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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:
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 17th 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.
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.
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 19th 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.
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”
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:
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:
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.
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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