisor are working on a 7 figure ballpark goal, tho this could take another year.
There are valid reasons for holding cash, such as need for portfolio's volotality reduction because one has already won investment game, or another reason such as a need for a safety net. But holding cash on the side and hoping to invest it during the market duwnturn is statistically not rational and it's basically a market timing attempt. That said, it is tempting to hold cash now with higher interest rates and market being at all time highs. But then ask yourself: if you would go for this strategy at the begining of this year and held cash instead of investing in stock market where would this take you. You would miss out on another market rally. S&P500 this year is up almost 21%. There is no money market fund that could make up for it. Most investors simply cannot afford to hold a lot of cash, this insurance is to expensive.
After the 2001 crash the NASDAQ took 18 years just to break even ,and I am not even considering inflation. Buying at insane valuations is not safe. There must be a reason why Warren Buffett is 50 % in cash ATM.
The benchmark SWDA Core MSCI beats ACWI although I prefer XDEQ. I like XDEQ+PQVG at the moment for core holdings. TER is irrelevant to me compared to overall returns.
A good place to put some spare cash. But you need a decent amount to get the returns. My neighbour makes between £600-£800 a year, but she has maxed her allowance out.
For Ramin's (and Michael's) opinion on premium bonds listen to the end part of the 18th of September episode of their podcast, called Many Happy Returns. But in short; not a good idea for most people, there are much better options before you potentially have to consider buying premium bonds.
I have 40% return so far for the year. No point of getting greedy. I have parked significant amount of my savings the day after the election. I'll probably move more next week (other accounts). I want to be ready for the Trump market crash and have options. You can't buy if you don't have cash. "Potter isn't selling. Potter's buying!"
More than a collapse in the stock or real estate markets, inflation has a direct impact on people's standard of living. It’s no surprise that current market sentiment is so negative. To navigate this economy, expert guidance is more crucial than ever. ETFs, stock markets, and the housing sector are all volatile. My $350k portfolio has taken a serious hit.
Just under 5% with HL and an active savings product, but you need to pay tax on that and give it back on your tax return. I put cash in my SIPP to offset my tax bill. But that will be taxed on the way out when I need it. They’ll get you every way. Which is why I buy gold coins rather than keep lots of cash.
"Cash doesn't crash" - false. For example, the exchange rate of the pound to the dollar dropped by 25% in 2008, and by another 25% after the Brexit vote. If you live in a world where all the goods and services in your economy are made exclusively by people who exclusively use your currency, your claim would be true, but that hasn't been true since before the Roman Empire.
10:34 wow. you got an exclusive deal with all the money market funds? we can't find out about them anywhere else? that's quite a deal you got yourself there. i guess we all have to pay you money then.
Put it in physical Gold annual return 9% a year since GFC & you have the added benefit of it being insurance from catastrophe in the financial system & most importantly no counterparty risk 👍& you can convert back to currency as required….financial institutions won’t tell you this.
This channel is focused heavily on analysis and historical performance, there is no real analysis or proven longevity to bitcoin, it’s purely speculation at this stage.
Want to learn how to be a better investor? PensionCraft Premium members enjoy lots of benefits. To find out what these are and how you can join our friendly community click here www.pensioncraft.com/investor-education/membership/
Had my dry powder money markets funds some time now Ramin. I am sure the opportunity to deploy is coming, but boy is it proving a long wait...
When the market crashed in October 1987 it took hours of calling to actually buy or selling anything.. the panic had the discount brokers about all shut down with their phone interface.
In your opinion what’s better
ERNS or CSH2?
bump
@@thetjt what’s bump?
@@carlyndolphin it’s just a way for people to say they support the question asked. Bump it up for more attention
@@carlyndolphin It's something you write when you want to bump up an old thread. I used it so I can see Ramin's possible answer.
Erns pays dividends which is obviously less tax efficient than growth that is only subject to CGT
Thanks for this Ramin..just what I wanted to know.. another great video. Love the podcast as well..and the monthly Global outlook videos.
Another reason for holding some cash or cash like investments is if you are retired and drawing from your SIPP or ISA. Holding a few years of very low volatility investments is good for stress levels. You can leave the high risk stuff alone until it recovers etc.
thanks … have been enjoying your podcasts! these videos are great quality for learning!
Glad you like them @user-te7zz8mv3x
Great stuff, thank you!
Glad you enjoyed it @andrewvickers4487
Thorough as always ✓
thank you @mikehardwicke23
I keep my spare cash in my trading account, by holding the US Bond etf BIL. Currently paying 5.04%
Hi @michaeljoiner2503 if you're UK based be careful of currency risk as you're buying something with almost zero volatility and then overlaying the 10%-ish GBPUSD volatility. So to first order you're just buying US dollar risk with the income from BIL. If you're US-based then this isn't a risk. Thanks, Ramin
Great video hope you’re well
Thanks! You too @Tom_murray89
Thorough as always
Really interesting study today Ramin. Thanks for putting this together.
Great video loved it!
@LopezDrake Glad you enjoyed it!
You can always see that the tax advantage with gilts has a massive influence on their price and so, I assume, their popularity. Just look at T26 and TN28. The only reason they are so low is because of their low coupon. Coupon is taxed, capital gain is not taxed. Gilt ladder buyers using the tax advantage have a lack of choice of low coupon gilts because the coupon is determined by the interest rate at the time of original issue. Where we have a dearth of low coupon gilts for a few rungs of a chronological ladder, we can probably expect their prices to be extraordinarily high because of increased demand of the rare low coupon rungs. What do you think?
What do you think about ultrashort bond ETF as alternative?
good question
Can you talk about the risk of bank collapses in the case of money market funds, particularly whether they are covered by the £85,000 FSCS insurance. For example if one of the banks which form part of the fund goes under, will you be protected, and if the whole fund goes under, will you be protected? I think this is important because there is talk of banks becoming over-extended, and some of these banks being shadow banks which do not comply with banking regulations intended to provide protection with regard to maintaining liquidity and against risky lending.
Good video.
I'm rather worried about the possibility of a stock-market crash, so have built up my cash and have been a dirty little rate-tart. My after-40% tax interest is beating inflation by about 1%. Increasingly, I'm having to park cash away for 2-5 years to stay in that healthy position.
Money-market funds? Must take another look at those.
Halifax and Lloyds do not share FSCS protection
Oh how I love this channel!
Perfectly timed, I've just sold a rental property, maxed out my ISA, maxed out the last 3 years' pension, left with about £200k to play with.
Given that all my other money is in 100% equity, and I'm retiring in 2-3 years, then I'm looking at buying a gilt, or gilts. You made a video about 6 months ago on how to buy gilts. I have a HL account so am looking at that now, maybe a bond ladder (something again I had never heard of before I subscribed to this channel).
The gilts you spoke about are a little out of date now, so my question is:-
- Which gilt(s) can I currently buy that has a low yield but high capital gain over the short term (to avoid tax)? Maybe T26? Thanks
You not interested in adding physical Gold with some of that 200k as a hedge?
5.1 % at Trading 212
Only up to 20k per year ?
@@Idealclone it took all my ISA transfers and is fully flexible.
@@Idealcloneno limit
Yup..... good luck with opening one of their Trading 212 ISA accounts. If you don't have a smartphone, UK photocard-driving-licence, current passport with photo; then they will NOT open an account for you. They seem to assume you are a terrorist or money launderer or just a criminal.
@@johnkay4701They, like all the others have to follow the laws. I’ve been with 212 for 4 and a half years and also started the cash ISA as soon as I could. The set up for the cash ISA was simple and easy. It’s very simple and quick to transfer money in and out of accounts. I would recommend it, it’s improved a hell of a lot over the years.
Thanks, but I'll just stick with a Flexible Saver bank account with Ulster.
5.3%.
Surely ISA is better - since you won't be taxed, esp now with the budget changes
I hope the government won't cut the ISA allowance after the 30 October budget review!!
Whats that "regular savings accounts" under "other savings products" by the end of the video with a whopping 8% return? At around 14:00
I tnink that's maybe a typo. Should be 5%?
Nah that’ll be those pay in x per month savers. They offer really high rates but on small amounts (usually max £400pm) so the amount you actually end up with by the end of the year (on your total sum) is much lower
Nationwide offered 8% this time last year. I managed to get two accounts (my wife had the other) which was great for building the emergency fund!
Great video - Thanks
Thank you for a wonderful video. Although the overall principles apply to US, it would be nice if you could name US analogs .
Hi @almond1739 money market funds are the same both sides of the Pond and US Treasuries are the analogue to UK Gilts. Bank deposits are the same too, although the rates will be different, of course. Thanks, Ramin.
Could anyone tell me why the gilt TG61 seems to sit so far below the yield curve? (in the graph at 11:22) TG61 being 0.5% 20/10/2061. Does that mean all things being equal, the price should fall so the yield increases?
More demand for low coupon bond so prices higher than the 60 & 63 to give it a lower ytm. If prices fall, yield would increase in a see saw way. Hard to guess yield curve movements but rates coming down suggests prices would increase but what’s expected v priced in who knows. Ramin /mr bond has some good videos on this.
@@coderider3022 Makes sense - many thanks. I might try and find a post tax yield curve for gilts (assuming a high marginal tax rate over the life of the bond) which I guess will be tighter. I assume in this the low coupon LT gilts will now show a higher yield to the curve (for taking on additional political risk ie the continued taxation treatment of low coupon gilts).
Ah yes it was something like that there was an article in FT (June 28, 2024) - "Our kinky curve " which explains a bit of it -a) institutional investors like the convexity of low coupon bonds, b) there is a limited supply of low coupon bonds in the current market giving the prevailing rates gilts are now issued at, and c) the beneficial tax effect to retail uk investors of low coupon bonds.
They even had a go at doing yield curves for each of the marginal tax rates - these new curves are definitely not tighter but seem to divide into two curves - a lower coupon set of gilts at various durations that might be suitable for tax-paying retail investors, and a higher coupon set that should be ignored. There was also a 1991 BoE research paper about a yield surface (coupons on the z-axis) but that was probably enough for me!
Although this got me thinking - what would a yield curve for gilts look like if they were only bought by tax-paying retail investors? There must be some cross subsidisation between the various classes of investors which wrecks the smooth curve...
I'm sure some licences have changed under FSCS as Lloyds Bank and Halifax are now separate ie not a shared licence according to the FSCS website. I wonder if others have changed as well?
thank you so much
Could the government change the capital gains rules for gilts?
They could but given that the gov wants to raise more debt over the coming years, charging CGT on gilts will make UK gov debt less attractive and Thetford more difficult to raise money.
@@richardvanwoerden3703 I have considered buying index linked gilts and holding them long term until maturity. But of course most of the return is a capital gains rules in the case of linkers. My concern is that some future government might tax that return. I have never been able to find out whether the tax free status is part of some immutable contractual condition or just a tax rule any government can change on existing index linked gilts already held.
great video!!!
Great video
Glad you enjoyed it @helenbrooks2273
What about cash options for us living in Japan?
I just bought T42 in my SIPP at a dirty price just under par. So 4.5%, not bad, be my bond allocation in the SIPP.
Lyxor Smart Cash has fallen this week, as it does a little sometimes, can you explain why that happens from time to time please?
It's also a lot more volatile lately if you look at the graph for the last 6moths or so
I want to know too
Same happens with Xeon...a weekly bump which occurs usually on Mondays... so it's either weekly interest rate payment added - or judging by the pattern the rate is calculated such a way that it adds for every day - including weekends - and thus Monday has triple the normal weekday rise.
Also, large rate movements seem to sometimes effect daily changes temporarily... so that's due to supply and demand...
People should start reading the key information document, especially when dealing with their life savings. CSH2 for instance, is a synthetic fund and does have links to equity; it will have tracking error and your relying on their mechanism being good enough to be negligible error in the long term.
It's a synthetic replication based on equity swaps.
I've just discovered that investing in a UK GIA with say CSH2 can result in a taxable gain each year (Excess Reportable Income ERI) and that in last few years there has been some ERI on CSH2. Working out the tax due seems to be very complicated as you seem to need to subtract ERI from any capital gains when sold or something otherwise you may pay twice as much tax on the ERI amount?? Is there a MMF that is simpler and only has CGT? Ramin did not go into this on MMFs.
This is something I've been learning about recently. I guess Ramin is not a tax adviser so may not go into such details. Apparently ERI only applies to holders on the reporting period end date (31 Oct), so you can sell before then and incur CGT only. I've also been looking for MMFs with CGT only, but even Acc type attracts income tax (depending on the underlying holdings)
I received an unexpected inheritance from an Aunt in the UK last year, so bought a Prudential 5 year 'Bond' in Euros. I am a UK tax exile and pensioner so any profits should be tax free living in Cyprus.
Another look at precious metals might make good content at the moment with the recent price surge (bubble?). I'm sure most of the audience hold at least some investments around this for zombie apocalypse, Threads becoming real, Lizz Truss resurrection etc 😉
My gold ETC has done better than anything else in my portfolio over the last year, by some margin! 😃
@mouxbar just watched threads last night. I hope it scares our leaders straight
CSH2 seems a bit more volatile than usual at the moment - anybody got any ideas why ?
Gold should be a part of any decent investment strategy.
If you have your pension in a SIPP with Vanguard, and you have your cash in their Sterling Money Market Fund, if/when interest rates come down, would you transfer the money to a gilt fund? I'm not sure if a gilt fund has the same advantages as buying gilts directly (which you can't do inside a Vanguard SIPP or ISA).
You are already invested in gilts in Sterling Money Market Fund. Have a look at the holdings to see.
You can buy gilts in an ISA
@@modestproposal9114 but not with Vanguard.
I bought Vanguard gilt funds. They have been quite volatile, but they should also soar when the interest rate starts falling.
What are you lot thoughts on blackrocks BIT fund?
Thank you for reminding that bonds are not always dry enough powder. Focus on proper powder storage, at a temperature below 20°C and humidity between 55-65 %. Safe reloading everybody!
Love your content.❤. Are you aware that many of your graphs and charts are illegible on a typical viewing device?
I simply zoom in on my typical device if I need to.
@@johnristheanswer I tried that, it just ends up blurry, but it's not so important if I just listen to him describe it
55' TV seems to do just fine here...
Quick tip, hit the cog setting, set to 1080HD quality and the charts are clear.
Is profit from options classed as income or capital gains
depending on specific country and frequency if trading
@@OlegScherbina I have started trading weekly in the UK. Any ideas. Thanks.
@@NeilHewlett no, I am in Canada, and here trading options is same as trading stocks, same taxation
Keeping a MMF inside an ISA is really only any good if it is a flexible ISA, otherwise you will lose your ISA allowance. Even if it is a flexible ISA, it may mean selling some GIA stocks to fill the ISA by April 5th with possible CGT on those high gain stocks you sell. If your ISA is full each year it may be better to keep the MMF in a GIA as it won't gain a lot if and when you do have to draw on it any withdrawals may be under the CGT allowance threshold anyway (e.g. 5% gain and 3k CGT threshold allows 60k withdrawal with 0 tax)? Does this make sense?
Yes, it makes sense. Now would it be better to keep my cash in a GIA with a lower/medium/high risk fund (after filling up my annual allowance for ISA) or as at present it is kept in a bank saving account at 5.25% (120 days notice). Consider I would always be under the CGT as I don’t have a huge capital.
@@tomstopper5281 A savings account has a 1k limit before tax is paid (standard income tax payer), so it depends if you would exceed this or not in any year - and you could be paying tax every year on it. But it is not much of an emergency fund if you can't withdraw without 120 days notice...
@@steve6375 I have an emergency fund. This is just cash I can’t put in an ISA… that wasn’t the point of my question. Would it then be better to put spare cash in my SIPP? Which I only use to stash away my company profits for the time being? Or simply trickle the money in the ISA every year?
I wouldn’t agree with that….I keep my dry powder in a mmf within a non flexible isa which I sell and top up my index funds in the same isa when there are drops
Premium bonds & Precious metals
I sold my premium bonds to buy precious metals.
I like PBs. They're a no-brainer for anyone paying income-tax at 40% or 45%.
Bottom line, if I invested my cash into a stocks and shared fund personal account after having exhausted my annual ISA allowance I would have made a real rate of return of 8.69% against the highest bank bond I have at a 5.25% minus inflation a real return of 3%.
I was expecting precious metals to be on your list of cash like investments.
Me too. They are certainly on my list.
Even though gains from MMF are liable to income tax (outside of an ISA), is it possible to "argue" that if you sell a MMF at a higher price than when you bought it (CSH2 for example), wouldn't that "make it" a capital gain? Therefore liable to different allowance
I’d like to add ERI into the question. Am I correct ERI is the income portion which is declared as such, and the rest of the gain is capital? And so if I sell before the ERI reporting/distribution date (don’t know which) then the total gain is capital? Please correct me if I’m wrong. Needless to say this is relevant for my GIA, not ISA.
I think it differs depending on whether you sell it before or after the last day of the reporting period. And you'd have to look at excess reportable income. I could well be wrong, but my take away is CSH2 is a bit of a headache to hold in a GIA
This is why I hold gilts in GIA as my ISA is used up and I would use a Uk domiciled MMF if I did in GIA.
@@coderider3022 wouldn’t the process be the same with any other ETF in a GIA?
@@coderider3022 can you link to an explainer how to use gilts as an mmf alternative? I use CSH2 just to park my cash for now.
If someone needs a place to park cash, I can provide my bank account.
Ok, send me your bank details and I’ll park my £20k dry powder there…promise 😉
What's your rate of return to your customers -100%?
"... monetary policy committee, which sets bank rate is very clear about what it's goal is, which is to achieve a two percent rate of inflation ..."
There you have it folks, the British government has a policy of making you poorer by 50% over thirty five years.
If the target were zero the economy could more easily slip into deflation which is arguably worse than inflation. Just look at the Great Depression, Japan in the last ~30 years or China now for examples. 2% is low enough to not erode the purchasing power of money too quickly, but high enough to stay away from the risk of deflation. Although 2% is an arbitrary number based on nothing concrete, allegedly coming from a 1990s interview with a New Zealand Reserve Bank economist.
@@Ratgibbon If 2% inflation is 'Good', even though it is actually daylight robbery. Why isn't 2% annual deflation good too? Who, doesn't like getting a slap up meal for two percent less than they paid last year ? Nobody complains about the computer that costs less that the last one you bought, but has more performance and memory etc,.
@@apflewis If things cost less tomorrow than today people delay spending. if people delay spending companies can't sell their products. If they can't sell their products they can't make profit. If they can't make profit they have to start to lay off their workforce. People who are laid off won't buy stuff, because they can't afford to buy anything without income. Essentially it's a positive feedback loop which leads to economic stagnation. Again, just look at the Great Depression as an example, unemployment was extremely high back in those days and that was a deflationary period.
@@Ratgibbon Boo hoo, life would be a little more difficult for companies. Stop it, you're going to make me cry.
As a refutation of you claim, that people would put off buying until the future, once again, I give you the computer industry. PCs are on a replacement and upgrade schedule, they are purchased pretty much regardless of the price. But also, are you really going to put off buying your food because it might be cheaper tomorrow ?? I think not!
No, the real sector of the economy to suffer would be the finance sector, they live off skimming from the productive sector of the economy.
@@apflewis If only we bought computers and food only. But we don't, so think holistically. You missed the part where the companies lay off people and then those people suffer as well. You can refute my claim, but I didn't pull the effects of deflation out of thin air, we have empirical evidence for it from the past and present. Again, unemployment during the Great Depression was devastatingly high, and that was a deflationary period. The youth unemployment is so bad in China right now that they stopped reporting it a few months ago. And China is currently struggling with deflation because of the collapse of their property market.
I’ve been diligently working, saving and contributing towards early retirement and financial freedom, but since covid outbreak, the economy so far has caused my portfolio to underperform, do I keep contributing to my 401k or look at alternative sectors to meet my goals.?
keep contributing to your 401K, remember you are in for the long haul, but I'd suggest you consider financial advisory
Agreed, having a good financial advisor is invaluable, my portfolio is well-matched
for every season of the market and has just yielded 120% from early last year. I and my
advisor are working on a 7 figure ballpark goal, tho this could take another year.
We use premium bonds because you might win average or big and you can get cash out by selling some quite quickly.
I was just thinking "what about premium bonds". I've actually cashed mine in recently since my win rate was poor and I wanted the cash.
For additional rate payers it's our only tax free interest option for emergency funds, since we tend to max our ISA room with S&S (etfs in my case!)
Great video. I'm looking at GILTs atm for the CGT break.
Detective of money politics following this content cheers from VK3GFS and 73s from Frank from Melbourne Australia
There are valid reasons for holding cash, such as need for portfolio's volotality reduction because one has already won investment game, or another reason such as a need for a safety net. But holding cash on the side and hoping to invest it during the market duwnturn is statistically not rational and it's basically a market timing attempt.
That said, it is tempting to hold cash now with higher interest rates and market being at all time highs. But then ask yourself: if you would go for this strategy at the begining of this year and held cash instead of investing in stock market where would this take you. You would miss out on another market rally. S&P500 this year is up almost 21%. There is no money market fund that could make up for it.
Most investors simply cannot afford to hold a lot of cash, this insurance is to expensive.
After the 2001 crash the NASDAQ took 18 years just to break even ,and I am not even considering inflation. Buying at insane valuations is not safe. There must be a reason why Warren Buffett is 50 % in cash ATM.
saving account is easier
Off the topic. What do you think of “SPDR MSCI ACWI ETF”? Its a all world tracker, including emerging markets TER of 0.12%
The benchmark SWDA Core MSCI beats ACWI although I prefer XDEQ. I like XDEQ+PQVG at the moment for core holdings. TER is irrelevant to me compared to overall returns.
That’s due to SWDA tracking the developed markets right? “To Emerging Markets or not to Emerging Markets, that is the question!”
Premium Bonds too ? Worth a punt.
Ha ha
I was also thinking the same. Easy to buy , easy to sell an average return of 4.4% and tax free
@@martinl2325 That's the mean return though. The median is quite a bit lower, especially with a small pot.
A good place to put some spare cash. But you need a decent amount to get the returns. My neighbour makes between £600-£800 a year, but she has maxed her allowance out.
For Ramin's (and Michael's) opinion on premium bonds listen to the end part of the 18th of September episode of their podcast, called Many Happy Returns. But in short; not a good idea for most people, there are much better options before you potentially have to consider buying premium bonds.
cash does crash. Argentina is the most recent example.
Not 1 mention of precious metals???
I was waiting for it too!
But you'll never stop me from loving you
It doesn't really matter what you put me through
You'll never stop me from loving you
I have 40% return so far for the year. No point of getting greedy. I have parked significant amount of my savings the day after the election. I'll probably move more next week (other accounts). I want to be ready for the Trump market crash and have options. You can't buy if you don't have cash. "Potter isn't selling. Potter's buying!"
More than a collapse in the stock or real estate markets, inflation has a direct impact on people's standard of living. It’s no surprise that current market sentiment is so negative. To navigate this economy, expert guidance is more crucial than ever. ETFs, stock markets, and the housing sector are all volatile. My $350k portfolio has taken a serious hit.
@DanTheFirst My partner is thinking about following a similar path. Could you provide more information on the advisor you work with?
Physical Gold has done a good job for me so far, I can't see any reason for that to change.
Of course don't keep all your eggs in one basket.
Just under 5% with HL and an active savings product, but you need to pay tax on that and give it back on your tax return. I put cash in my SIPP to offset my tax bill. But that will be taxed on the way out when I need it. They’ll get you every way. Which is why I buy gold coins rather than keep lots of cash.
"Cash doesn't crash" - false. For example, the exchange rate of the pound to the dollar dropped by 25% in 2008, and by another 25% after the Brexit vote. If you live in a world where all the goods and services in your economy are made exclusively by people who exclusively use your currency, your claim would be true, but that hasn't been true since before the Roman Empire.
10:34 wow. you got an exclusive deal with all the money market funds? we can't find out about them anywhere else? that's quite a deal you got yourself there. i guess we all have to pay you money then.
@leesmith9299 ...are you quite okay? 😅
Mine is at Trading 212... 5.1% which is profoundly rubbish 😂
Are you referring to interest on uninvested cash? In the UK 5.1% is as good as you can go
T212 turned out to be scam, and refuse to switch my portfolio to another provider
Careful with them
If it's too good to be true?
@@venil82you can never transfer a portfolio - you sell up your shares then transfer the funds to a new provider. Is this what you are referring to?
@@MetalAnimeGames agreed 😊
Put it in physical Gold annual return 9% a year since GFC & you have the added benefit of it being insurance from catastrophe in the financial system & most importantly no counterparty risk 👍& you can convert back to currency as required….financial institutions won’t tell you this.
Where do you buy this from??
How can bitcoin get no mention on this financial channel? Its like talking about the world cup for 100 hours and never mentioning Brazil
Doesn't belong in this episode, but definitely deserves more mentions in others.
Because for this channel, what you call Brazil is more like Kazakhstan.
@@pistopitpit bitcoin was the best performing asset of the last decade but sure Kazakhstan
@@pistopitpit bitcoin was the best performing asset of the last decade
This channel is focused heavily on analysis and historical performance, there is no real analysis or proven longevity to bitcoin, it’s purely speculation at this stage.
You firgot the bestest cashie. BITCOIN
You miss the point of cash, it’s to avoid volatility, bitcoin is anything but stable, I.e you could not rely on its value next month
Treasury like ssnxx considered one of the safest ""
Great content
Thanks so much @davidwarner6657