app-based stockbrokers dabbl review the weekend press and provide their take on some of the biggest stories set to impact the self-directed investor.
Is investing really a puzzle?
There was a piece in Saturday’s edition of The Times which caught the eye, headlined “Becoming an investor is easier than doing the Rubik’s cube”. For the vast majority, that’s going to be a difficult point to argue with and whilst it took some time to draw the conclusion, the bottom line is that the government has a fine line to tread in taxation, most recently in the decision to increase the taxes applied to dividend income. As the article notes, that hits small investors as well as the largest and the government need to be careful not to stifle growth here. However with interest rates low and inflation running well ahead of this, even with the modest uptick in taxes there’s still plenty of reason to be looking at shares to sustain returns.
No such thing as a free lunch
In many ways it seems like stating the obvious, but the Daily Telegraph on Saturday ran an article looking at the problems with “low risk” investments offering outsized returns. Since 2014 it has been illegal to market investments such as hotel rooms, student flats and car parks to retail investors in the UK, yet still the offers turn up in e-mail in-boxes. The article estimates that as much as £1bn has been lost to investors who were sold these badly structured schemes – some of which were evidently flawed from the outset at they would require property occupancy in excess of 100%. Arguably this shows investor education remains lacking as a properly functioning market simply won’t tolerate higher than expected returns – unless there’s an accompanying risk. Just like there’s no such thing as a free trade, there’s no such thing as a free lunch, either.
Green bond returns
Following on nicely from that piece on market efficiency, The Observer picks up on the government’s NS&I green bond which was launched recently. At the time there was criticism that the 0.65% return, fixed for three years, was paltry. Yet conversely as the government could raise money in the open market at this price, anything higher would cost taxpayers to fund. The government understandably went for the cheaper option and now the criticism is landing. NS&I point out that this investment isn’t for people prioritising profit over purpose, but the educational message – again – is that this is the going rate in the current market. Helping the public better understand why investments are priced like this would be incredibly valuable and could well help reduce the number getting drawn into inappropriate, flawed schemes.
New warnings of “FinTok” education
We’ve flagged this before, but The Sunday Express revisits the challenge faced by retail investors when they end up taking financial advice from social media. In keeping with a theme which has already cropped up in the weekend press, there’s a feeling that investors need to be more cautious, especially when high returns are being claimed. Whilst regulators seem to be facing a losing battle when it comes to clamping down on what’s promoted on social media, perhaps it’s better education across the population as a whole – and a degree of personal responsibility – that offers the solution here.
This article has been published in conjunction with dabbl. dabbl is a simple, intuitive app, designed to make share ownership more accessible than ever before. Connecting consumers with the brands they love, know and trust, dabbl is embracing the growing demand from the next generation of investor to have more control over how their money works for them.