Oil shock: the impact on your money, mortgage and next holiday

Hi, welcome to the latest episode of the Asia Bell Money Markets podcast where we talk

about investing, personal finance, money, stocks and a whole lot more.

My name is Dan Cotesworth and joining me this week is Charlene Young.

Hi there, Charlene.

Hi Dan and hi to everyone tuning into the show.

Now we've got some real traits on this podcast, including a fantastic chat with financial

journalists and financial times columnists Jonathan Guthrie, all about investing narratives

and some lessons from previous market crashes.

We'll explain why everyone's been talking about hummus and dashcams this week as we get

the annual update to the basket of goods used to track inflation.

And in Middle East, conflict continues to keep oil prices at high levels.

And that's actually having quite an impact on two industries.

What is cars and the other is travel.

We're going to discuss why that is important and why it's got sort of a read across parts

and stock market as well.

Anyone in the process of buying a house or remorgaging might be alarmed at significant

changes to deals available over the past week.

Stick with us, we'll explain why later in the podcast.

The clock's ticking on the end of the tax year, but there is still time to take advantage

of certain allowances if you get your skates on.

So we'll run through the key ones in a bit.

But first up, let's look at how markets have performed over the past week.

And some of the key announcements that we've heard, Dan, what has been going on?

Well, I mean, it's kind of the similar situation.

Don Trump saying that this conflict in the Middle East will soon be over.

There's no sign of that happening.

But what's quite interesting is that investors seem to be looking through all the noise.

Markets are kind of holding up.

So the FTSE 100, the UK stock market is up just under 1% in a week.

The S&P 500 is down by about the same amount.

But the Nikon Japan is up nearly 2%.

What's actually happening here is that Brent crews, the oil price, is kind of hovering

around $100.

And that is high.

And so it means that we've got to be slightly aware of the implications of what that

mean if it stayed at that level going on.

That's kind of what it means is that inflation could be a problem again.

Interest rates could stay higher for longer.

We're going to talk about that in a second.

But for now, I think the fact that sort of stock markets are kind of,

they're staying quite resilient.

But we haven't really seen, even since the start of March,

it's a really big correction in the stock market.

There's been a wobble.

There's certainly not been a big correction.

What's worked on the market in the last week is things like consume

a stable stuff like that we buy every day, no matter what's going on.

Things like food and tobacco, utilities, industrial companies,

and of course, oil companies themselves, things like BP and Shell,

continue to do well.

If oil stays higher for longer, theoretically,

their earnings should be pretty much stronger than people expecting, say, a month or two ago.

But overall, there's definitely wobbles there.

But I think investors should stay focused, really.

Don't react to every single headline you see.

Hopefully, this complex is resolved very soon.

But for now, it's quite reassuring that we haven't had big wobbles on the stock market.

We can kind of stay positive in terms of people who have got long-term investing perspective.

Yeah, and it's a big week this week for interest rate decisions.

So we're due to hear from the US later tonight, UK time,

and from our own bank of England tomorrow, a lunch time.

Kind of what's happening, obviously, in the Middle East,

it's done to put rates on a different path than perhaps we were expecting at the start of the year.

So, Dan, what are we expecting from these announcements?

Obviously, yes, we're recording this Wednesday afternoon.

Wednesday evening, we get the US numbers.

Thursday, lunch time, we get the UK interest rate decision.

So by the time you listen to this podcast,

you'll already know what's gone on.

But normally, we would perhaps record an extra bit at the top of the podcast

to say what's happened.

But looking at the data to the probability of rate cuts,

it's like, I don't literally no one's expecting any central bank

in either the UK or the US to do anything with interest rates.

They're going to sit on their hands.

There is, you know, it's kind of a way in see approach here from central banks.

Clearly, the prospect of oil being much higher in price terms than what it was a month ago

suggests that inflation could be a problem again.

Now, central banks push up interest rates if they're trying to fight inflation.

But what they might do is say, look, we're going to maybe take a watching brief

to see is this actually just a very short-term blip?

Or is this the way it could be for months and months to come?

Now, if that oil price stays higher for longer,

there are potentially negative implications for the economy,

for like business and consumer confidence.

Of course, that bees into the jobs market.

And actually, that's what the central banks will be looking for when they want

but think about what should they do with interest rates?

Do they need to go up?

Because if you go back a month or two ago,

all the talk was about interest rate cuts,

not interest rates staying still all going up.

So I just looked at, you know, we can access some sort of data terminals

and looking at the, you know, what are traders in the market sort of pricing in?

For the UK, there's basically implied no change to interest rates

is it sort of implied for the next 12 months or even longer.

In the US, you know, potentially could see some cuts later in the year,

but it's a big question mark.

Because so you just have to look at what else is going on in the world.

As we recorded this, spare thought for those in Iceland

where interest rates have just gone up to 7.5%.

Well, Australia has also just raised rates for the second time in two months.

And this is a point where Charlene says,

I've just booked a holiday to Iceland.

All right, I've got, I've got, I've got a big property portfolio there

and my mortgage has gone through the roof.

Tell us that's not true of Charlene.

It is not true, but we are going to touch on mortgages.

I know Laura ran through some indications

from her personal finance point of view last week.

I thought it was really useful just to kind of re-outline

how the base rate kind of plays a role in mortgages,

but isn't, kind of, really doesn't always directly read across to fix rates.

So the rates on fixed rates mortgages are actually determined

by something known as swap rates.

So this is the rates at which financial institutions kind of can lend to each other

and also they are forward looking.

So they're more concerned with interest rate expectations.

So what you've been talking about now is you've logged on to your fancy terminals

and what might happen in the future

rather than the decision we are expecting tomorrow.

And as you say, this is the kind of current worry.

So before they're on conflict, do you say markets are expecting maybe a cut this month

or maybe one or even two more in the next 12 months

and now we're looking at actually sticky interest rates

due to rising inflation or sticky prices for the rest of the year.

That expectation that rates will be staying higher for longer

has led to rising swap rates already.

And what that means is that inflates mortgage rates

and leads to what mortgage experts are calling a vanishing act

when it comes to fixed rate deals under 4%.

So we've had some really good analysis from MoneyFactsCompared.co.uk

and they find that the pool of lenders offering these sub 4% fixed rate deals

has actually all bit disappeared.

So all of the biggest banks have increased their rates since the start of March

and you're back to HSBC, NatWest, Nationwide and SunSundere

and none of those are offering sub 4% fixed rate deals when they were last week.

So they've also had a look at kind of what's been going on year and year

and I think that's just really useful to run through.

So year on year average mortgage rates across the two year, five year and 10 year fixed rates

sectors have all fallen.

But these recent increases in swap rates have pushed the average to and five year rates

back up above five per cent.

So cost on mine's back listeners will remember and watch us on YouTube as well

that the Bank of England base rate was cut to 3.75 in December 2025 last year

and since then your average standard variable rate.

So the SVR that you might see quoted has fallen by around 14 basis points to 0.14 per cent.

But although year on year, the base rate has obviously fallen by 75 basis points.

The average SVR has actually only fallen by about 55.

So at 20 basis points, sort of less than the headline rate.

And kind of as Laura mentioned last week, if you're due to remodeled this year,

if you're buying house for the first time, it's definitely still worth looking

for a fixed rate deal compared to a high variable rate,

but almost 300 pounds a month could be saved each month in repayments

if you're looking at 250,000 pounds mortgage.

And actually, it can pay to start looking for a deal as soon as possible

because you can actually secure any deals and existing borrow for up to six months in advance.

So some worrying news if you were counting on that kind of sub four percent deal,

but do still shop around and do shop around as early as you can.

That's me talking about mortgages and we've short markets as well,

but what have companies being reporting this week done?

Have we got anything good sticking on there?

There is some really good news.

And I think what's really important here is that share prices have reacted positively

to good news.

Now that suggests that investors are still switched on.

They're not kind of like hiding with their tin hats,

stashing cash under the mattress.

They are engaged and that's a really positive sign.

So we had, as a few names,

perhaps people don't really might not be familiar with.

They're not household names, but Diploma is a massive company.

It distributes lots of various goods.

I always think it's like it's one of those companies that helps keep factories running.

So if you go to a spare part and you know, conveyor belt breaks,

you give Diploma a quick call and they'll be around in the jiffy.

They share, they've gone absolutely bananas today like up

because they've increased their guidance and said certain parts of business are doing really well.

The IT reseller soft cap was come out said to have an exceptional first half.

It's benefiting from AI infrastructure spend.

And even moon pig has come out said, actually, no, it's fine.

We're just we're trucking along nicely.

It's all good.

What is quite interesting is from seventh of April,

the price of first class stamp goes up to £1.80.

Now obviously moon pig, one of the things that it does is it's

bigging in gifts.

So if you want to send, I guess a giant toberone and some flowers to your to your mother

on or grandparents or something, you can do it by a moon pig's website.

But also it's bread and butter is still sending out greetings cards.

Now £1.80 for a stamp.

That's the same price as car, isn't it?

So when was the last time you bought some stamp, Charlene?

Oh, I don't know.

I just go to the post office sort of as and when,

but I do use moon pig.

I'm a big fan actually putting sort of like photos of the kids on cards

and stuff and get my husband to buy stamps.

Yeah.

I mean, obviously the convene fact is good.

You can even like, you can get a digital signature and even they'll post it for you

and stuff.

So you can see what's see the, so perhaps why people use it.

But to me, like when I was a kid, I remember stamps for about 30 p, wouldn't they?

So it's like, so I had a look back.

I'm going to put you on the spot now, Charlene.

What, what, what do you reckon the first class stamp cost in, in 1996?

No, that was when I was born.

Not quite.

And OK, I am going to go first class stamp, £55.

Well, it's 26 p and if you get fast forward to 2005, so nearly 10 years later,

it was only at 30 p and then by 2013 it hit 60 p.

85 p by 2021.

Now it's more than double that price than five years.

I mean, this is, I know that the Royal Mall is grumbling and saying that, you know,

no one sends the kind of the volumes they used to and it's more, you know, you don't

really get colonies of scale any day these days, we saw sending letters and stuff.

So they need that price high to help cover all their costs.

But £1.80, I feel like an angry person here.

Right, angry London, yeah.

But talking to the cost of kind of everyday things, Charlene, I know you've been looking

at these latest inflation basket figures.

So these come at once a year, a tell us which items are used to calculate cost living.

What we normally see is like certain things are removed because they're no longer in favour

and stuff that's kind of trending now gets added.

So recent years we've had vinyl records of being added back, air fries, electric bikes,

even, even croissants, what's just quite surprised at?

I thought, you know, surely people, people buy croissants all the time anyway.

Do they? Why are they suddenly becoming famous?

But I can, so what's the latest big hits?

What's the sort of the craze now?

Yeah, well, we have looked at consumer trends, haven't we, in recent weeks, but the new

kids kind of on the block when it comes to the ONS basket are alcohol free beer, hummus

and dash cams.

Yeah, quite an exotic, I'll be so on, on their way out though, something I don't think

I've really bought either, single sheets of wrapping paper, they've been ditched in favour

of full rolls, which I kind of understand, yeah, I wouldn't have expected single sheets

to kind of be in there.

So yes, done, as you extend that, that ONS basket of goods is updated every year and the

reason it does that is to make sure that the data that is used to feed through and set

interest rates by the Bank of England, for example, is not out of date and it's not

giving kind of a false reading of the true cost of living.

Obviously, they're trying to get a picture for everyone in the UK on our own kind of

individual basket of goods is always going to be slightly different.

And as we've seen, consumer behaviours always changing, so this annual shuffle is a really

good way to kind of get an insight into what people are experiencing.

As I mentioned before, we've talked about our own consumer trend research and people

embracing kind of healthier lifestyles, you know, the proliferation of no and low alcohol

options has led to them now being officially added to the basket.

And Hermes, I mean, it's been a staple for quite a few people and certainly lunch boxes,

especially for my kids, as you know, for years now, I mean, it's going to be more and

more popular as people realise, kind of, it is pretty healthy in terms of protein and

plant fiber.

It's also had a beast thanks to the take up of weight loss drugs, which yeah, actually

kind of makes sense when you think about it.

Now, I'm not a full vegetarian, but I'd consume a lot of chickpeas.

To the point the other day where I had to actually Google if that was OK, if we could

have too many, you know, too much of a good thing and all that, but yeah, I do it to try

and keep myself off crisps.

So, you know, I'm influencing the basket if they're going to take that one, but I'm sorry,

I've gone a little bit off track there.

And getting back on with what I want you wanted to talk about, another really interesting

addition was pet grooming.

So that is the number one expense now for animal owners after health checks and our very

own Danny has looked at this and it's due to the uptake, as we know, lots of people kind

of added to pets in their household in the pandemic in the lockdowns, but hyperallergenic

dogs.

So you kind of cockapooies, Labradoodles that have quite sort of curly hair, but it doesn't

shed as much.

They do require quite a lot of grooming.

And yes, I thought it was really interesting that the number one expense now after health

checks was actually grooming, presumably more than food.

So that has also been added to the basket.

As we mentioned, dash cams have also made an appearance and, you know, that is in part

as a way for drivers to keep insurance costs down.

I'm going to take a look.

I don't have one, but maybe it's worth having a look.

And again, tech also changes the way that this basket is calculated.

So, you know, we can use all the data scammed from supermarket tills to give them a accurate

reflection of the cost of weekly shops.

So yeah, really, really interesting, another, another good look at sort of getting into

the bonnet and trying to find out what goes into these baskets and how it, and how it feeds

through to the inflation data that we see.

And, you know, shifting spending habits, I think that leads me quite nicely into something

new teas that we wanted to talk about.

And it's how people have behaved since the big jump in oil prices.

So in particular, those two industries that might look like winners or losers.

Yeah.

I'd say we want to talk about cars and travel cars.

I feel like it could see a shift travel we've already seen a shift.

So let me touch on cars first.

If you think you've got a very big jump in oil price, it means when you go to fill up your

car with petrol, it's a lot more expensive now.

And you just have to think, well, if you go, you know, when Russia invaded Ukraine and

we had that big energy crisis, energy cost went through the roof.

I don't think it was a coincidence that in certain parts of the world, we saw an increase

in electric vehicle purchases.

People are looking for more cost-efficient ways to get from A to B.

And a quick look, and I've seen a few little sort of early indicators on the data side

suggest that people, you know, do you think things like Google searches and stuff?

People are looking more now in the last couple of weeks for electric vehicles again.

So at the top of the podcast, I said that there was a link to the stock market.

There's quite a lot of companies on the stock market involved in the auto sector.

And they've all, if they're linked to the sort of EVs that electric vehicles,

they've not had a very good time recently.

That's because take-up rates have not been anywhere near what people expected.

Part of the reason is because they're really expensive for these cars.

I feel like there's still some people worried about whether the batteries are good enough

to get them somewhere, where they're going to charge them.

But I feel like that's not as big as a concern as it was, say, five years ago.

But yeah, I think I wouldn't be surprised if we come back in a couple of months' time.

If all the prices stay high, that we've got some proper firm indicators of, you know,

an increase in electric vehicle interest.

The other one, on the holidays, we have already seen here signs that people's holiday preferences

this year are changing.

So the travel agent on the beach has come out.

So on the stock market, it came out and its share price collapsed.

When it said it's reported a significant slowdown in bookings for prime holiday destinations,

Turkey, Greece, Cyprus, and Egypt.

Part of that is down to, we had reports of drones that sort of led to the closure

temporarily of Cyprus Airport a week or so ago.

And just geographically, people worried like, you know, if you've got all these conflicts

in Middle East and start to spread out, you know, people go, well, you know, I want to go

on holiday for some, you know, peace and quiet relaxation.

I don't want to be worried about sort of tensions in the area where I'm going.

So you can understand why people are a bit nervous about those sort of popular holiday destinations.

But, you know, having a look around, there was an article just a couple of days ago,

it said, you know, people are now reporting more increase in bookings for Portugal, Italy, Spain.

And interestingly, for the U.S., and we've had quite a few of the U.S.

airlines the last day or two saying, this is booming for them, you know, like for people

sort of saying, actually, you know, go last year, say not sure I want to go on holiday

to America, things seem to be going up again.

So I think it is really interesting shares in airline companies have had a terrible time

in the last couple of weeks because $100 oil price for that means significant increase

in costs.

Also, we've had big disruption to travel routes around the Middle East.

And so they've had, they've had really big disruptions.

So people worried about near term earnings for that.

But I think overall, it's, you know, you're going to see, you know, some definite shifts.

What about you, Charlotte?

Have you booked your, got you some holiday all sorted?

We were thinking about going where Easter, and then kind of not got on the head partly

also because everybody then seemed to be booking things like the Canary Islands, so obviously

a little bit closer to home, but still get a little bit of sunshine.

So no Easter plans I am off to the States for a birthday trip in the summer.

So yeah, I've already booked that trip myself.

But yeah, no, you do notice it sort of where I am if you want to go from Manchester to

anywhere that you tend to go via kind of Dubai or Doha, and obviously with those flights

kind of either being cancelled or people trying to get back.

Yeah, the other way, unless you want to go down to London is to go across to the US.

So yeah, no, we'll be keeping a keen eye on it.

And like you say, it is just kind of that geography, isn't it?

People just worried about even, even if they're not necessarily worried about tensions

where they're going, it's about, can they get back, you know, there's been lots of people

at school who sort of got stuck in places of late.

So yeah, no, a really interesting one.

And yeah, particularly that uptick in the US, I hadn't read about that.

So yeah, I mean, you're just just thinking about it now.

I mean, like the idea of like people are slightly nervous.

Well, of course, another option is just to staycation, you hold it home, you know,

and if that does happen, we have a massive increase of people having their son

of the whole days in the UK.

Of course, what does that mean for the, that could actually be a positive for the economy.

So yeah, definitely, it's nearly 20 degrees here.

So yeah, no, absolutely.

We're going to, yeah, head down to see some family and some of us are over Easter instead.

So yeah, do my bit.

Excellent.

Well, we got time for just one more sort of segment we want to talk about before we bring

on this week's special guest.

And it's all about the tax you're in.

So please, before you switch off, thinking I'm going to start boring you with stuff about tax,

stick with us because actually what Charlene's going to tell you could actually save you some money.

Now we are just days away from the end of this tax year, but you do still have some time

if you act now.

So Charlene, give us the top tips.

I will keep it quick and hopefully not boring.

So Ices, individual savings accounts, we love them.

Tax fee wrappers where you can either put cash in or get invested and those gains are free

from capital gains and income tax.

And it's very much use it or lose it when it comes to your 20,000 pounds and your

ice allowance or 9,000 pounds for under 18s and a junior I say, you know, we haven't

a few days left.

So we can in theory that AJ Bell accept payments into just before midnight on the fifth

of April, but that might not be the case, obviously, with all providers and with it being

Easter Sunday on the fifth of April, you'll be unlikely to get any support from your

bank or building society if you're having some payment issues or card issues.

So just one thing to bear in mind.

And that 20,000 pound allowances spread across all your Ices for the tax year for you as

an individual.

So now you can pay into multiple Ices of the same type in a tax year.

So just obviously keep an eye on what you have done so far and how much of that allowance

you have used.

We also touched last week on the increase in income tax rates for dividends that come

in from the sixth of April next year.

So in the new tax year, but it does mean that those tax benefits of investment Ices,

stocks and shares, Ices become even more valuable from the sixth of April.

So the more of your investments you can get wrapped up away from that tax increase, the

better.

And one particular date, the 27th of March, that is the last day you can place something

called a bed and I say transaction with AJ Bell, but again, try not to leave it to the

last minutes.

And so you can do that online logging into your account.

So as a reminder, a bed and I say deal lets you sell an investment that's in a dealing

account or a general investment account and then get that wrapped up and bought back in

and stocks and shares I say.

So the sale proceeds that get transferred across as part of this transaction, they will also

use some of your I say allowance and you might need to factor in some other costs like UK

stamp duty on the repurchase, but just to be bare in mind, obviously check with your provider

in case that date is different or very, very imminent.

You can also lodge your instructions from the sixth of April online if you want to get

started early in the tax year to on those better nicer deals and like pensions, again,

the tax relief part on what you pay in, so that basically you get from the government on

your own contribution, that runs in line with your earnings for the tax year.

So in theory, you can pay in up to 100% over your UK earnings for a tax year and get tax

relief on that.

So that's earnings, it's not things like interest or property income though, but you also

have an overall pension and your allowance that applies to all contributions.

So the ones that you make, but also the ones made for you, so by your employer, for example,

that is £60,000 per tax year for most people, although if you've had a bumpy year and

you want to stuff a load of money in your pension, you can actually carry forward unused

allowances from up to three previous taxes too.

So it gets a little bit complicated when we're talking about your own contributions,

very much the earnings for the tax year, but in terms of your allowance, you can carry

some stuff forward if you've had a particularly good year or you want to use employer contributions

to do that.

Now, pension contributions, why do we love them?

They help lower your taxable income and get you out of the various traps and quirks

in the UK system.

So for example, the limit at which your personal savings allowance is reduced, that amount

of tax reinvest you can get each year, the income limit when child benefit starts to get

clawed back or you start to lose your tax repersonal allowance.

So yes, you get tax relief from the way in, yes, it's an tax re wrapper, but it can also

help you with some of those quirks.

And if you want to do that for this tax year, you'll have to make sure you contribute

before the end of the tax year.

Just keep in mind that you'll see your annual allowance tapered down, if your income

is over 260,000 pounds for the year, or you'll have a fixed £10,000 allowance for

sips and other pension pots, if you've already taken income from a sip or another pension

that allows flexible options like draw down.

Last point, because I want to keep it short and sweet, if you're already in draw down

and you do want to take like an income top up before the end of the tax year, you know,

just to get you up to a particular band, for instance, you'll need to get the income

instruction in ASAP.

Well, thank you very much, Shoddy, and if you want to read more stuff about this, check

out Edgey Bell's website, we've got lots of good stuff there to help people with

pensions, ices, investments and more.

Right and it is guest of the week time, and it's a name which might be familiar to financial

times readers.

Jonathan Guthrie worked at the FT between 1996 and 2024, including Stints as Associate

Editor and Head of Lex, which is the Newspapers Investment Column.

He still writes columns for the FT on a freelance basis and recently had his first book published.

One recently messed up with Jonathan over Zoom to discuss a wide range of topics, including

coping with market wobbles and the government's desire to get more people investing.

Let's hear what Jonathan had to say now.

Very pleased to be joined by Jonathan Guthrie, award winning journalist Financial Times

Columnist, an author of a new book called The Truth About Investing, is an absolutely

fantastic read.

Importantly, it's very easy to understand, which is a very rare thing in the world of finance.

I would say it's pretty high recommended for people just getting into investing, or even

those who have been doing it for a while and want to take it up a notch and get a bit

more confident about what the numbers really mean and what's going on.

So Jonathan, absolutely brilliant to see you.

Hope you are well.

Thanks for coming on the podcast.

Very well.

The license to be here, Dan.

So as we are recording this on 11th of March, we're still in the middle of a bit of a

stop market wobble linked to the Middle East.

It's kind of a, it's frustrating from the perspective of stop markets seem to be doing

quite well for quite a while, and while so a few little wobbles around things like

concerned around AI and stuff, generally, things were still working out for people.

And of course, this year we've got the government trying to encourage more people to invest.

I think just general awareness that people need to do more to save for the future, I'm

just wondering, you know, from your experience looking at markets, is this sort of latest

market wobble concerning?

And do you think actually this could actually stop more people from investing, or it's just

a normal blip that we've seen from time to time?

Okay.

So there are a couple of questions there.

What do we think about the current sell-off?

That's what it is.

There's some quite sharp drops, and particularly today on the day of recording in the FTSE 100.

But at the moment, this is a sell-off.

It's not quite a correction if you want to go with the kind of ways in which people attempt

to create technical definitions for the things which are a bit vague.

In the market, corrections, I think, 10% of crashes, 20% as a rule of thumb.

It is going to put people off from putting money in the short term, I think, if you're

seeing a very big drop in one day, you probably

don't, unless maybe you're a clever, professional investor going on that.

You probably want to see a little bit of stability.

But I don't think it should put people off in the long term, because the approach I

advocate in the book, which I followed myself, which I think is also a theme in your

excellent podcast, is that investment is something you do gradually.

You trickable money in, you invest for the long term, extended periods of time, you know,

seven to ten years, at least in equities, that tends to smooth that market to ups and

downs and gives you the best chance of some good growth.

And therefore, you shouldn't be too put off by volatility.

Stock markets are volatile.

They are innately unstable.

They're all kinds of drivers for that, lots of short term economic incentives that tend

to put stock prices up.

In terms of what the government wants people to do, well, I wouldn't go too much from

what the government tells you to do in terms of investment.

Dan, you may say I'm a terrible cynic, but I think they have most of them there, right?

They would like to nudge the fund management industry into putting quite a lot of default

money.

That's the money which people haven't actually expressed an opinion about how it's invested

for their pension funds or I says they were quite deeply for pension funds.

The government would like a lot of that to go into UK assets, private ones.

Is that the best investment for you?

Not sure that it is.

And it certainly suits politicians because it reduces the amount that they have to take

out of the public purse to put into infrastructure.

But overall, I think we should still be investing for the long term.

Obviously, you've seen previous market wobbles, market crutches, market corrections.

I mean, what, what, what, what, what's the best way to survive them?

Is it, is it simply to sit in your hands and do nothing and let it ride out?

Or is there something a bit more that people need to think about when we get periods

like now or even worse situations?

Well, I think the, the main thing is to follow the advice that, uh,

Douglas Adam Adam's in a hitchhiker's guide to the galaxy, which is don't panic.

When you see big corrections, you have something or indeed big rises,

you have something which in cognitive terms is referred to as availability bias.

It's a big availability of information.

So lots of newspaper headlines reports on the television news,

showing people panicking in financial centers.

It creates quite a sort of bow wave of emotion.

And then if you're a private investor, the tendency is to sell out at the wrong time.

You tend to sell out when prices have dropped substantially.

And you also tend on the other hand to buy in when prices are going, have gone,

have already gone quite high.

So in general, what I do is I don't panic.

I do tweak things a little bit.

I've taken money and my own funds that I run for myself and my family.

I've taken a little bit of money off the table over the year last year or so.

I've also diversified away from the US to some extent.

I think people are realizing that the high political risk, the high geo-political risk of exposure to the US.

Of course, it tends to overspive into the rest of the world as well.

But a friend says that you're maybe 60, 70% US assets, that's too much.

I've dialed it back and I'm sitting on a bit more cash.

But I wouldn't panic.

Don't call out to the market.

You need to ride out the peaks and troughs over time.

What about someone in retirement?

I mean, they could argue that they don't have as much time to ride out.

There'd be any sort of ups and downs.

And actually, do you think that someone in retirement perhaps would have already sort of

de-risked their portfolio and not be as much in terms of stocks and shares as perhaps someone

who's still saving for retirement?

Or actually, people these days in retirement tend to have growth because they're living for longer,

potentially.

Absolutely.

It depends who you are and what kind of assets you have.

But I think what you've outlined, Dan, is a sort of the traditional approach as opposed to the

newer approach.

The traditional approach was that you wanted to be completely out of equities by the time you

retired.

Everything was basically in cash or some cash equivalent, maybe some bonds.

And you use that to buy an annuity that absolutely pegged down your income for the rest of your

life, probably.

That isn't the world that we live in anymore.

You don't have to buy an annuity, which is great news.

But it brings some complexities and risks with it.

So, for example, if you're approaching retirement with those default funds, for example,

the ones where you haven't expressed an opinion on where it's invested and the

companies, savings company, moves it into a safer asset.

Those tend to be very conservative.

So, check what those are because what you probably should be doing is having a fairly safe

pot of money for your immediate needs over the next few years that you can draw on.

This is assuming you're in a defined contribution pension set up.

But, further off, seven to 10 years or so ahead, maybe more.

You should be taking more risk because you want to get some equity growth,

and you also have that opportunity to ride out some peaks and troughs in the market.

And if that's the situation you're in, you have to remember, say, if you're in your early

sixters, you've got a pretty good chance these days, thankfully, of living

into your eighties, maybe 84 would be the average for a man, 87 for a woman.

So, you can remain exposed for longer, depending on how competent you feel to do that,

what kind of advice you've got, and some other factors, which are really quite individual.

I mean, just a concept of someone, they might be listening to this thinking,

I'm not really done much in investing, but I'm either interested in it, or perhaps I feel like

I should be doing this to be better prepared for the future.

I guess what sort of stop people from investing in the past?

I presume it's a mixture of a lack of confidence or a lack of money.

Well, yeah, I mean, both figure, and I think if you're scrambling to try and cover

household expenses, you're not going to be putting a lot of money away.

I know for a lot of private individuals, they get rather annoyed with people like us,

so continue to say, well, you should be saving a lot of money from the age of 20 or 25,

20 or 25 or else, 10 not to be doing that, they've got other priorities.

I don't necessarily think that that's a terrible thing.

It's good to dip your toe into it, I think, as you get a little bit older into your late

trenches, early thirties. One of the things you do see, I think you mentioned confidence there,

is that a lot of people sit on large amounts of cash for quite long periods of time.

And I think that does show a lack of confidence.

What happens if you do that for extended periods of years, is you're going to lose value.

Related to inflation, inflation tends to be a bit ahead of deposit rates, so even quite good

ones. So the value of your money is eroding. And I think that does show a lack of confidence,

and investment is fundamentally quite simple. I rate this book really to try partly to

demystify it and to try and puncture a lot of the jargon and a lot of the industry speak around

it. I covered the city and I wrote about investment and investment managers now for 40 years.

It's really, there's quite a lot of mystique around it, which is misplaced. If you follow the

systematic approach, which I've described, and which again, I think you quite often talk about

in the podcast, it doesn't need to be a complicated thing at all.

Well, if we do see more people investing, and actually I really do hope we see more people

putting money into the markets to try and save the future, is there sort of a temptation that

they're just going to, a lot of people be drawn to parts of the market. They've got the most

compelling narrative. There always seems to be something that's sort of the hot area. So

in recent years we've had AI, we've had weight loss drugs, defense stocks and stuff. I'm just

wondering, obviously, the people are talking about these areas because there's lots going on,

but it's sort of a danger that people are going into these areas.

Perhaps, you know, from what you've seen in your career.

Yes, absolutely. Human beings, we function on narratives. This is a very basic thing, and it's

probably why I have the job that I have, and you have the job that you have as well. We're

story tellers, and people find that compelling and interesting, and we tend to try and interpret

the world around us, via narratives and stories. And the problem with it is that some of them aren't

true, and you also have to think about the motives of the people who are telling you stories.

Sometimes it's someone who's what's YouTube interested in their fun, so they can make fees.

Sometimes they're stories that we tell ourselves. So you have to kick the tires as you go along.

I'll give you an example a few years ago at some of the chip designers and some of the chip companies

were very keen on the thing called the Internet of Things, which was the idea that saying in

domestic context, your fridge would talk to your groceries company, and it would tell the

old groceries company when you run out of milk. And then a truck, a van would come and

it would deliver milk and other things to your house. This was meant to be a great new thing,

and the reason for that was that the great wave of investment in personal devices and use of

personal devices was beginning to plateau. It would reach the natural limit. They needed another

big thing to sell to people. The Internet of Things was broadly speaking at a retail level,

a bit of a bust. People don't really want a toaster that can talk to their fridge or to their

gracer. It's too much bother. It didn't really work. I was skeptical about it at the time.

When I first started engaging with AI, which was quite a long time ago, actually, I was talking to

an AI in San Francisco before things like chat GPT. We were generally available, and I started

trying them out. I thought this is really potentially a very big thing indeed. And I think AI is

transformative, but who it benefits ultimately and who it damages, we can't be very sure about that.

So think about the stories that people tell you. Think about why they tell them and always be

skeptical. I was going to say, yeah, I mean, skepticals, you know, cynical, because quite often,

if you're investing some money and you're looking at a certain stock, it never to be, they're going

to talk up if things are good. Even when you might read a set of results for training update,

when things are clearly bad, they'll go, they'll always try and put a spin on it. Actually,

I agree with you. It's a recall of the external environments.

Yeah, I mean, in the past, I remember we've looked at sort of the excuses that companies put out

when they're trying to gloss over stuff. And the weather is always a good one. Like trains say,

the wrong kind of leaves on the line. It's like the wrong kind of sun or wrong kind of rain. And

I even think that there was a company blamed a visit by the Pope for, you know, for companies not

selling enough that that year or something because everyone was distracted by watching the Pope.

And it's it's obviously, you know, you do talk about this in your book, sort of the highlights,

things like be careful with narratives, you know, the trend following, you're hurting. Just

just because someone else is sort of piling into an area doesn't mean necessarily. It's good for

everyone isn't there. So yeah, it's fair of missing out. So, so a very characteristic psychological

syndrome that I've come across as a private investor is talking to other people who invest and

they tend to tell you the stuff that's gone well for them. So I went to see an old friend he'd

made quite, well, he made money in the city and he'd invested it in property around the country.

And he was telling me how brilliantly well, well, he'd done of this. And I felt sort of quite

anxious, you know, here am I. I'm boring, Jonathan. I've got my online portfolios that I'm

tweaked occasionally in this guy's, you know, buying and selling real assets and he's making real money.

Next time I saw him, he'd lost a lot of money. He'd lost about a million quid. I think on

a nightclub, I had no idea why he'd invested in a nightclub. This is not a good thing for somebody

who's familiar with that, complicated and sometimes rather, rather interesting industry to invest in.

And he'd done rather badly. The first time he wanted to crow, which is fine. That's a normal

human thing. You want to establish a bit of status. But the reality was that his overall picture of

his returns weren't quite as good as originally thought. But it does tend us to drive us into the

same things. I mean, I think as investors, we should be prepared to make mistakes. Not everyone

gets it right. I mean, but I can't, the key is to go to learn from mistakes. I mean, Jonathan,

I don't know about what your experience is. You know, have you got any, have you sort of made any

sort of slipups along the way? You know, perhaps any sort of if you fix them along as you went

on. Where's the start? I mean, where's the start? I was writing one of the things I wrote about

in the beginning of my career was the Japanese stock market. And I wrote, I think towards the end

of the eighties that and Japan is such a consensual and well-organized society that the stock market

that can never seriously fall. We then saw basically 20 years of the most depressed,

economic condition that you can probably imagine. I held on to shares in Pearson, the education

company for a long time when I was losing money on it. And I finally sold out and was willing

to recognize that I had made a bad choice. And a contact who's a hedge fund manager said,

you know, Jonathan, the thing about shares is they have no feelings. Shares do not feel sad

because you have sold that. And I think that's worth remembering. And another more recent one,

I was quite positive when I was, I didn't actually buy the shares because I wasn't allowed to,

I was writing for the FT on Lex at the time, but I was very positive on Aston Martin as an investment.

And that was because I'd been for a test driving on Aston Martin. It was an absolutely beautiful car.

And, you know, I was Starstruck. And the reality was that the business model, a lot of problems with it

and they lost people a lot of money. Yeah, I mean, Aston Martin has been, it's an incredible

story, isn't it really? You know, it's like the brand we know everyone wants to, we'd love to have

a, you know, one of these cars. Yeah, that has to be the one of the most miserable investments

on the stock market in years, isn't it? Well, the wear of Dama, this is the thing,

the wear of Dama and also the wear of bits of what other private investors were doing. So I think

private investors generally quite like Dama stocks or something that's like hatching. So

Aston Martin as one of those games workshop actually has been one of those. That's been one of those

stocks that's been supported by private investment to a large extent. It actually hasn't done badly

at all. But one of the problems I remember from engaging with the management there was,

was that they were trying to talk private investors down and say, well, you know, we're doing

Harry Potter things that don't get too excited, you know, that sort of thing. So you've got to watch

out a bit for those fads. Yeah. Well, Jonathan's been absolutely brilliant to have you on the

podcast. So your book, The Truth About Investing, that is available in shops now, is absolutely

brilliant. We're not meant to be buyers towards anything and you know, give recommendations,

but I suggest you do go buy this book. Thank you very much for coming on podcast.

Thanks very much, Stan. It's been a pleasure.

Thanks again to Jonathan Gussery for coming on the show. And that is all we have time for this

week. Don't miss next week's show where we've got two big names lined up, assuming everything goes

to particulars. We'll have someone from a company that makes exceeding me good products,

and a former dragon from Dragon's Dem. Until then, thanks for tuning in and have a great week.

This podcast is for educational purposes and the views expressed don't necessarily reflect

those of AJ Bell. The podcast isn't telling you if a certain investment is suitable or not.

The value of investments can change and you can lose money as well as make it.

It's also important to remember that how your tax will depend on your individual circumstances

and rules can change. The way an investment performed in the past

may not be the same as how it behaves in the future. If you want help, go see a qualified financial

advisor.