Monthly Newsletter – May 2024

1 May 2024

A real issue in society today is long term care and an ageing population…we explore the importance of saving for care in your old age….

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Long-Term Care Costs and Ageing Populations

According to a recent study by Just Group the price of the average home could cover just seven years of care in a residential home. For most relatively young people thinking about potential long-term care costs would probably be fairly low on their list of priorities. As people age, they inevitably start to think more about these issues and if they would like to leave their home to their children consideration needs to be given as to how one may fund any potential long-term care costs.

This issue is only likely to become more pertinent in the future due to increased longevity and changing demographics as shown in the graph below from research conducted by the Centre for Ageing Better:

Even if you do not plan to leave your home to relatives, another issue to consider is the fact that since 2020/21 house prices have risen by 12% whereas care fees have risen by 20% and this trend is expected to continue.

Engaging in open discussions with family members about long-term care preferences and expectations can also be very useful and collaboration with your financial adviser can ensure that your wishes and objectives are taken into account.

In conclusion, saving for long-term care is not just a prudent financial decision; it’s an investment in one’s future well-being and security. Should you wish to discuss long-term care planning for either yourself or a relative please contact the office and we will be happy to assist.

Darren Fuller – Clear Senior Paraplanner

AI – Healthcare needs you

If you have recently been writing a wedding speech or tried to answer a difficult Excel question or maybe summarizing a large chunk of text, chances are you’ve engaged with ChatGPT in some form. There’s a lot AI is great at, and helping with admin is one of them!

Leveraging AI to make ‘industry’ more efficient is a growing theme. In fact, it was referenced specifically in the Spring Budget. The Chancellor committed £3.4bn to the healthcare sector.

What was of interest wasn’t the figure, it was where it was being directed. This money is to be spent on digital transformation – including the expansion of AI capabilities for diagnosis, and lots of digitization of tasks.According to the UK government, “this funding will significantly reduce the 13 million hours of time doctors spend on poor IT, freeing up significant capacity (…)”.  Informed people will run the rule over the accuracy of these numbers, but the theme is an interesting one.

If we look to data away from our shores to make this more objective – then it would appear that there are some striking changes that have occurred over the past few decades.

In the U.S. the number of doctors has doubled since the 1970s, but interestingly the number of admin staff has grown 30 times!

Reports of unreadable, disjointed medical records, and lots of complex, labour-intensive insurance processes mean more people are needed to deal with admin than treat patients. And it’s expensive! But the positive is that technology is already having a tremendous impact elsewhere in the world of healthcare:

If AI can help in the less glamourous area of reducing the admin burden, the posiives could be material. For an ageing population, for workers within the sector… and for investors in it!
Intel co-founder Gordon Moore predicted a doubling of transistors every year for the next 10 years in his original paper published in 1965. Moore’s Law is the observation that the number of transistors on an integrated circuit will double every two years with minimal rise in cost.

 Come on Down!
There really isn’t enough good game shows these days, in our humble opinion.
So, let’s take a trip down memory lane in our inaugural – and possibly last, who knows – GUESS THE CHARRRRT!Clue #1 The below happened during November, eight years ago:

Clue #2 This rollercoaster covered just an 18-hour period.Clue #3 This holding plunged by over 5% initially. Sure, these things happen. But the rally came almost immediately after…. and nothing had changed.

Guess what the holding was?

The S&P 500 on November 8th & 9th 2016!

S&P 500 futures on 9-10 November 2016. Source: The New York Times

After pricing in a Clinton White House, chaos then reigned overnight as markets digested a higher-than-anticipated probability of a Trump victory.But upon confirmation of this win – and President Elect Donald J Trump not causing any issues on day one of the news – the index rallied materially, finishing the day up.

We use pictures all the time in the investment industry to illustrate points. Some are more useful than others, but this is the most apt one, for the data above.

Over the same period – 18 hours – if you were to pick the start and the end of the fluctuations, this is what you’d see:

Just another day………….

Ahead of election mania this is a timely reminder that companies, currencies and indexes fluctuate by the minute. It’s a brilliant example of how important it is to ignore the noise and stick to the plan.

The bright light of innovation
Even though the price of energy contributed to the tightening of belts over the past couple of years, we still have it pretty good compared to our ancestors. Back in the 1600s, something that we now for granted – artificial light – would have cost you £16,000! imagine having to account for lighting as a percentage of expenditure in your budget? A lot has changed since then, your home is now probably devoid of candles, unless you are going for the atmosphere. Not only has the price of lighting changed, but also the technology that produces it.
Indeed, by 2006, the price for lighting in the UK had fallen to just £2.89:

Source: Fouquet and Pearson (2012), taken from The price per million lumen-hours in £. 1 lumen-hour is equal to the luminous energy emitted in 1hr by a light source emitting 1 lumen. For comparison, a 100w light bulb emits around 1700 lumen.

Demand, efficiency, and innovation! When there is a desire for something, humans have an amazing ability to solve it. In this case, town gas allowed cheaper lighting in the 1800s, as gas lamps were twice as efficient as tallow candles. When the efficiency of the technology improves, the price of the service falls; gas lamps improved so much that during 1800 and 1900, the price of lighting reduced 30-fold! * You can really see this drop in the purple line above.
Electric lighting only became cheaper than gas lighting in the 1920s, (over 40 years after the introduction of the incandescent bulb). Consumption then kicked on and the rest is history. This is a nice way of looking at the evolution in lighting sources over time:

Commodities are attractive investments to many. You can touch them, they’re easily understood, and some of the short-term fluctuations do offer interesting investment opportunities. But over the long term?
As the lighting example proves, backing a commodity is effectively betting against human ingenuity. We prefer, over the long term, to back humankind’s proven track record of innovation. Will it shock you that a well-diversified portfolio is a good way to do that on aggregate….?

What is good Environmental Social and Governance (ESG) investing?
There is one fundamental problem with trying to solve the problems with ESG investing – what is good or bad.We are victims of it every day. Whether it’s at work, in the pub, at the dinner table… how often do you have to convince someone else that your idea of what is good (behaviours, outcomes, motives…) is the right one?

That’s because other people have different notions of what is good.

In the financial markets, if two investors disagree on the price of an asset (what is a good price for them), one investor can simply sell to the other, and eventually the market decides who was right. In ‘ESG’ situations the market doesn’t get to decide, so things get much trickier. Over to you…

  • Tesla is increasing the roll out of EVs, but is its CEO a shining example of corporate governance?
  • Genetically modified foods: messing with mother nature, or are they ending world hunger?
  • Are mining companies bad for the planet, or are they providing the metals for the energy transition?

Are banks corrupt, or are they the conduit to spur on renewable tech investments?

Not easy, is it…?
The EU has been trying to tackle this problem. Regulation now in force requires EU companies to provide ESG disclosures, covering a broad spectrum of sustainability topics.
EU businesses, including multinational companies with operations in Europe, have to report on ESG issues impacting their business, but they also have to report on how the business impacts a number of sustainability factors.

This is part of the efforts from regulators to create an international uniform standard of reporting, meant to fill the huge gap created by fragmented and inconsistent reporting. *
This doesn’t put philosophers out of their jobs – the fundamental problem of what is good or bad still exists. But when investing responsibly, looking at the same ESG metrics for all businesses through the same lens should give a clearer idea of who’s doing better or worse in the same playing field.

Congratulations and many thanks to Gary Beach and Charlotte McIntrye who ran the Brighton Marathon to fundraise for the charity in a very respectable time of just over 5 hours despite Charlotte picking up an injury!

They have raised £1250 so far with donations still coming in.

You are still able to donate through the following link or QR code.





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