Latest / Merryn Talks Money / Your Money Questions Answered: Pensions, Taxes and the UK’s Debt Outlook

Transcript

Your Money Questions Answered: Pensions, Taxes and the UK’s Debt Outlook · Merryn Talks Money

0:02
Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. Welcome to Meren Dog's
0:19
Speaker 1: Your Money, the personal finance edition of Meron Talks Money
0:22
Speaker 1: and these bonus podcasts we talk about the best strategudes
0:25
Speaker 1: and making the most of your money. I am Meren
0:28
Speaker 1: Sumset Web Bloomberg UK Wealth Editor at Large and with me,
0:31
Speaker 1: of course award winning. There's another award, isn't there John
0:34
Speaker 1: Award winning Senior a border and author of the Money
0:37
Speaker 1: digital newsletter John Stebeck. Hi, John, tell us about your award.
0:40
Speaker 1: Come on, get it over with.
0:41
Speaker 2: I am I'd say I'm not looted because it's some
0:43
Speaker 2: pard I'd tell you. So anyway, there you go.
0:49
Speaker 1: Okay, well watch this space everyone. So that's exciting news
0:53
Speaker 1: and award. We can't tell you about it. And also
0:54
Speaker 1: the other thing I wanted to tell you is that
0:56
Speaker 1: it's rapture week. Woo.
0:58
Speaker 2: Yeah, that's sort of some mutterings about this, but I'm
1:01
Speaker 2: not really I think I've avoided the topic.
1:04
Speaker 1: Yeah, you're missing all the important stuff. Time to have
1:06
Speaker 1: out there in the world is ending. Well. Actually, I'll
1:08
Speaker 1: tell you what, listeners, if you hear this podcast, it
1:13
Speaker 1: probably hasn't happened because today we're recording on Tuesday, and
1:17
Speaker 1: that is the end of the world day, according to
1:19
Speaker 1: those who believe in the rapture of of course, having
1:21
Speaker 1: thought of that, think about that little further, John, I'm
1:23
Speaker 1: kind of guessing that neither you or I are going
1:25
Speaker 1: to be lifted up. So actually you'll probably hear this
1:26
Speaker 1: podcast anyway. Our producers will still be on, it will
1:29
Speaker 1: still be here, maybe maybe not. M will change and
1:31
Speaker 1: I'm just going to leave that topic completely.
1:32
Speaker 2: Literally enjoying meldonn talks money in hell. That's a nice
1:37
Speaker 2: part for the weekend.
1:38
Speaker 1: I was hoping for Pergetry.
1:41
Speaker 2: No such thing at the pool, I think, really, yeah,
1:45
Speaker 2: did they not change his mains with that? Or was
1:46
Speaker 2: that lumble? So that might have been lumble. Even though
1:49
Speaker 2: we are getting weired on then, I have.
1:54
Speaker 1: Not been fully focused. I we'll come back to this
1:56
Speaker 1: another time anyway. Luckily we have a very informed and
1:59
Speaker 1: very engaged this in a base. I'm pretty sure one
2:02
Speaker 1: of them is going to email in and tell us
2:03
Speaker 1: the difference between Purgatory and Limbo Go listeners. Now, we
2:08
Speaker 1: are going to answer a few questions from our readers,
2:11
Speaker 1: and one other thing that I want to address before
2:13
Speaker 1: we get going on that. Lots of you will have
2:16
Speaker 1: listened to the episode that I did last week with
2:19
Speaker 1: Mark Wood, who's chairman of Everest's Funeral Concierge. We spoke
2:22
Speaker 1: about with drawing the tax free amount from your pension
2:24
Speaker 1: fund and the potential changes coming in twenty twenty seven
2:28
Speaker 1: and what you might or might not do about that.
2:30
Speaker 1: Lots of you already know exactly what you're doing. There's
2:33
Speaker 1: been seventy billion quid pulled out of pension pots in
2:36
Speaker 1: the last twelve months. Is people desperately try and get
2:38
Speaker 1: ahead of any nasties coming up in the budget. Will
2:40
Speaker 1: come on to that in a minute, but clarifying a
2:43
Speaker 1: few points so I want to reiterate this and to
2:45
Speaker 1: make absolutely clear what the reality is of this. Mark
2:49
Speaker 1: suggested during our discussion that taking your twenty five percent
2:53
Speaker 1: tax free at lump sum at age fifty five or
2:55
Speaker 1: later means that you have effectively retired. I'm going no
2:59
Speaker 1: longer put my mine into your pension with tax Really
3:01
Speaker 1: that's not quite the whole story. It is correct that
3:06
Speaker 1: from the normal minimum pension age, which is currently fifty five,
3:09
Speaker 1: it will be up to fifty seven and twenty twenty
3:11
Speaker 1: eight and trust me, it's going higher. You can access
3:13
Speaker 1: up to twenty five percent of your pension pot tax free. Now,
3:17
Speaker 1: if you also start taking taxable income I dro done
3:21
Speaker 1: or more lump sums. At that point, something called the
3:24
Speaker 1: Money Purchase Annual Allowance MPAA rules apply, and your future
3:28
Speaker 1: tax relievable contributions are capped at ten thousand pounds a year.
3:33
Speaker 1: There are also various rules around recycling, so you're not
3:36
Speaker 1: allowed to take money out in your lump sum and
3:38
Speaker 1: then shove it back in again. That's against the rules.
3:40
Speaker 1: That's recycling. You will get in trouble, however, So what
3:44
Speaker 1: this means is that withdrawing the lump sum alone and
3:47
Speaker 1: not putting it back in again does not mean that
3:49
Speaker 1: you are treated as retired. You can continue to contribute
3:52
Speaker 1: to your pension and to receive tax police on those contributions,
3:55
Speaker 1: subject to the standard annual allowance. Right that out of
3:59
Speaker 1: the way, We've al then had quite a lot of
4:01
Speaker 1: feedback about the data Helm interview. Not all of you
4:03
Speaker 1: were happy with that. Maybe you don't have the opinions, etc.
4:06
Speaker 1: But I thought it was personal excellent. But I would
4:08
Speaker 1: wouldn't I, John, you weren't here for that interview or
4:12
Speaker 1: on one of your many, many holidays. How you get
4:14
Speaker 1: all these awards? I was on a beach. I don't know,
4:17
Speaker 1: but you listened to this Pine and I hope you
4:18
Speaker 1: did while you were on a sunny beach in Greece.
4:21
Speaker 1: And by the way, everyone will while in the pre
4:24
Speaker 1: chat before we started recording, John has been giving me
4:26
Speaker 1: advice on way to go holiday in Greece, because that's
4:28
Speaker 1: how often he's been on holidays. Yes, so while you
4:31
Speaker 1: were in Greece listening to this what did you think
4:33
Speaker 1: about it?
4:34
Speaker 2: I thought it was great, And I thought it was
4:36
Speaker 2: great because I think it's the clearest explanation of what
4:39
Speaker 2: the issues are surround in the line and intermittent sources
4:43
Speaker 2: of energy for all of our energy, particularly in the UK,
4:48
Speaker 2: and I have to see. The other thing I thought
4:50
Speaker 2: was good was that I thought the detail pushed back
4:52
Speaker 2: at you quite a few times whenever you raised points
4:55
Speaker 2: by them. He's clearly not rapidly anti these sources of energy.
5:01
Speaker 2: He's just pointing out the practical issues were over relying
5:04
Speaker 2: on them. You know. So you said that faintly building
5:07
Speaker 2: more of X and more of Y, it's just that
5:09
Speaker 2: you need to be a weird of what the problems are.
5:12
Speaker 2: So no, I thought it was really good.
5:14
Speaker 1: Okay, interesting, But I do want to just add one
5:16
Speaker 1: thing to that. Some people have commented that they see
5:18
Speaker 1: that episode as political and leaning to the right. Now,
5:22
Speaker 1: I think that brings us into a definition problem of
5:24
Speaker 1: what is right wing and lot of what is left wing.
5:26
Speaker 1: But either way, the intention of the show is not
5:29
Speaker 1: to be political. We are concerned with the economic prosperity
5:33
Speaker 1: of the UK and how we can make it better.
5:36
Speaker 1: We're interested in abundance, we're interested in plenty, and we're
5:38
Speaker 1: interested in wealth. Nadita was very frank regarding his opinions
5:41
Speaker 1: on the UK's energy strategy and the performance thus far
5:45
Speaker 1: of Ed Miliband. But this is not about politics from
5:48
Speaker 1: his point of view. It's about research and it's about evidence.
5:57
Speaker 1: And now on to today's show. In the spirit of
6:00
Speaker 1: hearing from your listeners nicely, even maybe listening to your listeners,
6:03
Speaker 1: we have decided to have a mail bag episode. We're
6:06
Speaker 1: going to answer a few of the questions you've put
6:08
Speaker 1: to us. Some of them you've sent to me directly,
6:10
Speaker 1: some of them you sent to our email address, which
6:11
Speaker 1: is Merror and Money at Bloomberg dot net for those
6:14
Speaker 1: of you who haven't done it yet. So to kick
6:16
Speaker 1: things off. And by the way, some of these questions
6:18
Speaker 1: are more statements masquerading as questions, but we're going to
6:21
Speaker 1: make them into questions to a degree. The first one,
6:24
Speaker 1: the ostensibly the question is what can Rachel Reeves still tax?
6:27
Speaker 1: And then Nigel, who's written and tells us what he
6:30
Speaker 1: believes should still be taxed. I manage got quite a
6:32
Speaker 1: long list of things that Rachel could still tax, but
6:35
Speaker 1: I'm not sending it to So Nigel suggests that we
6:40
Speaker 1: should tax all the things that we currently do not
6:44
Speaker 1: pay for for all the things that are currently free.
6:46
Speaker 1: So what this means, he says, is you effectively make
6:49
Speaker 1: it illegal to sell anything below is actual cost plus
6:55
Speaker 1: five percent. So all the things we get for free podcasts,
6:59
Speaker 1: online exercise classes, online training, etcetera, etcetera, all these would
7:04
Speaker 1: be put on the subscription model, and then a sales
7:07
Speaker 1: tax is imposed on top. So Niger's wife, for example,
7:10
Speaker 1: who uses a free Pilatus podcast compiled by people all
7:13
Speaker 1: over the world, but her use of that podcast gives
7:16
Speaker 1: no revenue to the UK government, she could be paying
7:19
Speaker 1: a subscription and v eighteen Now, Nigel, I suspect that's
7:22
Speaker 1: possibly the most unpopular thing that has ever been set
7:26
Speaker 1: on this podcast, and it's a very very high bar, John.
7:30
Speaker 2: I mean, if the way to charge for free things
7:35
Speaker 2: was just to put a place on the media in
7:37
Speaker 2: this country, would not be in any trouble at all.
7:40
Speaker 2: In a business model, we'd be at all and then
7:42
Speaker 2: we'd all just launch substacks and take the money ourselves down.
7:47
Speaker 2: I feel this is impractical. I also hope that Nigel's
7:50
Speaker 2: wave doesn't listen to the podcast.
7:53
Speaker 1: Yes, yes, I mean I suppose. The other thing I
7:56
Speaker 1: would say is that you're right. If putting a price
7:58
Speaker 1: on something meant meant that you could sell it, everyone
8:01
Speaker 1: would have put a price on But if everything have
8:04
Speaker 1: the same price on it, oh you.
8:06
Speaker 2: Can eat Childs for the ear as well. I mean,
8:08
Speaker 2: I stop lessening the podcast.
8:10
Speaker 1: We're just getting to that because I just said that
8:12
Speaker 1: was the most unpopular thing ever said on this podcast.
8:15
Speaker 1: But Nigel has raised his own bar with his second suggestion.
8:20
Speaker 1: Ideal second suggestion is that the cost of a unit
8:23
Speaker 1: of energy and of water should escalate pro rata to
8:27
Speaker 1: the amount used so heavy users, by which I assume
8:29
Speaker 1: he means that those were swimming pools would be paying
8:31
Speaker 1: a lot more per unit for their top end use
8:33
Speaker 1: than they would for the first few units. This would
8:36
Speaker 1: encourage investment in energy and water saving devices, but also
8:40
Speaker 1: provide funding to allow a very basic, tough to keep
8:43
Speaker 1: within amount of energy and water to be made available
8:45
Speaker 1: to every consumer for free. You're too good to us, Nigel.
8:48
Speaker 1: I mean that if you find yourself unemployed, you still
8:50
Speaker 1: have a little water to flush the loo and to drink. Well,
8:52
Speaker 1: that's nice. This is essentially a wealth tax, Yes, it is,
8:55
Speaker 1: but would end up driving the innovation to lower consumption
8:59
Speaker 1: for all. Now, John, I'm going to let you have
9:01
Speaker 1: your rant on this is a minute, but the risk
9:03
Speaker 1: of sounding right wing, my own view on this is this, This,
9:08
Speaker 1: this suggestion is exactly the problem that we should find
9:13
Speaker 1: ways to use less, not just to be efficient. Because
9:16
Speaker 1: we're all pro efficiency. Let's do more with less, but
9:20
Speaker 1: let's not always aim to use less. Let's aim for abundance.
9:24
Speaker 1: Let's aim for plenty. Let's aim for rising living standards.
9:27
Speaker 1: Let's aim for long hot showers. Right, Let's not aim
9:31
Speaker 1: to make stuff worse.
9:33
Speaker 2: Yeah, I mean, I just I really dislike this. This
9:40
Speaker 2: this sort of modalizing almost a bit something that is
9:44
Speaker 2: also not you know, it's just it's not it shouldn't
9:47
Speaker 2: be necessarily irrash and water in this country for the start,
9:51
Speaker 2: And I mean one thing.
9:52
Speaker 1: I'm telling you there really is plenty of water, especially
9:56
Speaker 1: a reservoir.
9:57
Speaker 2: Yeah, I mean, I mean one thing, to be slightly fairly,
10:01
Speaker 2: nigelized that some countries do actually price water and energy
10:05
Speaker 2: along these lines, like I'm pretty sure that Portugal has it.
10:09
Speaker 2: I don't think it's so much as a free bit,
10:11
Speaker 2: but there is either are kind of domestic rates and
10:13
Speaker 2: then industrial rates or whatever. Once you get above using
10:16
Speaker 2: a certain amount, it jumps. And I guess that in
10:19
Speaker 2: I can, particularly water scarce country like Portical, that is
10:23
Speaker 2: maybe a more appealing approach. But also, I mean they are.
10:27
Speaker 2: The other thing is so if you find your someone
10:29
Speaker 2: employed still with water, flush the loo and they drink.
10:30
Speaker 2: I mean there's lots of unemployed people in this country
10:32
Speaker 2: and none of them are short of water. So actually
10:34
Speaker 2: Nigel is sort of talking about a drastic change there.
10:40
Speaker 1: So I just maybe anyway, Nigel, I didn't mean to
10:46
Speaker 1: be unkind. Please keep listening and please keep sending in
10:49
Speaker 1: your ideas. We do appreciate them. It gives us something
10:51
Speaker 1: to stoke a bad thank you. Right now, we're moving
10:54
Speaker 1: on to Tristan and well, you know, as I say,
10:58
Speaker 1: hi Bot, but boy, these people can jump it. This
11:01
Speaker 1: is trust in wonders if there should be a tax
11:04
Speaker 1: on social media. As a concerned parent, I'm with him there.
11:07
Speaker 1: I am also a concerned parent when it comes to
11:09
Speaker 1: social media. I'm against most forms of social media. So
11:12
Speaker 1: I began to nickname it the toxic tax, for the
11:14
Speaker 1: damage it is doing to young people in society as
11:17
Speaker 1: a whole. Ah, okay, there is probably an applicable Adam
11:19
Speaker 1: Smith quote. There is I should be adding here. I'll
11:21
Speaker 1: find it later. I think the simplest way to think
11:24
Speaker 1: of it is to use the cliche of there is
11:25
Speaker 1: no such thing as a free lunch to highlight that
11:28
Speaker 1: while people may consider the consumption of social media to
11:31
Speaker 1: be free, they are paying for it in other ways.
11:32
Speaker 1: I think most people, maybe not all in particularly not
11:35
Speaker 1: young children, but most people understand that it's a straightforward
11:37
Speaker 1: swap entertainment for data, addiction for data for implementation. I
11:42
Speaker 1: was thinking that either a flat charge could be placed
11:44
Speaker 1: on the mobile phone and broadband bills, but anyone wishing
11:47
Speaker 1: to have their data social media enabled or potentially a
11:49
Speaker 1: data dependent variable charge with a cap to avoid young
11:52
Speaker 1: people racking up big bills, et cetera, etc. And then
11:54
Speaker 1: he suggest the public WiFi is in cafes, library, schools, hotels, workplaces,
11:58
Speaker 1: et cetera. Well, then have the option of restricting social
12:01
Speaker 1: media or not as they wish. Now, this is all
12:04
Speaker 1: about trying to repla reprise social media, to reflect the
12:08
Speaker 1: negative externalities that they impost and to send a message
12:11
Speaker 1: particularly the young people have heard damaging They are in
12:13
Speaker 1: line with similar other activities drinking, smoking, driving. Now I
12:17
Speaker 1: can't even begin to see how this can be implicated,
12:19
Speaker 1: but nically I am all over it. This is an
12:21
Speaker 1: absolutely fantastic idea. It should be taxed or well, okay, taxes,
12:26
Speaker 1: maybe that is not that straightforward, but it should be disencouraged.
12:29
Speaker 1: I listened to Tim Bernerdley speak the other day and
12:33
Speaker 1: he had this very interesting idea about social media on phones,
12:36
Speaker 1: because you know, he genuinely feels that this is a
12:39
Speaker 1: terrible thing for a young people, a terrible thing for
12:41
Speaker 1: our children, and it's one of the big downsides of
12:43
Speaker 1: course to the World Wide Web that he actually invented,
12:48
Speaker 1: and his thought was that there should be a specific
12:51
Speaker 1: simple phone, initially designed specifically for children, for the under
12:55
Speaker 1: sixteens with the under eighteens that cannot be social media enabled,
12:59
Speaker 1: a simple old treashion phone that is only a phone
13:04
Speaker 1: and a texting device and WhatsApp device. You know, maybe
13:07
Speaker 1: they can have one or two things. It's involved, but
13:09
Speaker 1: that's a that's a that's a blur thing, gray areas
13:13
Speaker 1: all over the place. And you might say, well, this
13:15
Speaker 1: phone already exists because you can use your your family
13:18
Speaker 1: protections to chopple sorts of things off your children's phones,
13:21
Speaker 1: and so you have to get permission if they download
13:23
Speaker 1: this or down or downloads. But nonetheless, well.
13:25
Speaker 2: No, the actual phoone exists as well. They do have
13:28
Speaker 2: you've got They're called domb points and there's a law.
13:31
Speaker 1: Oh yes, yes, yes, not that young guy.
13:33
Speaker 2: That leads a bit who reading't this collapse and the
13:37
Speaker 2: Taine John list, he's very good.
13:38
Speaker 1: Yeah, yeah, no, I know that the phone itself exists,
13:41
Speaker 1: but that's not Tim's idea. Tim's idea is that this
13:44
Speaker 1: is compulsory for the under sixteen. Oh okay, so in
13:48
Speaker 1: the same way that you can't buy cigarettes. And I
13:51
Speaker 1: don't know why can you buy cigarettes? I have no idea.
13:53
Speaker 2: Well these days you can't I buy them, can you?
13:55
Speaker 2: Because you under eighteen? And then it keeps rightchetting up
13:58
Speaker 2: until you're going to be thoughty and you're not giving
14:01
Speaker 2: a small ca Can I remember some stupid thing that
14:03
Speaker 2: we soon acted in desperation before the last election.
14:07
Speaker 1: I've forgotten about that. I've forgotten about that. But basically
14:10
Speaker 1: it's not about cigarettes. Yeah it's not. It's not. But
14:13
Speaker 1: you know all those that is that constantly show that
14:15
Speaker 1: most children say that they would love to not have
14:18
Speaker 1: social media, but they have to have it. Everyone else
14:20
Speaker 1: had it. If you could put maybe it's only fourteen,
14:22
Speaker 1: maybe it's thirteen, maybe it's sixteen. I don't know, but
14:25
Speaker 1: if you could put a blanket down. And I hate
14:27
Speaker 1: banding stuff. I'm a libertarian, a hot but sometimes, you know,
14:29
Speaker 1: you do look at this stuff and think, actually, maybe
14:31
Speaker 1: it's time to do something.
14:34
Speaker 2: I agree with the basic point. And there is a
14:37
Speaker 2: sort of reverse tragedy of the commons going on with
14:39
Speaker 2: social media that you just pinpointed, which is that everybody
14:42
Speaker 2: feels they have to use it, even thothough each individual
14:45
Speaker 2: or most individuals are like I hate using this stuff
14:49
Speaker 2: and looking at more in kids that feel the same
14:51
Speaker 2: way about it, I think it's more of a find
14:53
Speaker 2: in practical ways to do it. And I think I
14:55
Speaker 2: think taxing it probably taxing it is like, for example,
14:59
Speaker 2: seeing me thought when we actually got serious about smoking
15:01
Speaker 2: and we banned it in pubs, that kind of went
15:03
Speaker 2: against every liberty and instinct that I've got, but it
15:06
Speaker 2: worked and it actually made going to the pub much
15:09
Speaker 2: more pleasant for most people. And I think the problem
15:12
Speaker 2: with this idea that tax is actually a form of
15:15
Speaker 2: banning stuff is nonsense. I think what you have to
15:17
Speaker 2: do is you have to if you think that something
15:19
Speaker 2: should be banned, then ban it. If you don't, then
15:23
Speaker 2: you know taxes should be raising for raising revenue. Ultimately,
15:27
Speaker 2: too much of this social engineering that's going through the
15:29
Speaker 2: tax system and it's busy. It's like we've sown a
15:32
Speaker 2: whole load of weeds and now nobody knows what the
15:35
Speaker 2: tax system is for, which is why we get so
15:37
Speaker 2: many useless budgets coming up. So I think I think
15:40
Speaker 2: Tristan's heart is in the right place. I think your
15:43
Speaker 2: solution is completely kind of bonkers, and it just no way.
15:47
Speaker 2: It shouldn't be on the tax system. It should be
15:49
Speaker 2: on legislators to come up way away like Tim's suggested
15:53
Speaker 2: of you know, rendering every smartphone illegal for the under
15:56
Speaker 2: sixteens or whatever you want to do. I think that's far.
15:59
Speaker 2: That is the root to go down and just confront
16:00
Speaker 2: the fact that we are actually being anti libertarian. We
16:04
Speaker 2: are saying that people not we don't think this is
16:07
Speaker 2: suitable for kids, and so we're going to ban it
16:08
Speaker 2: in this country. I think we just got to confront
16:11
Speaker 2: these things head on, as opposed to you know, messing
16:14
Speaker 2: around because you know what, you tax it, So what
16:16
Speaker 2: it means that just the wealthy kids have got it
16:20
Speaker 2: or the you know what, you know, you're just going
16:23
Speaker 2: to you're going to entraine certain social me and girls
16:25
Speaker 2: problems even worse.
16:26
Speaker 1: Then, Okay, so don't tax, just ban I think what
16:29
Speaker 1: you say about trying to use the wrong instruments for
16:31
Speaker 1: the wrong things, you know, the idea of using the
16:33
Speaker 1: tax system to try and disencourage things that maybe should
16:36
Speaker 1: just be banned out right at the extent that we
16:38
Speaker 1: agree with banning anything ever, and then things like you know,
16:41
Speaker 1: using using GPS using the and it's just to police
16:45
Speaker 1: the benefit system, using people working in call centers to
16:48
Speaker 1: try and tell whether people are telling the truth or not.
16:50
Speaker 1: We're using the wrong things for the wrong things. That's
16:52
Speaker 1: a different podcast come back then.
16:54
Speaker 2: Ye, but it means nut ideology has been actually has
16:57
Speaker 2: been toxic, even if it was a good idea to
16:59
Speaker 2: come about to start worth But anyway, Yeah, there is
17:01
Speaker 2: another podcast. We should do something in that.
17:03
Speaker 1: Yeah, we should really do something on nuge. We didn't
17:05
Speaker 1: be the nudge guy once another? Right, anyway, moving on
17:08
Speaker 1: this one is shifting away from banning stuff and taxing
17:12
Speaker 1: stuff and back to investment outlook seems quite gloomy. Yeah,
17:18
Speaker 1: it's tempting to allocate much more heavily to absolute return funds.
17:21
Speaker 1: Funds like are gonna absolute returns Go Barry and API
17:25
Speaker 1: effects have been delivering great returns for a number of
17:27
Speaker 1: years now, and based on all the doom and gloom
17:29
Speaker 1: I'm hearing about the global outlook, I'm wondering why I'm
17:31
Speaker 1: invested in anything else. Absolute returns sounds rather than nice. Yet,
17:35
Speaker 1: typically people don't invest more than twenty percent of their portfolio,
17:37
Speaker 1: and such funds I'm not sure many people in verse
17:39
Speaker 1: twenty percent in what factage I consider when thinking about
17:42
Speaker 1: allocating more unusually like this, and it's interesting one John,
17:45
Speaker 1: We've talked a lot about absolute return funds over the
17:48
Speaker 1: over the years, and one of the questions one should
17:51
Speaker 1: ask is why isn't every fund an absolute return fund?
17:53
Speaker 1: The idea of relativity has always been ridiculous. That you
17:56
Speaker 1: pay someone a lot of money and their job is
17:58
Speaker 1: to beat an indoyk like that. Their job should be
18:01
Speaker 1: to make you some more money than inflation. If you
18:04
Speaker 1: just want inflation or a little bit more money than inflation,
18:06
Speaker 1: then these days issues you can have a posit account.
18:08
Speaker 1: That's nice. You couldn't for a long time, but now
18:10
Speaker 1: you can. And if you want to have, you know,
18:11
Speaker 1: a couple of percentage points above inflation, then you should
18:14
Speaker 1: be able to go and buy an equity, an equity
18:17
Speaker 1: or a multi multi asset fund, and you should be
18:19
Speaker 1: relatively confident if your manager is competent, that you should
18:22
Speaker 1: get that on a rolling three year basis. Right. That
18:26
Speaker 1: seems entirely straight forward. An absolute return fund, by the way,
18:29
Speaker 1: for anyone who is not experienced in this area, is
18:31
Speaker 1: a it's effectively a multi asset fund that aims not
18:34
Speaker 1: to track an index or not too slightly beaten index,
18:37
Speaker 1: but just to give make you money every year. And
18:40
Speaker 1: I can hear you going, we'll surely everyone's both to
18:42
Speaker 1: do that. No, No, they're not.
18:45
Speaker 2: Yeah, it's usually like inflation plus eight percent or something.
18:49
Speaker 2: I mean, I think the big problem with absolutely ton
18:51
Speaker 2: points is basically what you've said, and as a result
18:55
Speaker 2: of what you're seeing, they all have different ideas about
18:58
Speaker 2: it's level the absolutely tons. So I think if you
19:00
Speaker 2: look inside the sector, you'll find there's quite a big
19:03
Speaker 2: divergence in the best performers and the worst performers, and
19:07
Speaker 2: also in what they hold. I mean, Argonaut is a
19:10
Speaker 2: is a great fund, to be very clear, But usually
19:13
Speaker 2: when people think about absolute return funds, I think they
19:16
Speaker 2: would tend to believe that they would be on the
19:19
Speaker 2: lower risk side of the spectrum and whatever else Argonaut
19:23
Speaker 2: is and Barrie certainly wouldn't claim that it isn't. I
19:26
Speaker 2: would say it's it's a higher risk on it in
19:27
Speaker 2: terms of volatility, exposure to equities, exposure to things like
19:32
Speaker 2: you know, Argentina and things like that. So and whereas
19:35
Speaker 2: you know the other ones that are kind of you know,
19:37
Speaker 2: maybe not as interesting or you know, I've had I
19:40
Speaker 2: held a lot in bonds or gold or whatever. I
19:43
Speaker 2: mean not gold. But you know, recently a lot of
19:45
Speaker 2: the absolute return investment trusts have not done that well,
19:50
Speaker 2: and I think I think this is the problem. You
19:52
Speaker 2: really need to look at the individual fund. And I'm
19:54
Speaker 2: not sure the label absolutely turn tells you very much
19:57
Speaker 2: except giving you a rough idea that it's not bench
20:00
Speaker 2: mark to anything specific other than inflation.
20:03
Speaker 1: I suppose the answer is it's not any easier than
20:05
Speaker 1: investing in any other type of fund. Sorry, ten, Yeah,
20:09
Speaker 1: but we we approved the concept right. Next question, bitcoin
20:12
Speaker 1: investment via listed vehicles. You suggested this was new and
20:16
Speaker 1: the market value to nav premium reflect discussing, I said,
20:19
Speaker 1: we didn't suggest that it was new. We suggested that
20:22
Speaker 1: the bitcoin treasury business was new to the UK. And
20:26
Speaker 1: so Jeff suggests we look at the Gray Scale Investment Trust,
20:28
Speaker 1: which is a US listed stock invested in bitcoin since
20:31
Speaker 1: twenty thirteen. Got to hope some people were in that.
20:34
Speaker 1: They literally went to a massive premium to nav net
20:36
Speaker 1: as at value, then fell to a huge discount around
20:39
Speaker 1: fifty percent, recovered to one hundred percent when he converted
20:42
Speaker 1: into an ETF. Take a look and see if you
20:45
Speaker 1: think the new listed bitcoin players just like gray Scale
20:48
Speaker 1: did in its hey day. And the art of that
20:51
Speaker 1: is yes, absolutely they do, and we agree entirely. He
20:56
Speaker 1: finishes off by saying, do we not find historically that
20:59
Speaker 1: investment trust that net as a value premiums quite often
21:02
Speaker 1: tell you the underlying asset is fashionably overpriced. I think
21:07
Speaker 1: you know the answer. Oh, we do we know that answer, John,
21:10
Speaker 1: Do we know that answer?
21:11
Speaker 2: Yes? And I appreciate Jeffrey, And then to Taylor's.
21:16
Speaker 1: Give us give us the opportunity to read out on
21:19
Speaker 1: our side exactly, Thank you, jeff Okay, one more, one
21:23
Speaker 1: more question, as you know, two more questions, but they're
21:26
Speaker 1: kind of the same question. Actually. The first one is
21:31
Speaker 1: fifty two billion pounds in debt. Seems like rather a
21:33
Speaker 1: large problem. We've had a great ride this past eight months,
21:35
Speaker 1: but we'll our UK debt and ravel it all horribly
21:38
Speaker 1: somehow this autumn. That's from Stuart. Oh, hang on. The
21:41
Speaker 1: next one is also from Stewart. Is it the same Stewart?
21:44
Speaker 1: The next one different question? Jesus says it's a different Stewart. Hello,
21:49
Speaker 1: Marion and John, I'm a regular listener. Follow up your
21:51
Speaker 1: podcast there are any answer discussion on the doom loop
21:54
Speaker 1: and what private investors should do in a doom loop. Well,
21:57
Speaker 1: the first thing to say is that, boy, do I
21:58
Speaker 1: have disappointing us for us Stewart number one, which is
22:02
Speaker 1: that fifty two billion is nothing, nothing, absolutely nothing. In fact,
22:07
Speaker 1: the UK level of debt is about two point nine
22:09
Speaker 1: trillion pounds, which is closing in on one hundred percent
22:13
Speaker 1: of GDP. Last year or the year up to and
22:17
Speaker 1: the financial year March, we borrowed one hundred and forty
22:20
Speaker 1: six billion pounds and we are spending eight and a
22:23
Speaker 1: half billion pounds a year loan on interest payment and
22:28
Speaker 1: by the way, and rising. So yes, going on three
22:31
Speaker 1: trillion pounds worth of debt is a large problem, John,
22:35
Speaker 1: You've got thoughts on that.
22:38
Speaker 2: No other than that the only upside, that's all, is
22:42
Speaker 2: that we are not the only country to send that
22:44
Speaker 2: situation and this technically, well, one thing I would make
22:49
Speaker 2: clear is this technically should be manageable if the people
22:53
Speaker 2: run in the country are competent enough to manage it properly.
22:58
Speaker 2: And I think that actually is and I'm not even joking.
23:01
Speaker 2: I think that is where we have the problem, right
23:03
Speaker 2: though Britain does not need to be in as much
23:06
Speaker 2: trouble as it's in. It needs more effective leadership and
23:08
Speaker 2: that's the mess and con pointing.
23:10
Speaker 1: Yeah, and the question here is what will happen? How
23:15
Speaker 1: bad will it be? Our people watching? I mean, there
23:17
Speaker 1: is that wonderful thing we say often in the UK
23:19
Speaker 1: the world is watching. Were mostly it totally, totally, isn't
23:22
Speaker 1: and simply doesn't care. When you look at the market,
23:26
Speaker 1: there was I don't know if you wrote about this, John,
23:28
Speaker 1: but the Bank of America the most recent survey is
23:31
Speaker 1: showing that there flows out of the UK were huge
23:34
Speaker 1: and you know, the biggest month about flows of equity
23:36
Speaker 1: in the UK since the early two thousands, and global
23:40
Speaker 1: alligators less keen since since the beginning of time, et cetera,
23:42
Speaker 1: et cetera. But that's a survey that's not real life, right,
23:47
Speaker 1: and so it's what they say rather than what they do.
23:49
Speaker 1: And if you look at the market itself, there is
23:51
Speaker 1: no evidence that there is a massive outflow of capital
23:54
Speaker 1: from the UK equity market. Most of our indices are
23:57
Speaker 1: not all of them, but the Footy one hundred is
23:58
Speaker 1: knocking around US all time highs on the two fifty.
24:01
Speaker 1: Isn't that far off, it's it's highest for the years.
24:03
Speaker 1: Stelling is kind of okay, guilt heels have come down
24:06
Speaker 1: a little bit. So I'm not for a second suggesting,
24:08
Speaker 1: don't get me wrong, that there's anything good about the
24:11
Speaker 1: UK economy or about well that's good things about the
24:13
Speaker 1: UK economy, but about the UK public finances absolute rubbish,
24:16
Speaker 1: remaining rubbish, and no clear plan to make them less rubbish.
24:20
Speaker 1: But but that is something that for our equity markets
24:24
Speaker 1: at least foreign investors are appear to be prepared to overlook.
24:28
Speaker 2: Yeah yeah, And because it only marks to an extent
24:32
Speaker 2: for the equity market, and the meanesture for the equity
24:35
Speaker 2: market again is how the government can sorts it hurt.
24:38
Speaker 2: This is the problem, because we're going to be all
24:40
Speaker 2: set and chatting a bit less right up until the
24:42
Speaker 2: hul Reeves sets down in November the twenty sixth, and
24:45
Speaker 2: then beyond that we need to worry about whether she
24:47
Speaker 2: can even make whatever she does stick with her own party,
24:51
Speaker 2: because you know, we could end up getting the Chanceloran
24:54
Speaker 2: and underplayment. It's still replaced at some point in the
24:56
Speaker 2: next twelve months. That's certainly not beyind the bones of possibility.
25:01
Speaker 2: But I do think that advice we joy that has
25:02
Speaker 2: faced in the UK are political ones rather than financial ones,
25:06
Speaker 2: because we are by no means the only country with
25:09
Speaker 2: public finances this bad and it can be solved, and
25:12
Speaker 2: we have the second fastest grown economy in the G
25:14
Speaker 2: seven right now, which is you know, because the other
25:17
Speaker 2: five are terrible. But it's still you know, it's still
25:20
Speaker 2: something that we should be able to get out of
25:23
Speaker 2: this if we can just get a better sense. And
25:26
Speaker 2: that's the only thing that's messing well.
25:28
Speaker 1: As we keep saying, there's a lot wrong with the UK,
25:30
Speaker 1: but there is nothing wrong with the UK that can't
25:32
Speaker 1: be fixed by other policies. No, someone one day will
25:36
Speaker 1: bring us those There's going to be a lot more
25:39
Speaker 1: talk about this on this podcast over the next little while.
25:42
Speaker 1: We've got a lot to say about tax and a
25:45
Speaker 1: lot to say about budgets. But you know, we'll save
25:48
Speaker 1: some of those joys for later in the month, shall we.
25:51
Speaker 2: Good idea? Oh doom?
25:54
Speaker 1: Look, by the way, what should you have in a
25:57
Speaker 1: proper role? Doom loop? Well, I think you know the
25:58
Speaker 1: answer is you're buying it already. It's probably cold. Yeah, Hi,
26:02
Speaker 1: and it is out there. I'm listening to radio in
26:04
Speaker 1: the car this morning, long chat about gold, and I
26:07
Speaker 1: am also hearing from friends at the big asset Managers
26:10
Speaker 1: that those fund managers who've been sniffy about gold for
26:12
Speaker 1: ever are starting to buy it on their own account,
26:14
Speaker 1: so you know, getting out there. Thanks for listening to
26:22
Speaker 1: this week's Marry Drugs Your Money if you like or share, rate, review,
26:24
Speaker 1: and subscribe wherever you listen to podcasts. Also be short
26:27
Speaker 1: follow me and John on x or Twitter at Marnis
26:30
Speaker 1: w and John Underscore Steppack. This episode was produced by
26:33
Speaker 1: Summersardi and Moses and questions and comments on this show
26:36
Speaker 1: and all our shows are always welcome. Our show email
26:38
Speaker 1: is Merri Money at Bloomberg dot net