Has the cash Isa been saved for good... or is a cut still coming?

0:02Georgie Frost: Welcome to This Is Money podcast sponsored by Charles Stanley Direct. I'm Georgie Frost and joining me and Simon Lambert today is Lee Boyce. And coming up, the mortgage time bomb set to hit a million households. As the golden era of cheap loans finally comes to an end, what can you do if your repayments jump up? The rise of ring, a security dream or a privacy nightmare? What rights do you have as Neighbours being filmed? Elsewhere, the FTSE 100 hits all-time high as investors bet Trump will chicken out again. Will he? NVIDIA is the first company to hit$4 trillion market value as the AI boom drives demand.

0:44Georgie Frost: Is it too late to get involved? Don't forget you can stay up to date with all the latest breaking money. Just go to thisismoney.co.uk or download the app.

1:23Georgie Frost: investment involves risk But first, two bits of news that dropped onto our laps on Friday morning. The UK economy shrank unexpectedly in May, contracting for the second month in a row, and reports that the Chancellor will not announce any changes to the cash ISA allowance in her Mansion House speech. So let's go with ISA's first very quickly, Lee Boyce. It was nailed on, now it's nailed off. I don't know if that's an expression, but what's going on? it's been nailed off it's a it's the expression we'll use i like it georgie um what's going on well it's back to that doom laden part of the couple of month run up to the budget last year when there was so much speculation kite flying uh and lots of stuff didn't come to fruition and it was just quite overblown this again looks like another one of those scenarios in which the chancellor was heavily rumored in the last few months to be cutting the cashier allowance of tax-free wrapper£10 ,000,£5 ,000,£4 ,000 all sorts of figures had been banded around it now appears there's a mansion house speech next week where we were expected some sort of announcement on this and it might still happen who knows there's speculation it might be all Monday we could be talking about it again I don't know but it looks very very likely that now cash rises are safe and the full£20 ,000 limit isn't going to be changing which after months The months of mayhem and nonsense and things written about it and hearing about it just looks like nothing's going to happen.

3:02Georgie Frost: I'm not right in thinking that in the spring statement, Simon, there was a line in it that said that cash isis will be looked at. So this is not just a bunch of journalists, financial journalists getting together and going, well, what can we talk about this week? Or a lot of kite flying, as Lee said. It is likely that the Chancellor's really quite seriously looking at it just because we're not going to get it next week, which did seem quite soon, because normally these sorts of sort of consultations and whatever seem to take ages. It doesn't mean we won't get it in the budget. Yeah, I mean, cash ice is safe, dot, dot, dot, dot, dot, for now.

3:35Yes, Rachel Reeves could do this in the budget. And all of this is rumour, obviously, apart from the fact that the government has, A, put in its budget document that it is going to look at ISAs and cash ISAs, and B, has repeatedly declined the opportunity to rule out a cut to cash ISIS. And if you repeatedly decline the opportunity to rule out a cut to cash ISIS, then you've got to, that's as good as saying that a cut to cash ISIS is on the cards. Because if there isn't a cut to cash ISIS on the cards, you just say, no, we're not going to do it. And in fact, actually, what Rachel Reeves did rule out was a cut to the overall ISA allowance.

4:12I do not understand why you would pick this fight. the government is not hugely popular considering it's only one year into its term um you undermine trust amongst savers if the aim is to get more people investing in uk stocks i don't think this would make the slightest bit of difference it might nudge a bit more money into the stock market from those who can fill up their ices and want to protect as much cash as they can tax-free but a lot of that's going to going to go into gigantic us companies i mean we're going to talk about one of the biggest later on in the podcast and that is money from all around the world flowing into it and if you look at isa providers that's what they say if you look at companies that do cash isas and investment accounts they say actually they don't think this would make any difference the lobbying for this is coming from a very small amount of the investment industry who let's face it the people doing the lobbying do seem to have something of a vested interest um as i said i think it would just undermine trust in the system um if it's a tax grab then fair enough it's a tax grab but But that's a very different thing to trying to get more people to invest.

5:16There is just one thing I would say, though, which is like the context in which we talk about this, the attack on savers. The ability to save£20 ,000 a year is astonishing. That's more than half of the median wage in this country. the ability to save four thousand pounds a year is seriously impressive that you're putting away what 350 pretty much a month if you put away 350 a month that's pretty impressive into cash and if you can put away 350 a month into cash then you should probably be considering putting some of the money above that into investments because investments will deliver a better return over the long term it's been proven over like any period that you want to take by a number of studies but that doesn't take into account the fact that what you've got is unusual situations where people suddenly do have a lot of money and they do want to get it into a cash isa or they've built up taxed pots and they suddenly need to put into a cash isa or people take retirement lump sums or people are self-employed and they've built up loads of money in their bank accounts because that's what lots of self-employed people do and then all of a sudden they have a financial epiphany and they think oh my god i need to put some money into somewhere that isn't just my current account i.e my pension and an isa and so on and so on and you start messing with that stuff but also just by cutting you start you start skewing people's behavior people have been rushing to put money into cash isis the government has currently been costing itself money by refusing

6:52Georgie Frost: to rule this out this is my point are people not at the moment even though they're saying we're not going to bring this in next week in the Mansion House speech. All of this speculation is surely shooting the government in the foot because people are going to be going, oh my God, well, it might change. So I'm just going to stuff it in. And while you say 20 ,000 is a lot, it is a lot. 4 ,000, that's more realistic. 5 ,000, 6 ,000. If you're getting to retirement, maybe investing is not the right thing for you to want to do. If you're looking to buy a house in the next few years, again, you might have more than four or 5 ,000 pounds.

7:23Georgie Frost: It's those individual situations. But surely when they show the figures for how much people are stuffing into their cash ises over this year, it will probably be a lot that could have gone into investing. And I would argue and I will argue until I'm blue in the face on this one. The best way to get people saving and investing and engender a saving and investing culture is to build up people's faith and trust in the saving and investment system and constantly tinkering with it, cutting allowances, getting endless amounts of negative headlines, achieves the exact opposite of what you want to do.

8:01You need to make long-term pledges as to how you are going to protect the saving and investing system. So people don't think, well, the next thing they'll do is just cut stocks and shares, ISIS. And you need to enable people to think long-term and not have the constant rumors, the constant tinkering, the constant cutting back. And there's no greater example of this backfiring than the cutting of the capital gains allowance all the way down to£3 ,000 from£12 ,300. That should be going up, not going down. And what that's ended up doing is a load of people now not selling their investments. You can have a negative effect.

8:37In theory, that should have a positive effect. It should make more people use up their allowance each year and then maybe sell their investments to kind of build it down and get it into an ISA. because actually, oh God, this was only going to get worse. And it goes the other way. And I just think that this is not the way forwards on cash ISAs. Rumours about pensions, not the way forwards on pensions. It's not the way to get people investing in the UK stock market.

9:03Georgie Frost: Indeed, Simon, indeed. So we shall see. Simon, just a quick one, are we headed for a session? I mean, I don't know the answer to that. We might be, but we probably aren't. The GDP figures, Again, something else that has decided to steadily prove me wrong for months. I am of the opinion that actually, underneath all the doom and gloom, the economy is doing much better than we think, and that we've already turned the corner, we've hit the bottom and things are picking up. I think our unlucky Chancellor and unlucky Prime Minister, who, let's face it, have spent a year making their own bad luck, are about to get a lucky break on the economy and that things are going to pick up.

9:39The GDP numbers are putting up a good pub argument with me. on that one.

9:44Georgie Frost: What makes you so optimistic? Right. So I think there's an awful lot of reasons to be pessimistic. If you look at the kind of retail economy, shops, pubs, restaurants, they are all really suffering. We have seen job cuts. The jobs market has gone from being great to pretty terrible. The national insurance rise on employers has hit the lowest paid the hardest. Those are all on the negative side of the ledger. And these are some of the things that are dragging those GDP numbers down. On the positive side of the ledger, I think a lot of companies jumped in and made job cuts early. You saw that with the big retailers.

10:23I think they're going to realize that actually, they probably need some more staff and they're going to start hiring again. I think that some of the moribund jobs market is to do with a total lack of confidence. And actually, if things pick up slightly, then companies will start to hire. And I also think that there are substantial productivity gains being made across the economy in all kinds of companies, whether they are technology-based or whether they are not in any way technology-based, but do old-fashioned stuff, but are using technology to benefit their business. From some of the AI stuff that is going on, there are companies out there at the moment discovering that they can now complete what were fairly laborious tasks that took quite a long time much much quicker that's obviously going to have an impact on people's work and their employment but it also gives you an opportunity to take the person who was having to spend half an hour doing that task and can now do it in a few minutes by basically using an ai enabled tool that they've got and there are lots of these coming out and being made available to businesses for example even things like copilot my microsoft co-pilot is really quite impressive and you can take that person and you can deploy them to doing something more useful for 25 minutes and i think once these things start rolling up then actually we will start to see a benefit from it and i actually think that some of these things are going to benefit some of those you know companies like the retailers like the not small shops and not small restaurants really at the moment i think that maybe they will do maybe they'll save them a bit of time on some of the admin but some of the bigger you know operators in the market are going to start seeing quite substantial productivity gains.

12:09And I think that's already starting to kick in. And I think the snowball is going to start rolling downhill on that. And also, fundamentally, we're going to see another couple of interest rate cuts. All you need is a little bit more confidence. And I think that things will start moving in the right direction. I was really hoping they were going to move in the right direction before the autumn budget, though. I'm still hoping they will, but we are definitely running out of time on that one.

12:32Georgie Frost: Yeah, quite. Right, let's get into the podcast. Five years ago, the then-Chancellor decided to cut stamp duty. Do you remember that? I do. The pandemic was less than three months old and Rishi Sunag wanted to give, well, everyone a boost. The property market, which had seen sales stall unsurprisingly, jobs, growth and consumer confidence. And, well, it worked. Buyers rushed to buy bigger homes in the race for space. Some will have fixed below 1.5%. Many will have stretched themselves to the limit on cheap rates to buy their dream homes. Now, five years is up and almost a million households face forking out hundreds of pounds more over the coming months to keep their homes.

13:15Georgie Frost: So what can they do? Lee, take us on a little journey, if you would, from then to now what happened what's the state of play yeah so back in obviously march 2020 when the pandemic unfolded lots of things got paused in our lives including uh the housing market something actually managed to start uh hitting the housing market it took a pandemic um but it kind of got to the point where there was an emergency speech by rishi sunak and he cut stamp duty and i think we all know people or perhaps you guys did it yourselves that went off and raced to buy bigger homes to overstretch themselves more etc etc because for a number of reasons but that stamp duty being cut represents a sizable chunk of outlay and also people did race for space they decided that with that they gave them the confidence to buy somewhere bigger and people were working from home quite a lot and thought this is it this is like you know the massive change that's going to happen and stay forever and perhaps move further out from where their workplace was or just to commute a bit further and went for it.

14:25Georgie Frost: At the same time, as that stamp duty cut, we had the emergency base rate cut that went down to 0.1%, which feels like an absolute lifetime ago, but really it wasn't. And as a result, banks were offering cheaper than cheap mortgages. I mean, I'd be very surprised if we ever see mortgages below 1 % again. in our lifetime i mean who knows but you could fix for 0.9 at one point um you know it was an absolute competition battle between the banks the building societies the lenders uh to offer the very best deals and lots of people where most people would i would argue probably fix for two years two years is quite often what before that was i would say the norm five-year fixes became really in vogue because I think lots of people wised up and realised that actually that kind of rate probably isn't going to be around forever and five years at that rate it's not like you're going to be able to remortgage at 0.6 % at some point it really was like the lowest of the low now fast forward to today some five years later obviously lots of people on those five-year fixes are facing up to having to remortgage I wouldn't say it's all doom and gloom though I wouldn't say there's going to be tens and hundreds of thousands of people panicking.

15:41Georgie Frost: You're right, 900 ,000 people are set to remortgage. That's double the number compared to this time last year. And they are facing rates more likely to be around the 4 % to 5 % mark. Now, actually, this week there has been a bit of a mini mortgage war breakout between lenders and some major banks are offering rates underneath 4 % again. And they've actually gone a little bit below that, around about 3.8, 3.85. And it doesn't look like there's any sign of that letting up. So it seems like the mortgage rates are kind of starting to inch down a little bit. There's a lot of uncertainty about where base rate heads next, which will obviously have a big impact on where this could head.

16:25Georgie Frost: We were kind of like the cash ISA news. We were nailed on for a fair few cuts this year, but the mood music on that has changed somewhat. But it's still been more a positive outlook, I would say, for those coming up to remortgages. It's come at not the most terrible time. It could have been worse when inflation was raging at 11 % and mortgage rates were just absolutely all over the place. And we had, obviously, that September 2022, Kwasi, Kwarteng, this trust mini budget that sent everything spiraling out of control when it comes to mortgage rates. a lot of people who fixed five years ago have obviously just written that out but now we're at that point where you do need to be mortgaged so i can give you some figures some facts and figures here georgie about we laid out in this story kind of uh how it looks and what it means right so if you bought a place for 200 000 pounds in 2020 with a 80 ltv so a mortgage of 160 000 pounds the best mortgage you could have gotten then is 1.7 the reason why it's 1.7 is because to get those sub 1 % rates I'm talking about, you would have needed a 60 % LTV or a 40 % deposit.

17:36Georgie Frost: The mortgage in 2025, roughly£138 ,000. That's obviously how much you've managed to pay it off, plus the interest. And the best rate at 75 % LTV at the moment is about 3.99%. Your mortgage payment is likely to go up monthly by£160, which doesn't sound like the biggest amount of money. But when you start ramping up to bigger amounts, so a£400 ,000 home, you're probably looking at monthly payments of£325 more. £600 ,000 home, you're probably looking at mortgage payments£491 more. On an£800 ,000 home, you're probably looking at monthly payments of an extra£655. pounds so that but that's based on obviously as i say an 80 ltv on a 30 year term uh back in july 2020 compared to a 75 ltv today uh with 25 years left what you can do um what many people will probably be tempted to do uh if you're in this boat is you could add some extra years onto uh the mortgage if your mortgage lender will allow it so you're basically stretching the payments out over over a longer period of time now the pros of that are you're not going to be forking out as much on a monthly basis so you're hopefully not going to be panicking and worrying about um potentially losing the home but obviously the big drawback of that is you're going to be paying up more interest overall um on the home so you want to hopefully make that a temporary fix um if that's what you want to do um you can lock in a new mortgage rate uh six months typically in advance some of the banks now i've lowered it to three percent but there's no commitment to actually have to take that out you could change your mind and rates might improve between now um and six months time or three months time you know we might see mortgage rates continue to to drop somewhat it's a good good sign that the big banks are kind of going for this um you know so there's that option i think we all probably know someone that is in this boat overstretch themselves somewhat kick the can down the road somewhat and it's coming like a reckoning now of having to juggle potentially higher mortgage payments um we haven't factored in house price growth into these figures either now there could be it could be that you have managed to see the value of your home rise um and again that would potentially help with the amount of equity obviously you have in the home and what LTV you qualify for but I think it's interesting nonetheless and it's a kind of a real look back at those ultra low mortgage rates and that it would come into the end now of the the kind of people that have managed to take advantage of this and were fortunate and had the foresight enough to fix at such a low rate and now potentially seeing monthly payments going quite a bit higher.

20:43Georgie Frost: I guess the saving grace compared to those who perhaps fixed for two years and were caught in the middle of the mini budget disaster is you've got that as a warning. You know, three years ago, you could see everybody else suffering. So with any luck, this hasn't come as a big, big surprise for you because you've had a lot of warning. Not that that, unfortunately, is always what you need. Plus, you've got five years of paying off your mortgage. However, you're right. Whatever happens, you're going to have to pay more, aren't you, Simon? Yeah. If you bought five years ago now, you dodged the Liz Trust thing and fixed for two years.

21:19You probably managed to remortgage just for Liz Trust. If you bought once the property market had really started to take off about six months from now, five years ago, then you quite you were quite likely to have got walloped by the Liz Trust stuff depending on on you know when you managed to get your your purchase through and everything like that I bought a house exactly five years ago five years ago yesterday I think it was I believe it was July the 10th now this was a house that obviously we had agreed to buy before the pandemic before lockdown so we agreed to buy in february and then everything went into deep freeze over easter time and you know you couldn't do anything obviously the state agents were forced to be shut and so on and then whenever when we came out of the deep freeze we were faced with a difficult question of like do we still buy this house and everybody expected prices to move in the opposite direction and the property markets go in the opposite direction to the one that it went in.

22:28So with hindsight, we got lucky. But when we were buying the house, we couldn't even get a valuation done on it. Nobody would value it. We spoke to a surveyor and he said, I can't. He said, we can't value properties in this market because the market does not exist at the moment. And we just don't know what's going to happen. And we've never seen anything like this before. So because we were like, oh, OK, right. So we were like, well, what do you think? And he said, well, I don't know. You know, and I spoke to lots of people. I remember having quite a long conversation with a very experienced property buyer, Mr.

23:02Henry Pryor. Many people will recognize his name. And Henry said, I literally don't know what's going to happen, but surely this has got to be the thing that finally knocks, you know, the UK property market off its perch. And it wasn't. It was the thing that put a rocket underneath it. So, yeah, I mean, we thought we were basically like, oh, my God, what are we going to do? we thought we just signed up to instantly lose 100 grand. In the end, we got lucky. But what it does mean is that I have a mortgage that's up for renewal. And because fixed rate mortgages, although they're sold as two years or five years or whatever, they don't tend to last exactly two years or five years from when you took them out.

23:44So ours doesn't finish until the end of September, at which point i am going to wave goodbye to my beautiful 1.4 mortgage rate and say hello to one that's closer to four percent now fortunately they've actually come down a bit in the last week there's been another one of these little mini mortgage price wars but even allowing for five years of paying down the mortgage uh and the fact that rates are nowhere near as bad as they were our payments are going to go up by 400 pound a month so it's like just put that in context that's a lot of money to find i don't know where i'm going to find 400 pounds a month from um there's not you know there's not like lots of spare 400 pounds knocking around every month in the in the lambert household we will be fine we'll be able to do it you know it's not going to be a it's it's not going to cripple us but for people who are not in the fortunate financial position Many people will find that unsustainable.

24:44And the problem is, is it's not just that£400 a month. It's how much all of the rest of your cost of living has gone up by. Energy bills, we're still paying energy bills that are pretty much twice as high as what we were paying. Your food shop is far more expensive. Everything is considerably more expensive. So this is, you know, why it's causing people a real problem. But the answer is planning ahead. And if you think it's going to cause you a real problem is to start, you know, salting that money away early. And if you can start effectively, what you need to do is start training yourself. So if you if you know your payments are going to go up by 300 pounds and you're thinking, OK, where am I going to find that 300 pounds from?

25:25From this point now, you need to start every month getting an extra little bit of money and taking it out of your account and putting it there. Start at 50, go up to 100, go up to 150, go up to 200, go up to 250, go up to 300. So by the time you hit that date, you're already used to having£300 taken out of your budget. And also, you've now built up a bit of a war chest that can help you out if you do end up struggling with those payments at some point during the month. Because there will come a month where something goes wrong with the car or something happens and you're like, oh, how am I going to pay for all this?

25:58Georgie Frost: A very good tip there, Simon. Lee, you mentioned there about a mortgage price war and banks battling for your money. I just want to talk about switching because we're seeing all sorts of offers at the minute. £500 gift cards, cash bonuses, just eat vouchers. So you guys have rounded up the best perks on offer if you fancy switching your bank account. So what is out there, Lee? Yeah, the battle for current account customers is just really heating up once again. And actually, one of the biggest things that's happened in recent years with the current account switching service, which is a button you press when you want to switch bank and it guarantees to switch over your direct debits and all of the other stuff that goes alongside that and gives you a guarantee that if anything goes wrong it will rectify it and compensate essentially it should be done within seven days of switch what it's done is it's helped stimulate competition i would say since it launched in 2013 and lots of banks they want your custom they want you to become their customers one of the big reasons being um they can cross sell you lots of other products you know they can cross sell you their mortgages their investments their savings products their credit cards all that kind of stuff they are keen to have you on board but in order to get you on board largely now uh people are only interested if you're handing over cash bribes or other perks in order to do it because i think a lot of us just go oh it's just like one of those things bank's fine isn't it's where i get paid um you know i haven't really got that the same aren't they yeah not many not much reason to grumble the only time you probably it sharpens your mind is if there's an it meltdown with your bank and you haven't been able to use your card or you haven't had your salary paid in you know those payday link it meltdowns are an absolute nightmare and as i've mentioned this podcast before georgie that's why i have two accounts two current accounts always have two current accounts uh just for that very reason so we went off we asked a couple of experts we laid out six scenarios and we asked them to give us options as to what the best current account is in those scenarios so for the first one uh if you're earning more than a hundred thousand pounds a year or you have more than a hundred thousand pounds in savings investments a lot of people i think who are in this boat might not realize that they can get a better current account um And there's actually been a little bit of a mini battle for wealthy customers with Lloyd's.

28:26Georgie Frost: They've muscled into this market now. It launched a Premier account not too long ago. Barclays and HSBC have been historically the main players in this. Our experts have picked the HSBC Premier Bank account. That's because it's currently offering a£500 Selfridges gift card if you switch£100 ,000 more or more in savings or investments. or if you switch via the current account service and pay the minimum pre-tax salary of£100 ,000 a year and set up two direct debits. Alongside the HSBC Premier, you get loads of other perks, health appointments, free worldwide family travel insurance, wealth management advice, and preferential rates and savings and mortgages.

29:06Georgie Frost: So well worth having a look at that. Now, right on the other end of the spectrum, students. Students are important for banks as well. you know they want to hook in students because their potential future high earners you know get them in early and we do tend to stay loyal to our bank and failing that our students quite often slip into the red and they might be able to recoup any outlay getting them in by charging them interest if they go over their overdraft which I think all of us having been students know how easy that is to do I mean it was easy to do back in our day when a pint was a couple of quid i can only imagine how easy it is to do now in an era of contactless um and probably lacks budgeting um but for the first time i i can't remember this uh and i might be wrong but nat west is offering actual upfront cash now usually it's like a rail card discount or again back in our day it was like free cds and all that kind of stuff that west is actually offering cash 85 quid and they promise to pay out within 10 days if criteria met but despite that our experts have picked the nationwide flex student account this comes with cash back of up to 100 pounds and account the account must be funded with 500 pounds before december the 12th 2025 please mum and dad can you put some money in my account i've spent it all it's worth you with uni um i'll get i'll get cash back of 100 pounds so it's a good it's a good deal and it's also offering 120 quid worth of just eat vouchers spread over 12 months it's for 10 pounds a month um and if they refer friends they can get 40 quid just eat vouchers so 20 pound per friend referred so potentially it could be worth 260 quid now the the main other reason why the experts picked this is that there's an interest free overdraft up to a thousand pounds in the first year two thousand pounds in the second year and three thousand pounds in the third year having had the same deal when I was at university.

31:05Georgie Frost: I can tell you that is crucial. Elsewhere, if you're just in the middle of those, so you're not a student, you're not a high roller, you're just an ordinary person, you can get cash carrots at the moment. First direct is the pick here,£175 cash carrot. I do believe that deal is ending pretty soon though. So if you're interested in that, you might want to act fast. The reason why they've picked this over all of the other options, there's a 7 % regular saver account. You can put up to£300 in. It has an interest-free overdraft for£250. no fees to use first direct debit card broad and also it always comes from near the top of customer service and then just to round up the rest if you want interest on your balance nationwide flex direct is the pick here for the first 12 months you'll get five percent up to on balance up to 1500 pounds lots of these deals have gone now though the in credit uh interest stuff on on bank accounts you know you're better off just opening an easy access account if that's what you want it for perks halifax ultimate reward it's 19 pounds a month so isn't cheap 228 quid a year but you are getting aa breakdown cover phone insurance home emergency cover for all of that if you add that all together alongside the insurance travel insurance that's offering it's probably going to pay for itself but this is crucial if you're going to pay for monthly perks you have to be using them and make use of them otherwise it's a complete waste of time and you are just spending money for no reason whatsoever last pick if you want to try something new we've got a new current account that was launched last week last month by zopa which is an app-based bank which is battling starlings monzos and chasers of this world you'll earn two percent on your full account balance for 12 months with no upper cap there's a regular saver of 7.1 so just pipping the first direct deal there suffering two percent cash back on up to, what,£1 ,500 of direct debits per year.

33:00Georgie Frost: And it also comes with zero fees and overseas spending. However, no overdraft on that one, and you can't open it as a joint account. That's it for part one.

33:14I'm joined now by Blarim Gashi of Charles Stanley Direct for our weekly Investing Explained feature. Blarim, we've got a question here from a listener. I have£2 ,000 of credit card debt that I'm paying off at a rate of£300 per month, I'd also like to start investing and have£100 a month I could use for that. What are the merits of paying more off the debt instead? Good question, Simon.

33:38Georgie Frost: And, you know, it's a very common one as well regarding credit card debt and paying it off early. I would say with credit card debt, you know, the interest rate that you pay tends to be a lot higher than the average, you know, for example, mortgages or anything like that. And it does require, you know, markets to really outperform in order for you to see the value if you were to put money aside. So in general, I would say, you know, if you can pay off high interest debts, do that. And by doing this, you know, you mentioned that there is£300 a month being paid, that extra£100 will knock off the£2k a lot quicker.

34:11Georgie Frost: And that frees up that amount to then invest in the future. Barham, thank you very much. Thank you, Simon. Welcome back. The FTSE 100 closed at an all-time high this week. A surge in the value of mining shares propelled the blue chip index towards the 9 ,000 mark. But hadn't President Trump slapped a 50 % tariff on copper imports? Wouldn't you expect shares to drop? So what's going on? Anglo American led the FTSE 100 with a 5 % surge by mid-morning on Thursday, followed by jumps of more than 4 % for Rio Tinto and Glencore Simon. Investors bet Trump will chicken out again, taco trading is that what it's called trump always chickens out yeah the new trade in town is the taco trade this has replaced the trump trade which turned out to be a bit of a bust when trump 2.0 turned out to be even more erratic than trump 1.0 and uh this culminated in his declaration of his tariffs on so-called liberation day shortly after liberation day uh he then introduced his 90-day pause on tariffs but for the period between liberation day and the 90-day pause there was quite a degree of concern uh and something of a mini market crash because it really did look like he was going to plow on ahead with some of this stuff and i think there had been earlier this year, this feeling that, oh, we got this totally wrong from investors.

35:40Actually, it's not going to be that when the moment the stock market falls, Trump caves in, in this version, he's just going to go all guns blazing for totally disrupting the world. That mindset has shifted. And this taco phrase was coined, which is absolutely brilliant. Now, I'd be careful back in the taco trade because there might come a time when trump doesn't chicken out and actually donald trump he's a guy who spends time on the internet and social media he's going to know about the taco trade he's pretty belligerent he's pretty contrarian and there's going to come a time when he doesn't chicken out just to teach all the people who are saying taco and posting memes of Trump in a taco, just to prove them wrong.

36:27So I would be wary on this one. But it has managed to propel various investments to new highs. And you can see a degree of market exuberance back in there. Nvidia, first$4 trillion company, American stock market hitting fresh record highs again, Bitcoin hitting highs, Nasdaq hitting highs, you know, it's almost like it never happened. I think I described it in a column that investors were having a Bobby Ewing moment. This is a famous scene in the old 1980s hit show, Dallas, where Bobby Ewing had been killed. And then Bobby Ewing stepped out of the shower and it turned out it was all a dream. But this is not all a dream.

37:19This stuff did actually happen. He was willing to stand up there with that big board next to him. Still one of my favorite Trump moments, the big board next to him and read out all those tariffs. And then he was willing to stick to it whilst markets were crashing. And then eventually he did introduce a pause. But if he's willing to do that, you can't rule out what else he might be willing to do. And the fact that at some point he might not chicken out.

37:46Georgie Frost: But just wanted to dig a little bit deeper into these all-time highs. It must be quite confusing because it feels like at a time when the world is going to pot, the markets are smashing it. What is it telling us? If the S &P 500 is reaching all time, if the FTSE 100 is reaching, are markets companies just doing so well? Is the economic environment really conducive? I mean, it seems almost perverse. Well, you've got a couple of different things going on there if you look at the two different markets. So firstly, sentiment. Sentiment drives markets. Are investors positive or negative? Do they want to buy or do they want to sell?

38:28Are they greedy or are they fearful? Are they feeling like they can make money or are they worrying that they're going to lose money? And that is the tide that goes up and down with the boats on it. The US market is very, very sentiment driven and momentum driven people are buying stuff that's going up and it has been for some years and you have got a selection of large companies in that market the magnificent seven and then companies outside of that that are making a stink load of money they are making astonishing profits um and there is an expectation that that astonishing profitability will continue and that they will just keep growing their revenues and keep making more money.

39:13So that's why people are buying into the US stock market. And then also you had this thing where it fell substantially. The buyers came in, drove the market up, and now some of the other buyers are chasing after the gains, going, oh, I missed out on that. Going to buy now. It's going to keep going up. And those individual companies, you know, maybe they can keep performing. 90 % of Wall Street has a buy rating on NVIDIA, right? That is all the brokers in Wall Street saying, buy these, they're going to keep going up. if you're a contrarian you're going to worry about that but if you're if you've been operating in a market where basically the only thing to do for the last however many years is just buy stuff that's going up you might go well as long as i keep buying stuff that's going up and then try and get out um before it crashes i'll do well the uk stock market on the other hand is slightly different now obviously sentiment is playing a part there but you're also getting a shift in sentiment from international investors who are going okay well you know i'm a bit worried about this US market thing.

40:07And I'm looking elsewhere. Where else can I look? Where else has got large companies that are making money and doing well? And where has got them that looks cheaper than the US? One of those places is the UK. The UK stock market has been suffering from negative sentiment for many years, and is now starting to see international investors take another look at it. You've also got some driving factors coming in from buyouts from overseas companies coming in and buying out UK companies, again, because they're cheap. They're like, well, I'm not just going to buy some of the shares. I'm going to buy the whole company.

40:41And that's happening a bit further down the scale than these large companies. But we were even seeing talk of Shell buying out BP and the government being pro a Shell BP merger because that was better than a US energy company coming in and buying BP. And BP is one of the biggest companies on the UK stock market. Apple and NVIDIA are bigger than the UK stock market. You know, all you need, you don't need everybody to sell out of those companies and buy into the UK. You just need a small amount of money to be diverted away from there into the UK. Now, the interesting thing is that the UK stock market is hitting a high at the same time as these other companies are hitting high.

41:19Because previously this year, it had been a bit of a seesaw effect. The question is, will that continue? If US markets, if people, everybody's back buying US big shares and US markets, can the FTSE still do well at the same time? or will it suck some of that out of the footsie and back into the US? I think the UK stock market is seeing something of a recovery. And actually, there's going to get more people investing in it in the UK, probably more effectively than cutting the cash ice limit would.

41:47Georgie Frost: Yeah, quite. I want to talk about the mining story a little bit, just because I was in LA, darling, at Milken, and I went to a speech about Dr. Copper. And I've just read a book, How to Listen When Markets Speak. It's actually a really interesting book. The author argues that we're transitioning to this new economic era defined by sustained inflation, rising geopolitical risk, and a waning faith in passive investing. Now, in this environment, he says, quote, hard assets and rare minerals like lithium, cobalt, copper, uranium, and precious metals outperform traditional financial assets. so is that where we should be stuffing all of our cash well i think it sounds like you know more about this than i do for a start uh i don't think so but the thing i would say is we shouldn't be stuffing all of our cash anywhere anywhere right whatever you whatever you think it is that you should be stuffing all of your cash into don't stuff all of your cash into it you need a diversified portfolio because you might be wrong or you might be right but the market might be wrong and the market can stay wrong for quite a long time and you can stay right sitting there going why am i losing so much money when i'm definitely right um so you know don't overexpose yourselves to these kind of things if you put more than a small percentage of your portfolio into copper for example you are massively overexposed to copper now that's not to say that you shouldn't do it right but you need to be aware that that part of your portfolio could go up by lots or it could go down by lots and it's surprising how a relatively small part of your portfolio you know a 10 part of your portfolio can really hamper performance if that 10 tanks so just like you shouldn't stick all of your money in crypto just like you shouldn't stick all of your money in gold just like you shouldn't stick all of your money in a savings account because then you're leaving yourself at the mercy of inflation you shouldn't stick all of your money into you know copper or whatever metals or minerals that you've read a book about mining shares are doing really quite well at the moment off the back of this belief that we might be about seeing other commodity super cycles but also because they had been doing badly before now and they had suffered a bit and they're seeing a bit of a bounce back from that but also because you've got this effect where miners last time miners were hit really hard they did that thing where they cut a lot of costs out of their business and if you cut a lot of costs out of your business and then your business bounces back your financial results look pretty good and this is actually an interesting point to make about a lot of the magnificent seven the companies like meta google apple amazon where you had the the tech crash 2022 tech crash 2022 2023 i think it was and in that year a lot of the air was sucked out and they made quite big cuts to some of their major costs in the business and then that very much flattered their figures in the years that followed now the opposite is happening right now they are spending vast amounts of money on AI.

45:03And that will ultimately have an effect on the bottom line if profits turn down. If they can make more money from AI faster than they can spend money on AI, that's fine. But you can definitely see a scenario where these companies are sinking huge amounts of money into this, and it will potentially become detrimental to their earnings.

45:22Georgie Frost: Absolutely. I want to talk about NVIDIA specifically, because you've mentioned it a couple of times. This is a weird story, because I thought at the start of the year, It didn't have the greatest start of the year because, of course, we had China's deep seek that was how to do AI on a budget, apparently. Yet all of a sudden, it's just skyrocketed. It's overtaken the record set by iPhone maker Apple at its peak last December. That was$3.9 trillion. It is the world's first, as you said,$4 trillion company, which means it is now worth more than the entire annual economic output of the UK. This is just phenomenal.

46:02It's bonkers, isn't it? It's totally bonkers. It sounds like the kind of thing that you might see in a really toppy market. Might not be, though. I mean, as I said, it's making a stink load of money. Basically, the latest rally stems from the commitment to AI spending from its biggest customers. And its biggest customers include, as I said, Microsoft, Meta, Amazon and Alphabet, who account for 40 % of NVIDIA's sales. and they are projected to spend 250 billion pounds on ai next year up from 230 billion pounds this year and that's fueling a huge amount of demand you know for the chips that nvidia makes and nvidia has managed to ride this wave incredibly well it was originally a computer gaming chip designer um but it turned out that the you know the the way that those computer game chips work the really high processing power that they had to have turned out to be absolutely perfect for doing ai things now you know obviously there is tremendous demand at the moment for ai and nvidia chips is that going to continue there were questions about that earlier this year as you said the deep seek stuff it's like oh people could do this on the cheap um and and then and that would mean that they need less chips, less processing power and so on, NVIDIA would suffer.

47:22And then it's taken off again. I don't know the answer to this. To me, NVIDIA looks like the classic top of a market, massively overvalued story. But then I speak to lots of people who are professional investors who really do know their onions and they say, no, actually, it can keep going up. It can keep making more money. I can't give you a verdict on it, but all I can say is it is an astonishing story.

47:47Georgie Frost: Is there a way that you can spot the next NVIDIA? It's very hard. No, not really. My personal view is that you can try to, but what you need to remember is that you might not, and that actually fund managers who did spot NVIDIA will have invested in numerous other companies as well. So take the approach of something like Scottish Mortgage, right? Scottish Mortgage invests in disruptive companies that it thinks are generally going to change the world over the next five to 10 years and then holds them for the long term. And it says that you need to accept a lot of volatility in those share prices.

48:21And you need to accept a lot of volatility in the Scottish mortgage share price if you're going to be investing in something like that. Scottish mortgage has done very well in the past. Scottish mortgage has suffered. Scottish mortgage has then done well since but it's still below its peak. Now they adopt a portfolio approach. So I think I don't know exactly how many it is, but we're talking about maybe 100 holdings in that investment trust. And when they're initiating a position in a company, if it's a smaller, lesser known company, then it will start out as a very, very small percentage of the portfolio.

48:52And then as they get to know it, they might build it. They don't worry about, oh God, this is the only chance I'm ever going to get to buy these shares at this price now. So I'm just going to stuff as much of them as possible into my portfolio. They start small and then they build up. There are other investors out there who have much more concentrated portfolios and hold perhaps 20 or 30 companies. And so they end up making a bigger bet on something. But what I would say is if you are going to go hunting for individual shares and thinking that you might find the next NVIDIA, you know, just work on the basis that also you might not find the next NVIDIA and you might lose all of your money.

49:27And I think it is worth considering doing it through a fund, an investment trust or an ETF. And also, I don't hold any NVIDIA shares, but I know that I am massively exposed to NVIDIA because most of my pension is in a global stock market tracker, and NVIDIA represents a big chunk of that.

49:45Georgie Frost: Right, reader, question time. My neighbour, who lives opposite me, has installed a ring doorbell. It means every time we leave and enter our home, he could be watching us. I mean, it's true, he could be. I know it may sound like we're being paranoid, but we don't know him well and don't like the idea of being filmed, particularly as we have young children. We feel the doorbell is compromising our privacy, particularly as our living room and master bedroom look out over the road and both have big bay windows. Can we complain and how can we ensure that we are not being filmed? Lee, what do you make of these generally?

50:18Georgie Frost: Ring, Nest and the like? Because I've just recently, about a year ago, I hated it. I hate the concept of it. I hate the fact that I'm being watched or could be watched in my own home. Although now I do a little fit check when you leave the house you can go yeah that looks good it's nice nice outfit and also you can look into someone's house anyway you don't need a camera to do that what do you think that's my view to start with all of that listen i i'm not a fan but i don't have one i don't really see it necessary i think it's just another piece of technology that doesn't really help out that much you know okay you might be filming something bad might happen and you might manage to get some footage the police are really going to act on it and do anything with it you know i'm not convinced that that's not for me and actually i was sitting around the pool a couple of weeks ago on holiday in gran canaria and someone's app ring app kept on going off and like next to me on the sun lounger and i was thinking how many people walking past your house or going near your house and he the person kept on looking i just thought oh my word like do you ever switch it off when when you're away from home.

51:28Georgie Frost: I don't know. It's just, for me, don't like it. And the privacy aspect of stuff, I mean, the argument with the privacy aspect of stuff is that we don't have privacy anymore, Georgie. You know, we are the most CCTV'd nation on Earth. I think you could probably argue. I can look into all of my neighbours' back gardens through Google Maps and Google Earth. And I'm not going to tell you my address because that would be daft. But the Google Street View recently captured me, my wife and my baby uh leaving the house uh and going and being put into the car um which now will live forever on google maps and it's uh it's quite a chaotic google maps picture you know all of this stuff we've given up so much privacy to technology in recent decades but i do understand i do understand it do you know the other thing that really winds me up georgie actually at the moment uh in a similar vein is adam the self checkouts that we're all getting pushed to in supermarkets and being recorded yeah my face being recorded as i'm like buying stuff it's just like it's horrible i absolutely hate it it's just constant the annoying thing about that though is i can understand look especially supermarkets are having an absolute nightmare of shoplifting but the people are not going to the tills to pay for it those are the good people generally you know you might be maybe putting the odd thing in your bag that's not costing you two billion as an industry it's the people that come in with the big duffel bags and are getting them swiping i've seen this swiping off shelves i don't like it i don't like it but yeah the ring doorbell stuff i get i get the pros and cons of it i do get the pros and cons um you know people some people love them some people think it's complete invasion of privacy and in this case you know it's very unlikely that your neighbor is going to have be recording your house uh 24 7 and quite often they only record i believe if they are triggered by a sensor at motion and also i think quite a lot of time they can be blurred for like a distance um you know so the the recommendation from our experts in here is that rings suggest its doorbells have a maximum motion detection range of 30 feet if your neighbor's camera is across the street it may be that you're out of range entirely now listen i know this is like a new neighbor but it's probably best to sort of chat to him and just say look you know how can i see what can you show me your phone and what this is capturing and that'll probably put your mind at ease but i know also it's not easy because neighborly relations aren't always that simple um you do have uh sort of general data protection regulation and data protection act 2018 legislation this includes ensuring that the use of the camera is proportionate and not excessive further duties include transparency clear purpose and ensuring the footage is stored securely and not kept longer than necessary, regulating and enforcing of this legislation with the competence of the ICO.

54:22Georgie Frost: So you do have rights. I believe there's actually a template on the ICO website to sort of give to your neighbour if you're unhappy about this to find out exactly what it is they're doing with it. And Amazon, who kind of own Ring now, say we strongly encourage our customers to respect their neighbour's privacy and comply with all applicable laws when using their ring device ring devices are not intended for capturing someone else's property or public areas we encourage customers to let their neighbors building owner property manager or housing association know that they plan on adding an extra layer of security to their home before installing their ring device and actually when you do buy ring doorbell they do send you stickers that you're meant to put in your door window to let guests know that you're on camera which is all those signs that you see wherever you are you know you may be being recorded recorded that's all legal jargon and whatnot to make sure that these these are being used properly but i get it georgia i get it the privacy aspects but i do think that there is an element of maybe being a bit overly paranoid about what's being recorded and kept and most people just want to ring doorbell because they don't want to miss out on a parcel delivery or they just want to kind of see who's at the door before they answer the door.

55:38Georgie Frost: Get it from that respect. I wish I didn't because now you can actually see how little parcel delivery people actually care. I've still got the footage of this delivery driver where this parcel just rolled off his hand onto the floor and he almost flipped it and then walked off. Oh, it hurts. And finally, your stat of the week, Simon. My stat of the week is that one in four Britons has a boots advantage card. Right, yeah. I mean, that's astonishing. That is a lot. I've got one. But when you break it down by gender, before you say anything, it's half of all women. Oh, that's not a massive surprise to me.

56:29Georgie Frost: Do you have one? No. Life's too short for loyalty cards. I know. I know. Life is too short. But also, just before I finish, this report also found that 74 % of customers save their points for at least six months before redeeming them. And women are more likely to save their points over several years to purchase a big ticket item worth£50 or more. Oh, well, firstly, it wouldn't take me several years to get£50. pounds i mean i've got about 40 pounds in here right now and that's probably been a fair few months i reckon then i'll probably spend it at christmas but i couldn't go a few years i'll lose them anyway that's it you can keep up to date with all the latest breaking money news just go to thisismoney.co.uk or download the app and if you have any comments or questions for the team anything you'd like to look into simon you can email us podcast at thisismoney.co.uk or come to thisismoney.co.uk forward slash podcast to find all podcasts past and join in the debate in reader comments.

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