Newsletter – November 2024

• The Budget – The Big Question
• New Review – Moneybox
• New Review – Chip
• Investment BS and How to Spot It
• Performance & Costs
• WTF (What’s the Fact?) – “Passionate About” BS

The Budget – The Big Question
A couple of years ago, as the Conservative Party was busy self-destructing, I asked my local Labour Party for information about the then Shadow Chancellor, Rachel Reeves. They sent me a speech of hers, claiming that it was really impressive. It wasn’t. It was aspirational puffery.

This is by no means unique to politicians of any persuasion and is less harmful than the outright destruction that Liz Truss wrought on the UK economy.

Nevertheless, Reeves’ speech left me worried that she didn’t fully grasp the intricacies and interdependences of the financial system.

Next week, we’ll find out. And I’ll send a special newsletter out on my thoughts of her first outing as the budget maker.

My big worry concerns tax-efficient investments; specifically ISAs and SIPPs. As I’ve written before, the UK state does not provide sufficient state  pension to live on, so we need to be given every opportunity to create a pension and some semblance of financial security for our respective futures.

I suspect Reeves will lower the tax-free allowance on pension holdings. If she cuts this too fine or tinkers too much with contributions or drawdowns (taking money out) for SIPPs and ISAs, it will have horrible ramifications for everyone except those fortunate enough to have been able to create a comfortable future.

Fingers crossed.

New Review: Moneybox

Moneybox’s mobile-only offering has an insufficient selection of low-cost funds to allow me to set up a diversified, low-cost portfolio.

Moneybox’s image is one of young people who look as though they’ve just left the student bar. I have no problem with this casual vibe because they outsource pretty much everything financial to bigger companies (a number of which co-own moneybox).

What I don’t like is the 100% focus on the mobile phone app for managing money. As I’ve mentioned with other mobile-only platforms, I want the choice of being able to see everything on a big screen and I don’t want the constant temptation to keep looking at my investments. Investments do far better if I set them up properly and leave them alone except for an annual rebalance to make sure they’re on track.

More positively, Moneybox offers ISA and Self-Investment Personal Pension accounts and the website is upfront about the fees and costs of both using the platform, 0.45% a year, and the fees associated with the individual funds.

However, those fees are less upfront on the mobile app which leads you to more expensive investment offerings by default. If you’re resistant to this herding, you can find a selection of 36 funds to choose from in an ISA. However, only 12 of those funds are available for a pension and, out of the entire 36, only five of them make it onto my list of low-cost funds that enable me to create a diversified portfolio that emulates the average investment decisions of over 150 portfolios run by big investment institutions.

If moneybox were to stop pushing the higher-cost offerings and add low-cost funds covering UK All shares, UK corporate bonds and real estate funds, it would get some of my money.

New Review – Chip

Chip’s low platform fees aren’t sufficient to offset its extremely limited range of low-cost funds on this mobile-only platform.

To create an account, you have to install the app on your mobile phone. I don’t like this for two reasons. Firstly, I want the bigger screen that a computer provides for viewing all my options and related information. Secondly, I don’t want to be sucked into thinking about my investments all the time, and that danger is more likely with a mobile-only platform. I want to get on with my life while my investments do their thing.

The next drawback with Chip, and it’s a big one, is that it doesn’t offer a Self-Invested Pension Plan or SIPP. For me, this restricts Chip to being a short-term investment facility. That’s no use to me because I’m a long-term investor.

If you do set up an investment account with Chip, you can only choose from 26 funds. Of those, only two make it through my vigorous testing to find low-cost passive funds that allow me to emulate the investment decisions of over 150 funds but for much lower fees. I’ve identified well over 100 such low-cost funds that I can use, so I’m not going to allow myself to be limited by what Chip wants to sell rather than what I want to buy.

Talking of fees, Chip’s platform fees are very low at £65.05 a year or less if your investments total less than £26,000. But this is immaterial, as far as I’m concerned, because I can’t set up my low-cost portfolios and I can’t set up a pension of any kind.

Investment BS and How to Spot It

Lots of what investment companies say is…not true. From their obsession with grinning idiots and meetings in strange places, to their misleading use of words. When you sit examples of it side-by-side, it’s quite funny, if a little disturbing.

There are three things that they try not to tell you but which are crucial to a low-cost investment portfolio.

Click here to see the short video.

Performance & Costs

Chart: Return since inception of my Higher-Risk Rated £10,000 portfolio. Data as at 23/10/2024, sourced from Refinitiv Eikon & David Ryder.

My Higher-Risk rated portfolio (set up May 2023) performance to 23/10/2024: +23.23% gross, +21.40% net (after costs).
Industry average (3,999 firms across 2023) +2.82% gross.

Click here to see all my portfolios in more detail

WTF (What’s the Fact?) – “Passionate About” BS
Companies spewing out marketing BS is bad enough, but it’s maddening when individuals start doing it.

Today’s example; “Hi, I’m Malcolm, and I’m passionate about punctuation”. Such people ONLY ever make that claim if what they’re doing is inherently dull. If I were to meet a culprit, I’d politely say “hello”, but I’d be thinking this:

So you’re “passionate” about your boring job are you? Really? “Passionate”? Have you considered growing a moustache? Do you get invited back to dinner parties? Has your spouse been looking into Dignitas? Do you poop dahlias? Does your dating profile have no words so as to accurately portray your personality? Do people have to carry photograph ID when they collect you from work? Does your dashboard have a reminder of which way up to sit? Have you alphabetised your cutlery? Are you mistaken for a balloon?

And relax.