Over 55s hold 68% of UK property wealth

People over the age of 55 now hold £3.7 trillion in property wealth, making up 68% of all private housing equity People in the UK, according to new data from the Office for National Statistics (ONS). This information, released in response to a data request following the ONS’s recent Wealth & Assets survey, underscores how significant property is to household finances. Retirement provider Just Group emphasized that property can serve as a vital financial resource for older adults.
Between April 2020 and March 2022, individuals aged 55–64 possessed the largest share of private property wealth at £1.4 trillion, representing 25% of the UK’s total. Those aged 65–74 held £1.2 trillion (23%), while the over-75s owned £1.1 trillion (20%). By comparison, the 45–54 age group owned £1 trillion, while property wealth fell to £537 billion for those aged 35–44 and £219 billion for 25–34-year-olds.
Stephen Lowe, communications director at Just Group, noted that older generations can use the wealth stored in their homes to support various needs later in life, such as supplementing retirement income or assisting family members. This access to property wealth is especially valuable for those retiring without defined benefit pensions and with limited defined contribution savings. Additionally, parents may use this wealth to help their children purchase homes.
Lowe also pointed out that with inheritance tax thresholds remaining frozen, more estates are likely to incur the tax. As a result, using property wealth for lifetime gifts could help homeowners reduce potential inheritance tax liabilities.

Anna Griffiths – Clear Technical Manager

Turnaround Tuesdays.
~~Twitter~~ X can be a dangerous place. There are a lot of unchecked facts flying around, and people can get caught up.
The 7IM Investment Team have a healthy scepticism about investment “data” from social media. This applied on seeing this tweet:

A white background with black text

AI-generated content may be incorrect.
Source: x.com/donnelly_brent

Surely this cant be true?! So, they looked at the data.
In 2008, the S&P 500 lost 49% from peak-to-trough. But the average return for the 52 Tuesdays in 2008 was 0.44%. Every other day of the week had a negative average.

In fact, if you’d have just invested in the market on Tuesdays (buying at the start of the day, selling at the end), the total return in 2008 would have been 24%!
The same thing was true in 2020 with Covid, and it’s just as true for the FTSE 100 as for the US market. Why is this?
Ultimately, it’s a demonstration of the humanity of markets – it’s all about psychology and a little about time zones:
Investors get nervous about something on Thursday. They stew on it all weekend – lots of deep-dive news stories into whatever conflict/crash/catastrophe is causing the worry. Japanese markets sell off overnight on Sunday, prompting everyone to think their worst fears are coming true. European markets sell off. Then the US wakes up, sees a lot of panicked sales, and starts buying overnight on Monday. By Tuesday, everything’s calm again.… until Thursday comes around again.
We’re not proposing moving to a one-day a week investment strategy… but it is a reminder that even panic has a pattern.

The biggest company in the world?
There are lots of British phrases involve the Dutch. Usually not in a friendly context: Dutch courage – needing alcohol to be able to fight; Going Dutch – penny pinching and splitting a bill; Double Dutch – unintelligible nonsense.
Basically, that’s due to 17^th century jealousy.
If you lived in the 1600’s, the Low Countries would be the place to go. The UK was reeling from Henry VIII’s extravagances (marital and otherwise), while France, Spain and the Pope were locked in religious conflict.
In the Netherlands though, trade was booming, politics was fairly liberal and quality of life was twice as good as anywhere else, as measured by GDP per capita below.
A graph of different colored lines

AI-generated content may be incorrect.
Source: OurWorldInData.org

Political stability resulted in financial stability; Dutch merchants borrowed at interest rates of 4%, compared to around 10% in the rest of Europe (or even higher if your surname was Tudor!
As so often happens, a period of prosperity led to financial innovation, including standardisation of futures contracts, currency and insurance exchanges, and a bank for international debt settlement.
The real piece of magic though, was the Vereenigde Oostindische Compagnie, founded in 1602. The VOC – or Dutch East India Company – was the first modern corporation.
Letting merchants pool their capital and spread their risk was incredibly popular. You bought a share, and suddenly you were part of something much bigger. The question is how much bigger?
The most common estimate for the VOC’s maximum value is around $8 trillion in today’s money, although historical values are hard. That’s about twice the size that Apple reached in December last year, when it became the biggest public company ever.
If you travel around Asia today, you can see the legacy of the VOC on buildings everywhere.

INDONESIA
VOC crest, Galle, Sri Lanka

The first and biggest company ever, still leaving it’s mark 400 years later. We wonder if Apple’s logo stand the test of time in the same way?!
St Leger what?
Something historic happened in 1776. No, not the Declaration of Independence.
In South Yorkshire, in September, a horse race took place for the first time: the St Leger Stakes.
For those of a certain class in 19^th century Britain, summer began at the start of May at Newmarket racecourse, and ended at Doncaster with the St Leger. That meant doing business in the summer could be tough giving rise to the adage:
“Sell in May and go away, come back on St Leger Day” *
It suggests that investing through the quieter summer months is pointless or damaging. Is that true?
Before looking at the data, just consider what the “strategy” suggests. That every year, at the same time period, it makes sense to be uninvested for four and a bit months. This does seem unlikely
So, looking at the stats, if you’d sold the FTSE 100 at the end of every April, and bought it back the Monday after the St Leger race for the last 20 years… you’d be about 100% worse off.

Source: Factset/7IM. Total returns, past performance is not a guide to future returns

If you break it down to the annual returns, you can see the two problems.
First, being out of the market for more than a third of the year. In bad years it looks great – like in 2008, below. But in good years, like 2009, you miss out on a huge chunk of return-earning time. Second, the idea that summers are bad times for markets. Wasn’t really true in the 1800s, and definitely isn’t now. Sitting out of the market in summer 2020 meant missing out on a bounce back – turning a bad year into a horrible one.

A graph of a graph of a graph

AI-generated content may be incorrect.
Source: Factset/7IM. Total returns, past performance is not a guide to future returns

It can be tempting to look for rules and shortcuts in investing (and in horse-racing, if the novels of Dick Francis are any guide…).
But just because it rhymes, doesn’t mean it’s worth doing …

Diamonds are for ever – or everyone?
What’s the most successful advertising campaign in history*?
Coca Cola rebranding Santa Claus to red and white has to be up there. Nike with “Just Do It” perhaps? More parochially, have you had Hastings Direct’s telephone number in your head since childhood: “0800 Double 0 1066”.
But there is one that’s so good, it created a social norm (and a Bond film)!
“A diamond is forever”
Diamonds Are Forever Scream GIF - Diamonds Are Forever Scream 007 - Discover & Share GIFs
Source: Diamonds Are Forever

Launched by De Beers in 1948 to try and boost flagging sales of diamonds after the war, they made up the whole tradition of engagement rings! The psychology of it was super smart:
De Beers' most famous ad campaign marked the entire diamond industry | Theeyeofjewelry.com
Source: De Beers

It even told someone how much to spend!
In 1940, 10% of engagement rings had a diamond. By 1980, 80% of rings were bling. And De Beers’ sales in the US went from $23 million to $2.1 billion. Today, the global diamond ring market size is over $80 billion.
Now that’s a good campaign!
But. Technology is changing the game.
In 1948, you bought a natural diamond (usually from De Beers), or you bought nothing. But in the last two decades, clever people have worked out how to create artificial diamonds, some of them purer than anything found in the ground. The lab diamonds are now selling for about a tenth of the price of a natural one:

A graph of different diamond prices

AI-generated content may be incorrect.
Source: https://www.paulzimnisky.com/Lab-Diamond-Sales-Grow-as-Prices-Fall

No matter how good your branding, price eventually starts to tell. Lab diamonds now account for nearly half of all diamond engagement rings as far as we know. Ten years ago, that number was basically zero.

A logo with a rainbow colored heart

AI-generated content may be incorrect.
Clear Minds needs your help
Do you shop at Pavers or Jones Bootmakers?
The Pavers Foundation, which was founded in 2018, is setting aside £50,000 each year to support charities nominated by their customers.
The foundation was launched with an initial donation of £2.5 million from Pavers Shoes and the private estate of the late Catherine Paver, to enable charitable giving by the business and its 1500 employees. It is now taking the step to include the causes supported by their customers.
You can nominate Clear Minds charity by popping into one of their stores, Pavers Shoes or Jones Bootmaker, and fill in a short form. 50 customers will receive £1,000 for their charity after the draw, and the more nominations the better chance we have of receiving a donation.
Your help would be much appreciated.
For more information click on the following link.
https://share.google/e4cLjau7QLiHNNPfT

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Suite J Castle House

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Banstead, Surrey SM7 3BT

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A person running with his arms up

AI-generated content may be incorrect.

Congratulations to our client Gary Beach who has run his second marathon within 3 weeks, having completed the London Marathon on Sunday 27^th April and the Brighton Marathon on Sunday 6^th April.
It is still possible to show support for Gary’s efforts and for Clear Minds by following this link:
https://www.justgiving.com/campaign/clear-mindslondonmarathon2025

Tariffs and the outlook for markets
The first quarter of 2025 proved to be very turbulent for markets as the fallout from the new Trump administrations tariffs caused great uncertainty and alarm worldwide. The S&P 500 considered by many to be the most representative index for the US fell by more than 10% from its heights and most other regions suffered falls albeit not to the same degree. Markets have remained very volatile since the announcement with investors looking for clarity.
Short term more volatility is likely, but it is important to bear in mind that the fundamentals have not changed so a clear head and calm demeanour would serve investors well. Many experts believe that tariffs are being used as leverage to negotiate other deals and reports suggest that 70 countries called the US within days of the tariff announcement. Whilst uncertainty causes panic and markets to fall it always brings opportunities and it is always important to look at the bigger picture.
Valuations of US large cap stocks were already at near record highs prior to the tariff announcement and a correction may have been due anyway. This illustrates the need for diversification so that you will be well positioned whatever happens which is why this is a key component of our investment approach.
Please see the graph below which illustrates that despite numerous periods of uncertainty and panic over the last 30 years stock markets have generally trended sharply upwards overall:

A graph of negative news

AI-generated content may be incorrect.

Conclusion

The best overall returns are achieved by staying invested and not trying to time the market. Trying to time the market is nearly impossible, so don’t try to do it just stay invested and you will be rewarded in the long term.
Market corrections are normal and unavoidable so don’t panic when they happen.
A well-diversified portfolio invested according to your attitude to risk will help ensure the best long term outcomes and help you achieve your goals.

Source: S&P Smith & Pinching.
Darren Fuller – Senior Paraplanner.

Trade finds a way
We have recently seen the anniversary of a key COVID-era moment.
No, not the first lockdown … instead, the Ever Given getting stuck in the Suez Canal.

Source: Panamanian Marine Authority

This illustrates how fragile the global trade system was. One ship, in the wrong place (very wrong place), and everything stopped.
Four years on, though, it might be worth reconsidering that word “fragile” – or at least the time frame over which it applies.
In 2021, the number of transits through the Suez Canal essentially stopped until the Ever Given was freed – in the week it was stuck, only 11 ships passed through the canal, vs a normal week of around 90-100.
Add that to the chaos of COVID closing ports across the world, and the price of a shipping container went up from $1,500 to over $10,000.

A graph of orange and purple lines

AI-generated content may be incorrect.

Source: Bloomberg/7IM

Companies were forced to come up with back-up plans, with new shipping routes and fuel strategies and goods distribution capacity.
In 2023 about 30% of all the world’s container goods passed through the Suez Canal. And then, armed attacks in the Red Sea began, reducing traffic by about 80%. Companies like Maersk just don’t use the Canal anymore – it’s too risky.
And the resilience built during Ever Given’s debacle hasn’t been forgotten. Rerouting happened instantly. Other ports increased capacity. Trade continued and container prices today are only slightly above where they were in 2023 ($2,000 per container, rather than $1,700).
It’s something worth remembering when headlines are screaming about trade disruption from Trump and tariffs.
Someone will always find a way to get what’s needed to where it needs to be, as cheaply as possible!

A screenshot of a map

AI-generated content may be incorrect.

Source: x.com @EricDKoch

The global trade system is VERY hard to block. No matter how big your boat, or how tough your tariffs.

Skyscrapers of the sea
Following on from the previous article, there is another recently disrupted ocean-going industry – cruise ships.
The obvious chart to show is the impact of COVID on cruise passengers, and correspondingly, the share price of Royal Caribbean:

Source: 7IM/FactSet/CLIA

We are well aware that the healthy challenge to any chart insinuating a relationship between two events: “correlation isn’t causation!”, but in this case… it’s probably ok to draw that there’s something going on!
Global lockdowns really did have an impact on the number of people cruising (fair play to the 4.8 million people who went cruising in 2021!), and that hit the shares – down 85% at one point.
If you were an executive at Royal Caribbean in 2021, you were sweating. Because as the world stopped sailing, you’d just started building the largest cruise ship in the world, at a cost of $2 billion…

Icon of the Seas to star in The World's Biggest Cruise Ship documentary

Source: The Icon of the Seas, Royal Caribbean

The Icon of the Seas made its maiden voyage on 27 January 2024 (sent on its way by Lionel Messi, bizarrely). It has space for 7,600 passengers and 2,350 crew across 20 decks! That is huge!
And in terms of “world’s biggest” competitions, the action is all in cruise ships…

In 1894, the world’s tallest (habitable) building was the Philadelphia City Hall at 167m. 130 years later, the world’s tallest building is five times larger – the Burj Khalifa at 828m.

In 1894, the world’s largest cruise ship was Cunard’s RMS Lucania at 12,950 gross register tons. The Icon of the Seas is nearly TWENTY times larger at 248,663 GRT**.

If the same pace of development in skyscrapers happened as in ships, the Burj would be more than 3 kilometres high!
Royal Caribbean kept their calm in 2021. They rode out the short-term volatility in their market, stuck to their strategy and kept building something for the long term… shareholders who stuck with them have been handsomely rewarded. Sound familiar?

Congratulations, not only to Gary, but to Charlotte and Andrew who also ran the Brighton Marathon for Clear Minds. Andrew finished in 4hrs 40, Charlotte in 4hrs 50 and Gary 5Hrs 5. Between them they raised £1261.45 for the charity.

It is still possible to donate to show your support these runners and the charity by following one of these links:

Charlotte & Gary

https://www.justgiving.com/campaign/clear-mindsbrightonmarathon2025

Andrew

https://www.justgiving.com/campaign/clear-mindsbrightonmarathon2025-2
All money raised goes directly toward counselling for those in long term therapy who find themselves in financial difficulties.

Our mailing address is:

Clear Financial Advice

Suite J Castle House

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Banstead, Surrey SM7 3BT

United Kingdom

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Time to bank on banking?
This chart has been doing the rounds lately.

Line chart of Stoxx 600 Banks index vs Magnificent 7 (total return, net dividends, rebased) showing The Magnificent 47 pull ahead

It shows European banks beating the big US tech stocks over the past three years! Also, in 2024 Barclays stock beat six of the Magnificent 7, all except Nvidia.
The danger with financial charts is that you can pick a period to suit your story, and when you pan out, and take a twenty-year view, banks are coming from a pretty low base.
Compared to 2004, the broad index of banks is only up 18%, while the global index is up 460%! And despite almost doubling in 2024, Barclays is still down 7% after twenty years. Lloyds is still 50% below its pre-crisis level.

A graph of stock market

AI-generated content may be incorrect.

Source: 7IM/FactSet, total returns from 31/12/2004 to 31/12/2024. Past performance is not a guide to the future.

Of course, investing is about the future.
Where are banks going from here? Although the financial crisis cut deep, the scars are now healed… the opportunity for banks is huge:
Since 2004, the global economy has increased in value from $44 trillion to more than $100 trillion.
The number of people in the world has increased by 2 billion, and the percentage of people with bank accounts has gone from below 50% to nearly 80%.
So, that’s a lot more customers leading to a lot more money flowing, and room for growth.
Even just catching up to the wider market would be a massive gain.
So, just maybe, banking is back…

Counting the cost of cash (ISAs)

People have all got opinions about Rachel Reeves possibly changing the rules on Cash ISA limits.
You can probably guess our views… “Investment firm supportive of more investing” isn’t making too many front pages. However, before 2013 Cash ISAs used to have lower limits than Stocks and Shares ISAs, so really Reeves is just rolling back, rather than doing anything radical.
Ignoring the politics, the debate does prompt us to go and dig around in the data – all at the bottom in a table.
We go back to when ISAs launched (April 1999) and looked at the average 1-year fix rate available each year.
If you’d put the maximum, you could into a cash ISA at the start of every tax year since 1999, you would have invested £261,520. If you’d kept rolling up the interest, you’d have turned your original investment into £301,924. £40k of tax-free gains!
But of course, it’s also about what ELSE you could have won…
If you take the FTSE All-Share index and use the rarely seen tax-year return to do a literal like-for-like (i.e., from April 7^th to April 6^th the following year).
So, putting the same £261,520 into a stocks and shares ISA on the first day of the new tax year, and simply hold a FTSE All-Share tracker, you’d have an investment worth £491,516. That’s £229,995 of tax-free gains.

Source: FactSet/7IM. Past performance is not indicative of future returns.

But, if you’d pushed the boat out, and maximised your Stocks and Shares contributions pre-2013, you’d have put £326,560 in and have £708,837 today.
£65k more invested, and £150k more return!
Not a cash ISA controversy…..

Fastest downturn in construction output since May 2020

Steep declines in housing and civil engineering activity since February.
New work and input buying fall at fastest pace for almost five years.
Input cost inflation accelerates to the highest since in March 2023.

Source: PMI by S&P Global

A graph with blue lines and numbers

AI-generated content may be incorrect.

Follow Ferris, not forecasts.
2024 finished like this:

A screenshot of a news article

AI-generated content may be incorrect.

Source: The Guardian/CNN/Fidelity/The Telegraph

But as Ferris Bueller knows….Life moves pretty fast! – (Ferris Bueller’s Day off)
A selection of headlines recently:

Source: The Guardian/CNN/Fidelity/The Telegraph

On a table of performance, US and Japanese Equity plummets down the table, while Europe shoots to the top. Someone described this as MAGA to MEGA!!

It’s also interesting that Real Estate – unloved for a few years – is starting to make a comeback. Who’d have guessed?

Source: Factset/7IM (YTD data to 09/03/25)

Who would want the job of forecasting 2025?
Thankfully that’s not the job of an investor who wants to invest in assets all the time, rather than using a crystal ball or trusting knee jerk reactions. After all, life moves pretty fast!

Knowledge not profit.
You probably don’t know this man … but technically he’s responsible for destroying a piece of cultural history, and technically we’ve all been helping…

Portrait of Ward Cunningham, a middle-aged bearded man, wearing wire rim eyeglasses and an olive drab fleece jacket

Source: Wikimedia Commons

In the late nineties, Ward Cunningham came up with two simple ideas. Have a webpage which allows links to pages that don’t exist yet. And let people write those pages if they felt like it.
And so, with a few others, Ward created a platform for knowledge that could be built and edited collaboratively, by anyone using it.
This destroyed a business model which had been around for more than two centuries:

Source: New York Public Library

After 244 years of spreading knowledge, in 2012 the Encyclopaedia Britannica stopped printing – Wikipedia had made it redundant.
The final version of the 32 volume set was sold for £1000 and contained 40,000 articles by 4411 contributors. Whereas the English version of Wikipedia has more than 64 million articles, with 14 million people contributing, and is free!
It’s worth thinking about Wikipedia when people (and investors) get excited about the potential for profit from the mass uptake of AI tools.
Wikipedia was a shift in access to knowledge. It used the new technology and destroyed legacy knowledge publishing.
But…. it doesn’t make a profit.
It’s possible that some of the biggest impacts of AI aren’t going to accrue to one or two individuals, but instead to broad society. Everything benefits.
So, as investors, probably best to own a bit of everything!
We leave you with Ward Cunningham’s other great contribution, Cunningham’s Law – which is maybe even more true today than it was in the early internet eighties.

“The best way to get the right answer on the Internet is not to ask a question; it’s to post the wrong answer.”

Brighton Marathon

A person and person standing in a field

AI-generated content may be incorrect.

A person running on a road

AI-generated content may be incorrect.

Only a few days to go before Charlotte & Gary run the Brighton Marathon to fundraise for the charity. We are lucky to have an additional runner, Andrew Strongitharm who is also supporting Clear Minds. Andrew has been running for 6-7 years now and completed the London Marathon in 2023 vowing to never run another marathon….and yet here he is!

Not forgetting Gary running the London Marathon two weeks later!

We wish all the runners the best of luck and thanks for supporting Clear Minds. If you would like to donate, please follow one of the following links:

Charlotte & Gary
QR code

https://www.justgiving.com/campaign/clear-mindsbrightonmarathon2025

Andrew
QR code
https://www.justgiving.com/campaign/clear-mindsbrightonmarathon2025-2

Gary London Marathon
QR code
https://www.justgiving.com/campaign/clear-mindslondonmarathon2025

Our mailing address is:

Clear Financial Advice

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Banstead, Surrey SM7 3BT

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Mid-market Growth Tracker
The NatWest Mid-market Growth Tracker reports on the performance of those manufacturing and services enterprises with more than 249 employees on a quarterly
basis:

A graph of a business activity

AI-generated content may be incorrect.

Employment down at fastest rate for nearly four years.

Latest data pointed to a decrease in workforce numbers for the fourth successive month at mid-market companies in December. The substantial drop in headcounts came amid increasing signs of spare capacity and softer inflows of new work, alongside concerns about the impact of rising payroll costs. Service providers cut jobs more quickly than manufacturers in December. The overall rate of job shedding at mid-market firms was the strongest for nearly four years and exceeded that seen elsewhere across the UK private sector.

Behavioural Investing
As much as everyone would like to think that they are always rational and calm in all situations the reality is usually quite different. Every human being is driven by emotions and this can be more pronounced during times of stress which can lead to damaging outcomes when investing.

People can lose their self-control and be influenced by other biases during rising and falling markets which can lead to negative results over the longer-term. This is why a structured and disciplined approach is needed to ensure that you can achieve your goals rather than getting sidetracked unnecessarily.

By taking this approach and having regular reviews with your adviser you are far more likely to avoid the pitfalls and bad choices that would otherwise be easy to fall into.

Please see chart below which illustrates how easy it is to fall victim to poor investment decision making:
A diagram of a financial crisis

Description automatically generated
Many inexperienced investors would get carried away at the euphoria point and overestimate their abilities leading to catastrophic results. Conversely at the despondency point mistakes such as withdrawal all funds could be made when this would be statistically the best time to invest more funds.
By taking a disciplined approach, remaining calm and utilising regular investing to take advantage of pound cost averaging these risks can be mitigated leading to far greater chances of achieving your goals and objectives.

Darren Fuller – Clear Senior Paraplanner

Luxury now has four legs!
For more than a decade in Chinese consumption, one of the main themes has been luxury. Chinese consumers now represent approximately a quarter of total global luxury spending, this is from spending nothing on luxury brands in 2000. But there has been a change in the last couple of years, luxury brands have started to struggle in China. It’s not that their consumers aren’t spending money, it’s just they are spending on different things.

Instead of Louis Vuitton bags, Hermes scarves, Rolex watches and Mercedes cars, the new middle class product line-up looks like this:

A collage of different types of cat food

AI-generated content may be incorrect.
Source: Gambol Pet Group.

Although less glamorous, it is understandable.

When society starts to have an established middle class, consumptions move from goods to experiences and from conspicuous to comfortable. In particular, people start to buy pets and all things that accompany these furry friends. Medicine, insurance, toys, and of course pet food!

So it is no surprise that while Kering (who own Gucci, Saint Laurent etc) and LVMH (who own Louis Vuitton, Dior, Tiffany & Co,etc.) saw their shares take a hit last year, Gambol Pet Food more than doubled!

A graph of a pet group

AI-generated content may be incorrect.

Delicious diversification
Now what do these two characters have in common?

A person in a suit and tie

AI-generated content may be incorrect.

No, it’s not that Gary Lineker and George Fox (founder of the Quakers) were both born in Leicester, although they were, it’s that they both work for Pepsi.
This might be surprising as we most often think of Pepsi as either a worse or better alternative to Coca-Cola.
Both Pepsi and Coca-Cola have similar origins, both created by American drugstore owners in the late 1800s and they have competed since then as the drinks spread across the country and the world.
Coca-Cola has effectively won the cola wars, being the most popular soft drink on earth and Coca-Cola is the most understood word in the world after “OK”. As of 2024 Americans even drink more Dr Pepper than they do Pepsi!
However, this is where it gets interesting in investments terms. Unlike Coca-Cola which is all about drinks, Pepsi isn’t.

It owns Walkers (hence Gary), and Quaker Oats, Doritos, Tropicana and the Starbucks cold coffees. Also, dozens of other brands which are recognisable in Mexico, South Africa and Indonesia.
In the last twelve months, Coca-Cola made sales of about $45 billion, PepsiCo doubled that. So, although Coca-Cola does one thing better than anyone else, PepsiCo does a lot of things better than most.

If you invested $100 into both companies 30 years ago, your Coca-Cola shares would be worth just over $1000, but your PepsiCo shares would be over $1800.

Source: FactSet. Chart shows Total Returns, past performance is not a guide to future returns, 01/01/1995 to 01/01/2025

Rate cuts help boost consumer confidence in February.

Consumer Sentiment Index (CSI) rises from one year low
Prospects for lower interest rates help boost future sentiment and spending intentions
Job insecurity persists.

A logo with a bird and a rainbow colored heart

Description automatically generated with medium confidence

Update

Brighton Marathon is fast approaching with Gary and Charlotte training really hard. Gary is giving regular updates on his training on their JustGiving page. Just click on the following link for updates and donations:

https://www.justgiving.com/page/gary-beach-3?utm_medium=FR&utm_source=EM

The charity is currently helping 28 clients and has provided 1324 hours of counselling through the 17 accredited therapists that work with Clear Minds.
For further information go to the website:
https://clear-minds.co.uk/

Our mailing address is:

Clear Financial Advice

Suite J Castle House

Park Road

Banstead, Surrey SM7 3BT

United Kingdom

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How have the forecasters performed in previous years

1st January – a day to celebrate a Happy New Year, unless you live here:

In this community of Cwn Gwaun, they continue to follow the traditional calendar proposed by Julius Caesar.

The Julian calendar doesn’t handle leap years properly, probably because Caesar had a Roman empire to build, and let’s face it, he couldn’t do everything! Every 130 years or so the Julian calendar gets another day ahead of our modern version.

This means it has drifted quite a bit over the course of the last two millennia. So much so, that the locals in Cwm Gwaun wouldn’t have had their big party (called Hen Galen) until January 13^th. Good excuse to extend the festive season!

There’s a story that there were riots when the UK moved away from the Julian calendar in 1750 – that when September 2nd was followed by September 14th, people took to the streets demanding their eleven days back. Turns out to have been a satirical report, rather than the truth.
Actually, a couple of hundred people in Pembrokeshire breaking free of the psychological anchor of the calendar year IS quite impressive, because back in the financial world, at the start of the year everyone is doing the same old thing:
Making forecasts about the next twelve months… which aren’t really a good guide to anything.

This great chart from Bloomberg shows in pink the range of professional (!) forecasters – UBS, Morgan Stanley, Wells Fargo, Barclays, etc – for where the US market will finish the year. And the black diamonds show where the market ended up.

No one’s nailing this!

Source: Bloomberg LLP. Past performance is not an indicator of future returns.

So why keep doing it?

In the Second World War, Kenneth Arrow (later a Nobel prize winner) was assigned to work in the weather forecasting department. His team became so frustrated with their inability to predict the weather that they asked to resign – they’d failed.Their resignation was rejected:

“The Commanding General is well aware that the forecasts are no good. However, he needs them for planning purposes.”

Professional strategists and researchers need to provide numbers (otherwise what are they being paid for?!). But if you’re actually investing money, you tend to treat these forecasts in the same way you treat daily horoscopes.

Maybe entertaining, perhaps even correct occasionally… but not relevant for getting portfolios to where they need to be!

The Trump presidency – is it good or bad news?

The power centre of the US presidency has now moved back to Mar-a-Largo – Trump’s ‘Winter White House’. Looking at the temperatures, it does seem a sensible move with Washington DC hitting -10 degrees C and Palm Beach Florida a balmy 26 degrees C.
On the less sensible side of the President ledger is things like this (right):

So, are we ready for another four years of policy via Twitter X?

An example from his first year in charge is below – antagonising North Korea…

Source: x.com/realDonaldTrump

It’s easy to get concerned, and difficult not to be distracted.

But let’s add a little bit of calm, and a little bit of context, it’s worth revisiting one of our favourite charts; Big Market Days (BMDs).

This is how we explain the idea of volatility in a more … approachable … way. Rather than worry about standard deviations, we can look at how many times the market moved up or down by more than 1%, which is usually the threshold for people outside of finance to notice. It is updated every year to see how unusual stock markets were. For what it’s worth, 2024 was almost exactly average; 50 BMDs.

Interestingly though, if you look at 2017, Trump’s first year in office, the fire and fury on Twitter absolutely did NOT translate to markets. 2017 saw the least BMDs since 1965!

Source: FactSet/7IM. Past performance is not an indicator of future returns.

Now that doesn’t mean 2017 will happen again, but it’s worth remembering that no matter how loud the President talks, the finance world doesn’t necessarily have to listen!

UK marketing budgets see renewed rise during final quarter of 2014, but caution remains.

Source: S&P Global Market Intelligence

Key findings from the Q4 2024 survey:

UK marketing budgets return to growth after flatlining in Q3, but post-Budget bounce is shallow.
Companies choose caution for now as they assess the impact of new government policies, but 2025/26 budget setting plans reveal strong optimism.
Sharp growth in event budgets shows companies’ continued desire to generate leads in face-to-face settings.
Direct marketing continues its impressive growth streak, although firms shy away from main media advertising.

Container? No- brainer!

When it comes to building portfolios, diversification is the way to go. But when it comes to building global supply chains, you want everything to be the same.
This is Malcolm Mclean who figured that out.

Malcolm ran a successful trucking company in the 1930’s based in North Carolina. As it expanded, it caused a problem: his trucks were spending forever in waiting around in ports. Empty, parked trucks don’t make money.

The problem was that shifting cargo around hadn’t changed for hundreds of years.

Source: Wikimedia Commons

Want to send something up the coast? Take a truck of cargo to the port, unload it all on to the quay, reload it bit-by-bit onto the ship, repeat in reverse at the other end. Chaotic, clunky and insecure – the picture below is from the Korean War, but could just as easily be from the 1800’s.

Mclean’s insight was that the only thing that matters is getting cargo from one place to another as quickly as possible. It appeared everyone involved in the supply chain was doing different things. Ships were being built for sailing efficiency, trucks for driving quality, and ports for storage capacity.

What about a container that didn’t have to be unloaded? It could be plonked onto a truck in North Carolina, and then a boat in New York, and then a different truck in Rotterdam. This was not an entirely new suggestion, but no-one had taken it seriously.

Mclean did. He thought about the whole thing, end-to-end. And in 1956, he made his move.

He designed and built a container that stacked and locked (with his engineer partner Keith Tantlinger).
He bought two ships and refitted them to store his new containers efficiently.
He persuaded ports to redesign their layouts, and to invest in cranes (notably in New York and California).

He then did one more thing: He made his container design available for free, giving up the rights to royalties to encourage it’s adoption as the global standard.

By 1974 uploading looked completely different:

Today, 90% of international cargo travels in the standardized containers created by Mclean, the cost of shipping a tonne of freight has fallen by about 90% since 1930. The largest port in the world, Shanghai, unloads nearly 50 million containers every year!

Sometimes, the best ideas come from thinking ABOUT the box … rather than outside it! Food for thought…….

Team News

In a positive news story, one of our Financial Planners, Rob MacMahon, has been awarded Chartered Financial Planner status by the Chartered Institute of Savings and Investments (CISI). This membership level is awarded through a combination of qualifications, experience and ethical standards in the field of financial planning in the UK. We all know how hard Rob has worked to achieve this status and the positive impact it has had on our business and to his clients.

Congratulations Rob!

Clear Minds are pleased to announce we are sponsoring Scottish champion pool player Donna Smith.
She has an exciting year ahead playing for Scotland and hoping to qualify for the World Championships in Ireland this year.
Donna’s story will be added to the Clear Minds website over the coming weeks, and we hope you will find this interesting and perhaps watch her progress throughout the year. We will however, be keeping you updated.

https://clear-minds.co.uk/

https://www.justgiving.com/clearminds

We are also happy to advise that Charlotte McIntyre and Gary Beach are once again running the Brighton Marathon on Sunday 6^th April to support the charity.

They are hoping to beat their respectable time of 5 hours last year, which was despite Charlotte picking up an injury on the way!
Please consider donating through the following links or QR code to encourage them in their challenge.
We would be grateful if would consider sharing the link with family and friends who you feel will contribute to this worthwhile cause.

There are still two places available to run in this event for the charity! If you are tempted to test your running fitness email [email protected].

https://www.justgiving.com/campaign/clear-mindsbrightonmarathon2025
or
https://www.justgiving.com/page/gary-beach-3?utm_medium=FR&utm_source=EM

Our mailing address is:

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Seasons Greetings!
All at Clear wish you a very happy, healthy and prosperous New Year!

Trump Numberwang

Calling all financial headline collectors! You would have been spoilt this past month, with wonderful examples of the Numberwang* nature of financial markets.

Source: WSJ/FT/Bloomberg/Reuters/Morningstar

Absolute textbook.

If he’s done nothing else, Donald Trump has managed to time his re-election perfectly, aligning it to a big, round number.
Why should 6,000 matter any more than 5,998 or 6,007?
Economically, it doesn’t – there’s no law saying that something does or doesn’t happen to the S&P 500 at 6,000.

But psychologically we absolutely LOVE round numbers. They stick in our brains. 6000 just feels nicer than 6,007.
A favourite example is in marathon finishing times (from nearly 10 million individual runners). In the “amateur runner” range** typically, people try to get under a specific number.

And so, you see MASSIVE clustering before each round number hour cut-off (more people finishing than expected, diving over the line) and then a sharp drop off in the few minutes afterwards.

Source: Eric J. Allen, Patricia M. Dechow, Devin G. Pope, George Wu (2017) Reference-Dependent Preferences: Evidence from Marathon Runners. Management Science 63(6):1657-1672

Once you recognise this tendency, you’ll see it everywhere: whether it’s record sales, Premier League goals scored or Insta followers.
Here’s another one though:

Think about the stock indices you look at. FTSE 100, S&P 500, EuroStoxx 50, Russell 2000.

Maybe there’s an untapped market niche of stock benchmarks that are, like, prime numbers. The Prime UK 107 Index, or the Prime US Large Cap 503.

Psychology would suggest not…

*Want to know more about Numberwang? See: https://www.youtube.com/watch?v=0obMRztklqU
** Amateur runner is from just below 3 hours up to 5 hours.

The Santa Rally

‘Santa Rally’ is the theory that markets always go up in December.

Using data going back to 1930, of the 94 Decembers we see that 69 are positive.

Source: S&P/7IM

That’s nearly three-quarters of all Decembers. Christmas truly is likely to have been a time of good cheer for investors.

Of course, we should note 60% of ALL months since 1930 deliver positive returns through history. So, investing in any month from start to finish gives you better odds than a coin flip of being positive – except for Sad September where returns are positive just 45% of the time.

So, is it real? Was December a stocking-full of market gains?
Well, hold your jingle-horses.

Unfortunately, even with the extended data, 95 observations really isn’t statistically significant.

So, sadly, we must suggest that the Santa Rally is just another Christmas fairy tale.

Brighton Marathon.

Eaten too much at Christmas and New Year? Need something to aim for with your training?

Clear Minds still have two places available for the Brighton Marathon on Sunday 6^th April.

For more information please contact: [email protected].

Our mailing address is:

Clear Financial Advice

Suite J Castle House

Park Road

Banstead, Surrey SM7 3BT

United Kingdom

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The Government’s Inheritance Tax Raid:
Single Homeowners Face Significant Inheritance Tax Bills from 2027

From 2027, single homeowners in England with average-priced homes and moderate retirement savings could face substantial inheritance tax (IHT) liabilities due to changes announced in the Autumn Budget by Chancellor Rachel Reeves.

According to Quilter’s analysis, a single homeowner with a property valued at £308,782 and retirement savings of £459,000 will incur a £107,000 IHT bill starting in 2027. This increase follows the decision to freeze the nil-rate band at £325,000 and the residence nil-rate band at £175,000 until 2030.

As property values and asset prices rise, more estates will be subject to IHT. From 2027, pensions will also be included in IHT calculations, further increasing liabilities for many. For example, a single homeowner in London with an average property value of £525,586 and the same level of retirement savings would face a £194,000 IHT bill in 2027, up from £10,000 today.

Regions like Northern Ireland, Scotland, and Wales, traditionally exempt due to lower property prices, will also be impacted. Estates with moderate retirement savings could face IHT bills of £59,821, £62,818, and £70,300, respectively. With house prices forecast to rise by 4% in 2025, these figures are expected to increase further.

Roddy Munro, a tax and pensions expert at Quilter, warned that freezing the nil-rate bands and including pensions in estate calculations would bring more average earners into the IHT threshold. “This tax, originally targeting the very wealthy, now disproportionately affects those with modest estates. Variations in property values across the UK turn IHT into a postcode lottery,” he said.
Munro emphasised the importance of proactive planning, such as early gifting and exploring options like onshore bonds placed in trusts, to reduce taxable estates. Trusts, he explained, not only help lower IHT liabilities if the transferor survives seven years but also provide flexibility and control over how assets are distributed.

We will be discussing with you best ways to mitigate IHT at your next Annual Review.

UK Inheritance Tax Receipts

National Insurance gap fill – six months to top up
Deadline Approaching to Backdate National Insurance Contributions

There is now less than six months to top up National Insurance (NI) contributions before the backdating deadline of April 5, 2025.

The deadline, extended last year due to high demand, allows individuals to backdate NI contributions as far back as April 2006 to boost their state pension. After this date, gaps can only be filled from 2019 onward, potentially losing up to 13 years of contributions.

Paying voluntary NI contributions could significantly enhance retirement income but that it isn’t suitable for everyone. It is important to assess personal circumstances, noting that some individuals may have sufficient time to fill gaps without making voluntary contributions.

Please check your NI records before the deadline, as taking action could result in being “thousands of pounds better off” in the long run. As always, please contact us if you have any questions.

Anna Griffiths – Clear Technical Manager

Investing Vs Consuming

People think about incremental gains when it comes to savings, e.g. cutting out a daily coffee and investing the money Strangely though, every two years people spend hundreds of pounds for a broadly identical phone.

It’s partly down to fantastic marketing from Apple.

But we seem to be in the habit of buying a new iPhone now more than anything else. Just like your daily commuting coffee. We are now socially accustomed to the cycle: come to the end of the contract, get offered a new phone, reluctantly barter a little about the price, repeat every two years.

So the following data gives a different perspective (but is absolutely in no way, investment advice!).
Now imagine if, rather than buying a new iPhone every two years, you invested the price of the phone into Apple shares on the day the new model launched.

The table below shows the cost of the phone, and then what that amount of Apple shares would be worth as of the launch of the iPhone 16.

Buying a new model every two years would have cost you £6,000, but if you had put that into shares you would have £50,000.
Obviously, no one would do this, it would be a weird investment approach, but most people don’t buy the phone upfront. However, this does illustrate the potential which could come from managing your unthinking spending, particularly on big ticket items, that you might have transformed into a habit. Do you really need a bigger television or to upgrade Siri?
Source: 7IM/Factset/Apple

No (fat) tails on the FTSE

Instead of talking politics, let’s talk about the huge tech rally recently, especially in the U.S. and the poor unloved UK equity market.

Looking at this year

NASDAQ (US) is up 24%
FTSE100 (UK) is up 7%

Despite AI, over the last three years the FTSE 100 has beaten the NASDAQ!
Investing £100 in the FTSE 100 three years ago you would have £127, the same amount invested in NASDAQ would give you £122.

Source: FactSet/7IM, total returns. Past performance is not a guide to future returns.

This counter-intuitive fact gives us the chance to mention that Losses matter.

If you held the NASDAQ you would have had a wild ride and would have been struggling until January 2024, that is assuming you stayed invested! And the reason for that? Fat, Tails.

The following chart counts the number of days where the two markets moved by various amounts.

The far left and the far right are the “tails” – the extreme values. And there are a lot more of them in the NASDAQ? Those are the “fat tails”.

And while it’s great to have a load of big UP days, it’s only good if you don’t have a load of big DOWN days too.

Percentages are cruel: A 50% loss needs a 100% gain to get back to the flat.

And it happens at a small scale too. If you make 1%, and then lose 1%, you end up with less than you started. This is true however your returns come in, whether you make it and lose it, or lose it and make it you’ve lost 1p.

So, the FTSE 100 wins by being a lot skinnier than the NASDAQ; having lots of boring, small positive days, over and over again.

The value of investments can go down as well as up and you may get back less than you originally invested. Any reference to specific instruments within this article does not constitute an investment recommendation.
Source:7IM

UK Report on jobs

Steepest decline in permanent staff.
Weakest rise in permanent starting pay since early 2021.
Vacancy numbers fall again October.

It’s – sometimes – relative

We can be scathing about any aims for the UK being the ‘fastest growing economy in the G7’, but, honestly, who cares about how we’re doing relative to Canada or Italy or Japan?

Economic growth is something in which most people care more about absolute results than relative ones. But when human psychology gets involved that’s not always the case. Sometimes we will prefer a worse absolute outcome if we personally get a better relative one.

The most famous example is with income:

World 1 – You earn £100,000 per year; others earn £200,000.
World 2 – You earn £80,000 per year; others earn £40,000.

More than half of people would choose World 2 as they are winning in relative terms.
When human psychology is involved though there’s more!

Ask slightly different questions and you get different answers:
Take holidays for example:

World 1 – You get 4 weeks holiday per year; others get 8 weeks.
World 2 – You get 2 weeks holiday per year; others get 1 week.

People would be back in World 1, give me as much holiday as possible, who cares about anyone else!
Or flip it again, assuming IQ is a good measure, ask about intelligence:

World 1 – Your IQ is 130; others average 150.
World 2 – Your IQ is 110; others average 90.

People would prefer to be the smartest in a dumber room.
Let’s try potholes:

World 1 – There are 3 potholes a mile in your neighbourhood: 1pothole per mile in others.
World 2 – There are 4 potholes a mile in your neighbourhood: 7potholes per mile in others.

Just generally less potholes please!

Finally, and this is VERY interesting in the current world:

World 1 – Your country spends 3% of GDP on national defence; other G7 countries spend 4%.
World 2 – Your country spends 2% of GDP on national defence; other G7 countries spend 1%.

No-one cares about GDP, but when it comes to defence. That’s a different matter!

If you were to try the above questions on your friends or colleagues, you will see the choices are all about social context, just as much as the number in front of them.

* All questions/scenarios here extrapolated from Solnick, Sara & Hemenway, David. (2005). Are Positional Concerns Stronger in Some Domains than in Others?. American Economic Review. 95. 147-151. 10.1257/000282805774669925.

Source:7IM.

Marathons 2025

We are pleased to advise that Gary Beach and Charlotte McIntyre are once again running the Brighton Marathon to raise funds for the charity next year. Also, Gary will be undertaking the London Marathon for us! So both are busy training. Donation details to follow.

But we do have two more place available for the Brighton run, so please let us know if you, or someone you know, would be interested in challenging themselves and helping the charity.
Contact [email protected].

Don’t forget to get your orders in for Clear Minds Christmas cards:

Please click here

From everyone at Clear have a fantastic Christmas!

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Labour’s first budget….🫣

THE BUDGET WHICH TRANSFERS WEALTH FROM THE PRIVATE TO THE PUBLIC SECTOR

The long-awaited—and, for many, dreaded—Autumn Budget has arrived. Prime Minister Keir Starmer warned us in advance to “face the harsh reality of fiscal matters,” while newspapers kept the suspense going with bold headlines on tax and pension changes. Now that Chancellor Rachel Reeves has delivered her address and the details are public, what does it all mean? What’s actually changing, and how might it affect you? We’ve rounded up the key points so you can understand how this Budget impacts your finances and if any action is needed.

Let’s take a closer look.

Income Tax

The anticipated two-year extension to frozen income tax thresholds won’t extend beyond 2028, meaning thresholds will begin to rise with inflation starting in April 2028.
The Starting Rate for Savings will stay at £5,000 for 2025-26, allowing individuals with less than £17,570 in earned and/or pension income to receive up to £5,000 in savings income tax-free.

Capital Gains Tax (CGT)

The main CGT rates will increase immediately to 18% and 24% for disposals made on or after 30 October 2024, aligning with the rates for residential property, which remain unchanged. The £3,000 Annual Exempt Amount also remains steady. Trustees and personal representatives will pay the 24% rate.
Two reliefs still provide access to lower CGT rates: Business Asset Disposal Relief (BADR) and Investors’ Relief (IR). The rate for these will increase to 14% from 6 April 2025 and then to 18% from 6 April 2026. The lifetime limit for Investors’ Relief will be reduced to £1 million, matching BADR’s limit. No changes were made to the CGT uplift on death.

Inheritance Tax

Inheritance tax thresholds are now frozen until April 2030, keeping the nil rate band at £325,000 and the residence nil rate band at £175,000 for another five years. Qualifying estates can still transfer unused nil rate bands to spouses, allowing for up to £1 million in wealth transfer without an inheritance tax liability.
Reforms to agricultural and business property relief will start in April 2026. Although 100% relief on qualifying assets will continue, it will only apply to the first £1 million in combined assets; above this, agricultural and business assets will get 50% relief, facing a 20% inheritance tax rate. Unlisted shares will also be subject to a reduced relief rate of 50%.
From 2027-28, the inheritance tax service will be digitalized to streamline tax returns and payments.

Non-Domicile Status Abolished

The government will replace domicile status with a residence-based regime from 6 April 2025, ending offshore trusts’ use to avoid inheritance tax. The remittance basis of taxation will be replaced with a simplified, globally competitive residence-based system. New residents opting in to this regime won’t pay UK tax on foreign income and gains for their first four years in the UK. Rebasing of foreign assets for CGT will also be available under certain conditions. Overseas Workday Relief will extend to a four-year period without needing income to be kept offshore. Temporary Repatriation Facility will also extend to three years with simpler mixed fund rules.

National Insurance (NI)

While individual NI rates remain unchanged, employers’ NICs will increase from 13.8% to 15% from 6 April 2025. The threshold for employer NICs on employee earnings will decrease from £9,100 to £5,000 annually until 2028, after which it will adjust with CPI. The Employment Allowance will also rise from £5,000 to £10,500, with the eligibility threshold of £100,000 removed.

Individual Savings Account (ISA)

Annual subscription limits will remain at £20,000 for ISAs, £4,000 for Lifetime ISAs, and £9,000 for Junior ISAs and Child Trust Funds until 5 April 2030. The British ISA will not proceed.

Pensions

Speculation around reduced tax-free cash for pensions was unfounded. However, starting from 6 April 2027, unused pension funds and death benefits will be included in a person’s estate for IHT purposes, with pension schemes required to report and pay IHT due.

VAT on Private School Fees

From 1 January 2025, private school fees will be subject to VAT at the standard 20% rate, also covering boarding fees. Local authorities funding pupils with special needs will be compensated for the VAT charged.

Stamp Duty

Higher rates of Stamp Duty Land Tax on additional dwellings will rise from 3% to 5% from 31 October 2024. Contracts exchanged before this date won’t be affected by the increase.

Furnished Holiday Lets

From April 2025, furnished holiday let landlords will lose beneficial tax treatment, with restrictions on finance costs, capital allowances, relief on trading business assets, and relevant UK earnings for pension relief.

High Income Child Benefit Charge (HICBC)

No changes to the HICBC structure based on household incomes. Starting in 2025, individuals can pay HICBC via their tax code, and Self-Assessment tax returns will include pre-populated Child Benefit data for non-tax code users.

Corporation Tax

The government has committed to capping the Corporation Tax Rate at 25%, while maintaining the Small Profits Rate and marginal relief at current levels and thresholds.

If you would like to discuss the budget and the impact of it on your personal circumstances please contact us in the usual way.

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Top ten of the 1900s and more…

Over 55s cut back to be mortgage free

A significant number of people over 55 are making substantial cutbacks in an effort to be mortgage-free by the time they retire, according to Key Later Life Finance, as the ongoing cost of living crisis continues to strain personal finances.

A survey by the equity release adviser found that 57% of over-55s are making sacrifices in the lead-up to retirement to avoid mortgage payments once they stop working. About 31% are reducing general spending on leisure and entertainment, while 14% are cutting their pension contributions to pay off their mortgage.

Nearly 18% will only manage to be mortgage-free by delaying their retirement age. This comes alongside research from the Financial Conduct Authority, which revealed a 29% rise in people buying their first home in their 50s between 2018 and 2022. Meanwhile, UK Finance data shows that over 60% of mainstream mortgages now extend beyond expected retirement ages, up from 20% two decades ago.

Among those who don’t expect to clear their mortgage before retirement, 70% anticipate making payments for at least two more years, while 13% believe they will be mortgage-free within 12 months of retiring. The cost-of-living crisis is cited as the primary factor preventing people from paying off their mortgages, with 30% having experienced pay cuts.

Over 10% plan to explore later-life lending solutions such as equity release, specialist mortgages, and retirement interest-only mortgages. Chris Bibby, managing director at Key, emphasised the growing issue of retirees still paying mortgages and expressed concern about the sacrifices people are making to ensure they are debt-free. He highlighted the need for more flexible financial solutions and recommended that over-55s seek specialist advice to better manage their finances leading up to retirement.

Anna Griffiths – Clear Technical Manager

Tales of the Top Ten

You will find TENS everywhere………

Anniversaries, speed limits, or recipes, we are used to rounded tens.
Well, the evolutionary reason for this is simple – ten fingers! That means people have been used to writing top ten lists for ages. For example, here are the top ten companies in 1900, it screams ‘Have you heard about the railways?!’

There’s a LOT of focus on the biggest companies in the US at the moment – so it’s helpful context to look at some of the stories of the top ten over the past 120 years.

The bars below show the weight of the top ten as a percentage of the index in the first year of each decade, with 2024 included too.

1. The feast/famine pendulum: The size of the top ten swings about a lot. At some points, the big stocks seem like the only game in town (like the 1960s, or the 1990s) and at others, not so much (1920s, 2010s). There’s no “right” level – but there are periods where things swing one way (lots of small businesses competing, say), and then swing back the other (to a few very dominant businesses). And the pendulum will keep swinging.

2. Speed of change isn’t captured: That pendulum shift can happen very quickly, and the decade-by-decade approach misses some of that subtlety. In 1999, the S&P (Standard & Poors) top ten was FULL of internet stocks (and about 25% of the index), but by mid-2000, the dotcom bust has meant banks, retailers and oil companies were back, and the top-ten had shrunk to 17%. Or take the fact that our tens-focussed approach entirely misses the financial crisis – the rise and fall of big banks is nowhere to be seen.

3. Not so similar: Looking just at weights, the 1990s seem to be similar to today, with the top ten representing more than a third of the entire index. But look under the surface…

The 1990’s top ten list was far more balanced, with eight entirely different industries represented. Big businesses but doing very different things.
2024’s top ten list has a concentration problem and a weight problem. The index today is top-heavy, and in similar areas.

Media as a Friend and Foe to Financial Advisers

Financial advisers are all too familiar with the Pareto principle, the 80/20 rule; roughly 80% of consequences come from 20% of causes. However, when it comes to managing clients’ financial lives, the reality is even more distorted. About only 1% of our clients’ attention is captured, while the other 99% is consumed by mainstream and financial media. Unfortunately, much of this media is filled with investment advice from investing illiterates who lack a deep understanding of clients’ long-term financial goals and investment market history. Based on this 99/1, it’s amazing that clients listen to us; it shows the trust they have when the noise to the contrary is overwhelming.

Take, for example, the recent “perfectly normal” decline in the global stock market. It was a standard correction, part of the market’s natural ebb and flow, but the media, sensationally, turned it into a dramatic event, causing unnecessary panic among investors. Clients who spent most of their time listening to this noise might have been frightened into making rash decisions, potentially derailing their long-term financial plans.

This is where, real-life financial advisers, come in. Clients have the advantage of being guided through the tumultuous waves of market noise. The financial media is often bent on sensationalism, which can lead to misguided financial decisions. Advisors are steadfast in their commitment to keeping clients aligned with their financial plans and long-term goals.
In many ways, the financial media can feel like the adversary. They’re the ones creating the fear, causing the distractions that pull clients away from their carefully constructed plans. But ironically, this makes the adviser’s role all the more vital, being the clear, rational voice amid the chaos.

This guidance is often counterintuitive and countercultural. While the media may incite panic, advisers urge patience. This is the real good that financial advisers do: they are the guardians of clients’ financial futures, ensuring that they stay the course even when the media is shouting the loudest. In the end, while the media may be a foe in spreading fear, they also remind us why the adviser’s role is so critical, cutting through the noise, keeping clients focused on achieving their financial goals.

Of axes and air con

The economy is aways the problem to solve for ay government, left or right. Should spending go on fixing potholes or building spaceships? Is this down to financing or training? Should new industries be promoted, or should there be more support for ailing ones?

How and where should a government intervene?

In 1921, the then head of the U.S. Department of Commerce, Herbert Hoover was faced with this question when tasked with ramping up growth in the U.S. economy and was frustrated.

Even though he saw individual ingenuity everywhere, it rarely scaled up into serious companies, so he thought the reason was simple – No-one had any standards.
For example, for chopping down a tree there were 994,840 varieties of single-bit axe for sale. It wasn’t just axes*. There were 90 types of blackboards for use in schools, 33 different lengths of hospital bed, 29 kinds of milk bottle caps!

This lack of standardisation made it almost impossible for real competition to take place. Consumers were unable to tell who had the best blackboard, the best screw, or steel when there were thousands of versions, all slightly different.

Hoover simply told every single industry that they needed to impose standards which the government would track and measure through a newly formed Bureau of Standards.
He did, however, let the industries decide themselves what the standards should be.

This was so successful; Hoover was called at the time ‘the Secretary of Commerce and the Under-Secretary of Everything Else’ and went on to become the 31^st President.
This was by letting the people with the most relevant knowledge agree their own rules, and then get cracking!

30 years after Hoover entered the Oval Office, Lee Kuan Yew became Prime Minister of Singapore, and he had similar beliefs to Hoover – get the basics right and then get out of the way!

In 1954 Singapore’s GDP per capita was less than $500, when Lee died in 2015, GDP per capita was more than $55,000.

When asked what the secret to Singapore’s success was, Lee said “Air conditioning. Air conditioning was a most important invention for us”

Before air-con, no-one could work through the middle of the day in Singapore. So, air conditioning was put in all office buildings and productivity soared in the civil service, in banks and in factories.
Get the basics right, and let people get cracking!

And so to today……

Most business leaders in the UK don’t want targeted government help in their industry** They want the basics to be good across the economy, and then to be left alone. Economic history suggests they may be right. Let’s see if the politicians listen.

* The Rise and Fall of American Growth: The U.S. Standard of Living since the Civil War, Robert J. Gordon
** “73% of business leaders believe that any future changes should be focussed on improving the general business environment, rather than the specific needs of individual sectors” https://www.pwc.co.uk/industries/industry-in-focus/framework-for-growth/pwc-framework-for-growth.pdf

PLEASE NOTE: THE NEXT NEWSLETTER WILL BE ISSUED LATER AS IT WILL BE BASED AROUND THE UK BUDGET ON 30^TH OCTOBER AND WE NEED MORE TIME TO DIGEST THE BUDGETS CONTENT.

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What taxes could Labour change in the October Budget?

With a purported £20bn hole in the current budget and commitment not to borrow, Labour need to consider how they plan to raise these funds. Since they committed in their manifesto not to increase VAT, income tax or national insurance there are two main areas that could be under consideration for them. These are as follows:

Inheritance Tax (IHT)

Many people wrongly assume that inheritance tax is only paid by the super-rich. Frozen allowances that have remained in place since 2009 and rapid increases in house prices however have meant that more and more people are paying IHT and this raked in £7.5bn in the financial year to the end of March 2024 for the government. These receipts are only expected to increase further. To increase revenue even more, Labour could up the tax rate from the current 40% or lower the value you start paying IHT. See graph below for UK IHT receipts:

Capital Gains Tax (CGT)

This is already a good source of revenue for the government and receipts for 2022/23 were £14.4bn. Receipts have been increasing as the annual exempt amount has decreased from £12,300 in 2022/23 to only £3,000 in 2024/25. Keir Starmer has ruled out raising CGT on the sale of main homes. Further revenue could be raised in the following ways:

The £3,000 annual exempt allowance could be removed completely.
Assets that don’t currently fall under the CGT regime could be included.
There has also been speculation that rates could be raised in line with income tax rates.

Please see graph below for UK CGT receipts:

Conclusion

At the moment we can only speculate as to what actions will be taken. This does however highlight the importance of financial advice. At Clear we will always ensure that your investments are structured in the most tax-efficient manner. With careful planning and ensuring that your individual circumstances are taken into account, we can help you achieve your needs and objectives by being flexible and adapting to changing circumstances.

Darren Fuller – Clear Senior Paraplanner

Investing in elections

One of the stories that always comes out of the U.S. in an election year is the idea that a Republican president is better than a Democrat for stocks. Let’s explore this idea.

The following chart shows two ways to invest around US politics since the Second World War, starting with $100.

Only invest in the S&P(Standard & Poor’s) 500 when the President is a Republican.
Only invest in the S&P 500 when the President is a Democrat.

Source: Factset/7IM/Robert Shiller, S&P 500 Price index. Portfolios are either invested in the S&P 500 or return 0%.

There you have it…..Democrats win $2,500 vs $1,500!

BUT look at number 3 strategy:

Stay invested, regardless of who’s in the Oval Office.

Source: Factset/7IM/Robert Shiller, S&P 500 Price index. Portfolios are either invested in the S&P 500, or return 0%

So, $34,000 from $100, without having to do anything! The lesson here is don’t stress about politics.

What happens if you can’t look after the pennies?

In July the Treasury announced that the Royal Mint will not be getting any business this year.

This is the first time ever that zero coins have been ordered, and the economic logic stacks up.

Source: UK Payment Markets Summary 2024, UK Finance

12% of all transactions in 2023 were made in cash, so cash is not going away, but it isn’t growing and there are already 27 billion coins of various types in circulation. There are rumours that 1p’s and 2p’s could be scrapped leaving 5p as the smallest denomination, all prices then in multiples of 5 – nice and neat.
Of course, there are always unintended consequences to thigs like this:

What will everyone at the Royal Mint do this year?
Think of the cliches! What will we give for someone’s thoughts? What will we spend in the loo?
Poor King Charles, finally on the throne and no coins with his head on!
What about future archaeologists? You can still find 2000-year-old Roman coins in British soil today. It won’t be so glamorous finding a 2024 Mastercard in a few centuries time!
Children won’t be taught about the unfairness of life if we don’t have the 2p pusher machines in arcades anymore.

But there is something more serious about moving away from cash…the psychology of it.

When we hand over cash, we experience a psychological effect called “pain of paying”. We get a real, biological increase in our pain receptors from handing over something physical. It actually HURTS.
And that pain isn’t there with a credit or debit card – because we don’t see or feel the money leave our account.
Quite simply, paying on card makes us more likely to spend more – various studies** have found that people using a card spend nearly twice as much as people paying cash for the same shop. So, to go back to clichés, if we remove pennies from the system, there really is a chance that the pounds won’t look after themselves.

**Greene, C & Schuh, S. The 2016 Diary of Consumer Payment Choice, 2017/ Prelec, D Always Leave Home Without It: A Further Investigation of the Credit-Card Effect on Willingness to Pay, 2001

Construction activity increases at fastest pace in 26 months

· Activity rises amid much faster increase in new orders.

· Employment increases for third month running.

· Emerging pressure on supply chains signalled.

As the second half of the year got underway growth accelerated in the UK construction sector. In turn, purchasing activity increased and raising staffing levels for the third month running. Greater demand for inputs put pressure on supply chains, and input costs increased at a faster pace. The headline Standard & Poor’s Global UK Construction Purchasing Managers’ Index™ (PMI®) – a seasonally adjusted index tracking changes in total industry activity – rose sharply to 55.3 in July from 52.2 in June.

All three categories of construction saw activity increase in July as work on housing projects returned to growth. Commercial activity increased solidly, but the fastest expansion was seen in civil engineering activity, where the rate of growth quickened to the sharpest in almost two-and-a-half years.

Source: PMI by S&P Global

Market Falls vs. Annual Returns

The “dog days” of summer were blamed on the appearance of Sirius (the dog star) returning to the night sky each year. The Ancient Greeks associate this period with heat, fever, mad dogs, and bad luck. In 600BC, the poet Alcaeus suggested that you “steep your lungs in wine” to cope with it all!
We’re right in the middle of the dog days now, and things are moving quickly, but here is a chart to remind us that market shocks happen as regularly as Sirius appears, they are a part of life.

Source: Factset, Past performance is not a guide to future returns, chart(s)/data for illustration purposes only.

The pink dots show the peak to troughs in the Standard & Poor’s 500 each year.
And then the blue bars show the return over that year. The money you’d have made from staying invested, start to finish.

Two things:

This year, the S&P’s 500 is only down 9%. Most years (+60%) see falls of more than that.
There will be some years where the overall return is negative (although never as bad as the worst point). In fact, these periods are the RISK that equity investors must bear to get rewarded for

The thing is with market sell offs, there’s always a different thing to last time, and it’s usually something you hadn’t heard of a few months ago! But trading the headlines isn’t a sensible way to live your life – high stress for very little reward.

Well done to our North Yorkshire police fundraisers who completed the walk of the Three Peaks overnight on Sunday 28^th July.

So far they have raised £1900 for the charity!

Please consider donating to back these guys using the following link or QR code:

Clear Minds

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Seasons Greetings! All at Clear wish you a very happy, healthy and prosperous New Year!

Seasons Greetings!
All at Clear wish you a very happy, healthy and prosperous New Year!