Should you swap your star fund manager for a cheap tracker?

0:02Terry Smith: Welcome to This Is Money podcast sponsored by Charles Stanley Direct. I'm Georgie Frost and joining me and Simon Lambert today is Helen Crane. And coming up, two of Britain's best known fund managers had a year to forget in 2025. So is it time to ditch the star stock figures or are they about to be proved right? Also today, will the Chancellor's cash isa limit cut get us investing? Not even MPs are convinced. Is it time to make another U-turn? Plus, we look at the quiet London house price crash, ask if cashback is worth it, and tell you the best to use electric cars for less than 10 grand. Don't forget to stay up to date with all the latest breaking money news.

0:39Terry Smith: Just go to thisismoney.co.uk or download the app. But first, a message from our sponsors. Do you love talking about money as much as you love listening to it? Then you'll enjoy this. Charles Stanley Direct's financial coaching service gives you a real human, yes, an actual expert to help you make sense of your finances. No jargon, no pressure, just clear answers to your money questions. Book a free 15-minute call today at charles-stanley.co.uk forward slash financial coaching. Go on, your future self will thank you. Remember, investment involves risk. Now back to the show. It's been a rough old 2025 for two of Britain's best-known fund managers.

1:18Terry Smith: Terry Smith's Fundsmith returned just 0.8 % for investors, while Nick Train's Finsbury Growth and Income Trust lost its investors 6%. As the debate rages over active versus passive, it would have proved a better move for investors to ditch the fund managers for cheap index tracker funds, simply backing the market. And we know someone who holds both Fundsmith and Finsbury Growth in their portfolio. So what will he do next? Simon. As the only male in the room here, I'm suspecting that he is you. It is me. Firstly, just what do fund managers do? Fund managers manage a pool of money that has been put forward by investors.

2:06Terry Smith: then they take that money and they try to buy assets that they believe will deliver good performance for a reasonable level of risk and also in line with what that stated funds aims are you could have for example the this is money highly exciting fund managed by yours truly Simon Lambert and my aim is to go out and find the most exciting companies in the world and pick them and try to deliver a return that beats the market or you might also have the this is money really boring but safe fund managed again by Simon Lambert who has donned his sensible shoes and decided to invest in assets that will deliver a reliable return taking less risk and getting less volatility fortunately yours truly is not actually a fund manager and there are much better qualified professionals who actually do the job and you have managers who manage what are known as open-ended funds which are traditionally called investment funds basically they're the biggest part of the investment fund unit universe and you also have managers who manage something called investment trusts which are basically an investment fund that is itself listed on the stock exchange so when you buy into an investment trust you buy its shares and you sell its shares and there's a limited number of shares so that investment trust could at any given time have a share price that is worth more than the assets that it holds so it's at a premium or could be if people don't like it worth less than the assets that it's held.

3:52Terry Smith: So it's a discount. Whereas the open-ended funds, the investment funds, they always trade at the level pretty much of the assets that they hold. And if there's a sudden rush of investors to put their money in, then the fund manager has to go out and buy more investments. And if there's a sudden rush of investors taking their money out, then the fund manager has to sell some investments in order to fund those redemptions. So in that regard, then, when we talk about active versus passive, what debate are we talking about here? We're talking about the debate as to whether you should employ a fund manager to try and pick the best investments for you.

4:27Terry Smith: And we're going to talk mainly about picking shares here because both Nick Train and Terry Smith are fund managers whose funds are equity funds. So they hold shares. But you can also have fund managers who buy bonds. You can have fund managers who buy other assets, gold, property, pretty much anything. The debate is whether you should have that fund manager trying to choose the best investments or whether you should adopt a passive approach. And a passive approach is basically to just follow the market. And there will be a chosen market. So you'll choose something that's either called a tracker fund or an ETF, and it will follow a set index.

5:06Terry Smith: And that is a basket of investments. and the idea is that it will track it as closely as possible you do get some tracking error you get some that are full further away from the actual performance of the index and then you also have to look at the fees because that will eat into it as well but the fees on passive investments tend to be much lower and the argument for passive investing is that you are simply allowing the market to do its work and that's what you're relying on and that by not trying to pick winners which is what a fund manager does you also don't run the risk of picking losers which is also what a lot of fund managers do and there is a great deal of research out there that shows how incredibly difficult it is for fund managers to consistently beat the market over the long term but also that we probably assess them over two short periods and that in order to assess whether a fund manager can actually consistently beat the market are they genuinely give delivering added value to their investors you need to measure it over a really long period of time like 20 years yeah like something like that rather than five right so what you're saying is essentially the cheaper much simpler option is making you more money than some of these superstar stock pickers, fund managers.

6:36Terry Smith: So the question obviously inevitably would be, do you ditch it? But before we get to there, Terry Smith and Nick Train, I'm sure our listeners will have heard their names before, but they really are quite big deals, aren't they? Yeah, they are very big deals. Essentially, they are Britain's two biggest star fund managers at the moment. The thing about the fund management industry, especially the active fund management industry, is it appeals to our love of a story. Now, you will get many fans of passive investing who say, why don't you write more about tracker funds? And we do write about tracker funds.

7:09Terry Smith: We write about tracker funds all the time. But have you ever tried interviewing a tracker fund? It's really boring. What are you buying? Everything. What do you hold? Everything. What do you like? Everything. They are inanimate objects. Whereas, for example, by comparison, Terry Smith includes in his letter to shareholders, the absolute gem of one of our mantras has been that we should always invest in businesses which could be run by an idiot so the performance is not heavily reliant upon management we have been made painfully aware that the range of businesses which can be run by an idiot is much more limited than we thought well i mean maybe in the world of generative ai we're going to start getting quotes like that from tracker funds but as it stands fund managers equal stories people like to read stories and there is the cult of the staff fund manager now rightly or wrongly there is the cult of the staff fund manager some of them fall down to earth with a bang near woodford for example whose fund arguably was not really doing what it was meant to be doing or what many of his investors thought it should be doing and blew up quite spectacularly but let's be clear that's not what is going on here with terry smith and nick train in contrast terry smith and nick train are very clear on what they do.

8:30Terry Smith: They are very clear on their investment approach and they are following it. And for many years, that was a very, very successful investment approach. And if you look at the long term, both Smith and Train have excellent records of beating the market. But if you look over the past five years, neither of them has managed to beat the market once. So by holding their funds you have lost out there's an opportunity cost you could have just held the market and you would have made more money you'd be richer now in some years that gap wasn't massive but in other years it was pretty big and last year i think we reached the the zenith of this underperformance where as you said terry smith uh delivered just 0.8 percent and finsbury go for an income lost its investors money unfortunately it lost them six percent so not only would you have been better off in a tracker fund you'd have actually been better off in a savings account question is if you're an investor like me who holds one of these funds or both of these funds what should you do now i mean look firstly was this just because the stock markets had a dela rise ai all that sort of thing that it's actually quite difficult to beat it is there an element of that?

9:47Terry Smith: Yeah, there is a real problem for active fund managers at the moment. And the problem for active fund managers is that the stock market is going up by so much. And the stock market is the biggest problem is for global fund managers who invest all around the world, because the problem is the global stock market. And this is a nice problem to have if you are a passive investor, and you've been holding a global stock market tracker, because your investments will have gone up by lots. But the global stock market is dominated by the US stock market currently, because of the big, big gains we've seen there.

10:18Terry Smith: It's now more than 70 % of the global stock market. And of that 70%, the US market is dominated by a small number of very large US tech firms, the magnificent seven, who have seen their share prices rise by colossal amounts in recent years. NVIDIA, the world's largest company, is a classic example of this. It's worth more than the UK stock market. And it means that it's very, very concentrated. And what that means is that if you are a fund manager and you don't hold those stocks, then you are going to fall behind the market unless you've found some other spectacularly good investments. Now, there are some fund managers who have managed to comfortably beat the market and found some other spectacularly good investments.

11:10Terry Smith: some of them have gone looking for what is termed value investing stocks for example which is companies that where their their value has been beaten up by so much that they then see a change in sentiment and a big rise in the value others have gone for different types of growth stocks others have invested in different parts of the world the problem that terry smith and nick train have is that they invest in what are generally seen as quality companies and these are large reliable companies with robust balance sheets businesses that should work through thick and thin year in year out and should just keep delivering profits for investors and at one point these types of company were very very popular indeed hugely popular after the financial crisis when interest rates were on the floor government bonds yielded almost nothing or in some cases negative amounts in which case to an institution investor to a big investor a big stable global company paying a three percent dividend looked very attractive indeed to an individual investor it looked very attractive indeed compared to a savings account that paid them less than half a percent now turn the world on its head with the you know the ultra profits of the u.s tech giants the covid lockdown then the inflation spike and then most importantly interest rates rising and all of a sudden those companies don't look so attractive because you can get four percent from a government bond which is pretty safe so why would you invest in one of these for the dividend alone and the share price has fallen as the demand has fallen for them so you're not getting the share price gains because there's less demand for the income that they pay out there's also just less demand for their businesses as a whole because just the general investor sentiment has changed and everybody's just looking over here but those uf big u.s tech stocks they're making super duper profits it's like well yeah i mean like okay i like a pint of guinness but like what do i want Diageo for when I could own Nvidia.

13:09Terry Smith: And so they're caught in a perfect storm, effectively. Now, both Nick Train and Terry Smith, as I said, have very similar investing styles, and they refer to as Buffett style investors. But Warren Buffett, the world's most famous investor, isn't a fund manager. He's a businessman. And quite a lot of his success has come from striking the kind of deals that ordinary investors and even fund managers cannot strike if you were a fund manager you want to buy shares in the company for most funds there are some that you don't have to do this for most funds you're going to have to go buy those shares on the market pretty much paying what the market is charging for the shares if you're warren buffett you don't have to do that you just speak to the company direct and say i'd like to take a stake in you you can negotiate preferential terms if it's in the aftermath of the financial crisis when there's lots of companies that are suffering massively you can negotiate very favorable terms and then you can make a lot of money off it.

14:04Terry Smith: And if you do those things over a very long period of time, as Warren Buffett has, and you use the cash pile from your business and the money generated elsewhere here to do this and then to do that, then you can genuinely create a style of investing that beats the market. But it's actually a lot more buccaneering than is given credit for. And also, interestingly, Warren Buffett, he says you should buy a tracker fund. So Simon, the question is, and you posed it earlier, what will you do? Well, as I said in my column, should I just say thanks for the memories and the good returns and ditch them?

14:41Terry Smith: Now, it's quite tempting, okay, because if I look at what I've made long-term, I've held both of these since 2012. Now, Fundsmith has delivered the better return out of the two. Invest in the global market, the global market has delivered the better return. Finsbury Growth and Income invests in the UK. My Fundsmith investment, it's difficult to tell because over the years I've changed investment platforms so when I've done that the cost that I bought for hasn't been properly carried over I've also added to investments with Fundsmith it's a bit clearer because I've only added to the investment twice and I've got what's known as the accumulation fund so all the dividends are rolled up within the fund so you see a genuine total return with that I think I've made about a 226 % return which is great it's turned 1650 pounds into like five grand that's pretty good but most of those returns came quite some time ago finsby growth in income it's harder to tell i do know from googling an old column that i initially bought the shares at 350p and they're now at something like 800 and something p so i've comfortably more than doubled my money i think i worked out 137 return on that but then i've added chunks of money at different times after that and reinvested dividends and it pays out a reasonable dividends that kind of adds up over the time and i think some rough kind of back of an envelope maths basically apart from that initial investment the rest of the money i've put in has gone pretty much nowhere um at one point i would have been up substantially but because things have come off the boil i'm not so what i should really be doing is saying okay this money if i put this money somewhere else does it have a better opportunity of making money so two choices should i just put it in a tracker fund potentially yes but what i talked about earlier with this over dependence on the u.s tech giants these fears over the ai bubble and things like that i'm a bit dubious about that also this is in my investment isa right where it's a lot more spread around lots of active funds and things like this that my pension on the other hand my work pension is largely invested just in a global tracker so i'm thinking okay well most of my money's doing that i can do some stuff with the other money should i invest it in another active fund or just something completely different maybe if i think there's a better opportunity there but also what i'm aware of is that what i shouldn't be doing is making a decision based on what's happened over the last five years because whilst past performance is no guarantee of future gains so the first you know 50 the first seven years or however long it is i can't remember what i'm talking about of holding these where i had the good returns i shouldn't rely on that to just make me think that returns are going to be good but i also shouldn't rely on the last five years to just make me think the returns are going to be bad and there is a possibility that as we see this shift away from giant u.s tech companies and we are seeing this you know they're still going up quite a lot there's still a lot of demand behind them but we're seeing just a bit of money shift away and you only need a little bit of money to shift away from them because they're so big that only a little bit of money would make quite a big difference elsewhere if that shifts away there's a chance it might shift into the type of companies that smith and train hold and if the market takes a tumble don't get me wrong funds Smith and Finsbury Growth and Income are going down as well.

18:03Terry Smith: You know, this stock market collapses, everything's going down, but it might not go down as badly and it might make a better return. There's a lot of mights there. There's a lot of could-bes. There's a lot of speculating. But I suspect that in the long run, there's a possibility that Terry Smith and Nick Train might actually turn out to be right on some of the stuff that they're saying. And there is also a possibility that you could see you know the port certainly nick train's portfolio all of a sudden you could see quite a few of those companies potentially suddenly rise by quite a lot and show a big bounce back so for now i am not ditching them because i'm thinking that potentially they might be set up for future gains perhaps even this year but there's a big big perhaps here and i cannot help but think that as I'm doing this, I'm indulging in yet more wrongheaded investment thinking.

19:01Terry Smith: Well, Simon, one to watch. We'll discuss this this time next year. Sticking with investing, thank you for being patient, Helen. We're going to talk now about the cash ice. I know that's not investing, but basically the government cut the cash ice limit for under 65 in order to try and get us investing. And I'm not sure who actually thinks it's going to work, except perhaps the Chancellor and a few of her close advisors. But now even MBs on the Treasury Select Committee say they remain to be convinced the reforms will drive the cultural change that ministers want to see. So, Helen, we've talked a lot about U-turns, haven't we?

19:40Terry Smith: Will we get another one on this one? Recap on the cash-isor limit changes, if you would, briefly.

19:47Nick Train: Sure. So, this was one of the biggest personal finance changes that came in the budget at the end of last year. So Rachel Reeves said that the cash ISA allowance, which at the minute is£20 ,000 a year for everyone they can save tax-free, will be cut to£12 ,000 a year from April 2027. But, and this is a caveat that I think a lot of people find quite strange, only for under 65s. So if you're over 65, you can carry on saving 20 grand a year. Under 65, it's going to be cut to£12 ,000 a year. You will still have, this is where it gets a bit confusing, you will still have a£20 ,000 a year ISA allowance.

20:32Nick Train: However, only 12 can be in cash and the rest, the other£8 ,000, can go into stocks and shares. So the idea is to encourage people to invest more of their money. And the reason Rachel Reeves wants to do this is to give a bit of a boost to UK companies and the UK economy. So, you know, we're seeing obviously sluggish growth. businesses aren't really investing and she wants more people to sort of pour cash into UK companies, UK listed companies so that they can invest in their businesses, you know, grow, hire more staff and hopefully she hopes it will create a sort of virtuous circle within the economy.

21:16Nick Train: It could have been worse, it's worth saying. So before the budget people were talking about the cash ISA allowance being cut to as low as sort of£4 ,000 a year, which I think would have been really sort of disastrous for people's savings because the cash ISA is obviously such a popular product. And it's one of the few financial products that, you know, the normal person on the street really does understand, you know, they're incredibly popular. I think about 40 % of the money held in ISIS is in cash ISIS, which might not sound like a lot. But I think that's because people who hold money in stocks and shares, it tends to grow more quickly over a longer period.

21:57Nick Train: So their parts may sort of balloon more quickly, but cash ISIS is still incredibly popular. So what the Treasury Committee has said, they're basically a committee of MPs who sort of run the rule over treasury decisions or the stuff that Rachel Rees is planning and whether it's going to work, whether it's sort of fiscally responsible. They met this week and Meg Hillier, who's the chair of that committee, basically said she doesn't think this drive to get people to invest is going to work, which is quite damning. She's eventually said reducing the allowance and the publicity which would have to go alongside such a reduction is unlikely to increase the level of saving in shares in the UK.

22:43Nick Train: So yeah, very, very bad, bad sort of week for Rachel Reeves. Plan not going to work at all, these MPs are saying. I take back what I said earlier.

22:54Terry Smith: Obviously, investment companies are probably a big fan of this because if it does possibly mean that more money goes into investing, they've got nothing to lose. But even then, lots of them haven't agreed with it. So it can't have come was a big surprise to the Chancellor. However, I am dubious we'll get any change here. There's just, I mean, to have another policy U-turn, I think would just be one disastrous step too far. So I think we are where we are with it. But Simon, what's your view? I mean, my view is that I've had conversations about this with some of the senior people at some of Britain's biggest investment platforms, including the chief executive of the second biggest one, Interactive Investor.

23:34Terry Smith: right and they have all said that this is a bad idea ii is an interesting example because it's got no skin in the game ii doesn't offer a cash isa right so you could see why for example so our friends are trading 212 also bad idea i mean this is a platform signing up huge amounts of investors right they also offer a cash isa they've said terrible idea right they said it won't get more people investing and actually it just sort of undermines you know the isa system and they said don't do it right but but they've got both products so at least you know they've got a bit of skin in the game they don't want their cash isa undermined but i mean richard wilson at ii they don't have a cash isa he was like no it's a terrible idea so the government we told the government this government didn't listen that's basically gen what the general thing from the investment platform and investment industry has been as we told the government this was a bad idea they didn't listen there are some in the investment industry who've been pushing for this largely it comes more from the kind of fund management side right who they do you know they will benefit but also there's this suggestion that even if more people did invest off the back of this right so say you've got the limited number of people who could actually put more than 12 000 pounds into an isa and are currently filling up a cash one even if some of those people took that eight grand and they invested it it's probably not going to go into the uk stock market in meaningful amounts a lot of it's going to go into global tracker funds those things we were just talking about and if it goes into them 75 of it's going into us shares yep the buying behavior that we see on the big investment platforms and then also in other places is not that the money is going to go into the uk stock market i mean if so say someone's got a financial advisor or wealth manager right so they've got a professional helping them manage their money and they say right okay i was going to put my 20 grand in a cash riser i've now got eight left over because i can only put 12 in so i'm going to invest that instead that financial advisor or wealth manager is not going to tell that person to put 8 000 pounds into the uk stock market the starting point for that financial advisor or wealth manager is almost certainly going to be invest in line with the market so three quarters of it goes into the u.s and then maybe if you think differently you can um move a bit away from that but they're not going to suggest putting a large amount of it into the uk stock market now in aggregate it might mean a bit more money going to the UK stock market.

26:24Terry Smith: But the counterpoint to that is you're undermining the country's most successful saving and investing scheme because people don't hear the nuance. They just hear ISAs being cut and they go, well, what's the point? They'll only change the rules again. What's the point? Put the money in my stocks and shares ISA. They'll only change the rules again. And so I think it was misguided and foolish. And I'm not surprised that this report has suggested that it's probably not going to do what the Chancellor thinks it's going to do. That's it for part one.

27:01Terry Smith: I am joined now for our weekly Investing Explained feature by Blairam Gashi of Charles Stanley Direct. Blairam, we've got a question here from a listener. I want to build an investment portfolio and would like to hold individual shares in it. How many different shares do I need to diversify? The first thing I'd like to do is give a bit of research and context you know talking about diversification and individual shares this goes back to kind of modern portfolio theory and modern portfolio theory shows that you don't need hundreds of holdings in fact you know the the kind of nice number is around 20 to 30 shares and that is essentially the amount you need to kind of essentially reduce company specific risk beyond that point any additional shares tend to make a very very small difference in overall volatility but I will say just because you have 20 to 30 shares doesn't mean that that diversification is kind of complete there are other factors you need to think about as well as just as hitting a number it's about variety you know mixing companies from different industries and sectors and you know exposure beyond just one region or market theme historically speaking and speaking to people in coaching calls researching 20 to 30 companies can be a lot outside of you know working hours and kind of family life in general, which is why many people kind of do a core satellite approach where the core is essentially the funds where the kind of diversification is already embedded into it by choosing the stock selection and things like that.

28:30Terry Smith: And then, you know, the 20 to 30 holdings is something that they feel like they are interested in and they'd like to fill any gaps if the stock or fund that they have is there. Laram, great advice. Thank you very much. Thank you. Welcome back. Homeowners in the capital are facing a rude awakening when they come to try and sell their homes as property values continue to plunge. Prices in parts of London are in freefall, with some people forced to cut their losses and sell for up to 50 % below what they paid in some cases. Up until 2015, London's house prices were rising so quickly, it would have seemed impossible to lose money.

29:06Terry Smith: But since then, house prices have crossed swathes as the capital have barely moved. And now some say a full-blown crash appears to be taking place. Helen, as the Londoner here, what's going on?

29:19Nick Train: Yeah, this hasn't made me feel...

29:20Terry Smith: I should say, sorry, the London living person, proudly from the Midlands.

29:24Nick Train: That is true. London living. That's true. I worked out the other day that I've been in London for 15 years. So I think I count as a Londoner, just about, if they love me.

29:33Terry Smith: If you want to be, though.

29:35Nick Train: Yeah, I'm not sure. bit on the fence to be honest I probably sound a little bit too brummy so yeah exactly so what's going on in London though yes it's not not been good um so we've got this great piece which is really uh picking apart everything that's happening in the London housing market uh essentially anyone who's bought in the last 10 years or so might have a bit of a rude awakening if they come to sell and they might be selling their house or flat for less than they bought it for. So London had this huge property boom between the end of the financial crisis and about 2015. So that sort of period between the financial crisis and Brexit essentially.

30:20Nick Train: The average home in the capital rose by 83 % according to land registry data which is phenomenal in just six years. So going from an average of£263 ,000 to£482 ,000. But since then, prices across a lot of the capital have been really stagnant and are now starting to go down. It does depend, as always with house price data, it always depends on what type of property you have and the precise location of your property. Because not all parts of London are equal. There's parts that have seen and are still seeing huge gentrification where people have made huge amounts of money. And, you know, even down to particular streets in a neighbourhood, some might be more attractive than others, might be doing best.

31:08Nick Train: You know, there's hundreds of these sort of micro factors. But in general, this data does show some really big price rises, even in the last couple of years. So looking at since the start of 2023, the average price of a flat in London has fallen by more than 7%. But in some of the higher end locations, so City of Westminster, which isn't just central London, you know, that includes sort of posh, I would say suburbs, posh sort of inner London suburbs like Marlebo, Maida Vale, St. John's Wood. Prices are down more than 27 % since the start of 2023. Kensington, Chelsea, 20 % fall. And I think flats are an interesting issue as well.

31:51Nick Train: That's something that's kind of happening across the whole of the country. But it really comes into focus in London because obviously so many homeowners do live in a flat. Flats have really been marred by leaseholders. All this controversy over leasehold and service charges, I think, is really putting buyers off. And also the cladding scandal, which, you know, there are still homeowners stuck in properties with unsafe cladding. And I think even on flats that don't have any of those issues, there's a sort of psychological barrier. You know, potential buyers are thinking, oh, do I really want to buy a flat in a block?

32:29Nick Train: It just seems in general, there's a general sort of bad feeling about it. So as someone who owns a flat in London, I'm feeling absolutely great, to be honest. What could go wrong?

32:40Terry Smith: Give it time. Give it time. Long term investment and all that. If you do need to sell, though, are there any tips?

32:49Nick Train: Yeah, I mean, it's difficult at a time when things are generally sort of flatlining. I think it depends on when you bought it. You know, if you have a flat that you bought, say, or a home in London that you bought 15, 20 years ago, you're probably still going to see an increase. I think the general advice from agents is to, although it might be tempting to price it optimistically and, you know, really try and make sure you get your money back on it. actually sometimes being a bit more realistic with the pricing can work out better you know if you price it quite competitively compared to other houses in your area you'll get more buyers in you might even still be able to generate a bit of a bidding war and eventually you'll uh you'll get more offers so i think the importance of actually getting people through the door and not putting them off with a price that people see is too high um is a big one and uh also just knowing what's on the market in your neighbourhood.

33:45Nick Train: So have a look at what's around, make sure you're sort of in line with those. You know, you've got to think of, you've got to sort of think through the eyes of a buyer, I suppose. What else are they seeing? How does your place look compared to the other things that they're looking at, I suppose, would be the advice. Simon?

34:02Terry Smith: Yes, it's really important to look at this London house prices thing. And remember that what we're looking at here is not all london homes and all london flats it's specific types of them so new build flats are the ones that are hardest hit you know the whole market is suffering there's new build flats and there's another thing that happened with new build flats that we have to remember which is help to buy now under the help to buy scheme the government at time in their wisdom, Mr. George Osborne came up with possibly one of the daftest schemes in economic terms ever, which was in order to tackle the problem of house prices being too high, he decided to lend people interest-free the money to buy the houses up to 20 % of their value.

34:49Terry Smith: So basically, rather than making them cheaper, it just sort of filled the gap with some cheap money. obviously then that had to be paid back after the event and what that did was it inflated flat prices rather than deflating flat prices and it also encouraged building so what we've got is there was a boom in new build flats that were being sold at inflated prices and bearing in mind that new build properties are already sold at a premium because they're brand new and that's judged to be a good thing you're the first person who's ever lived there you will note that after you've bought it that will never happen again you will only ever be the first person to have ever lived there the person you sell it to will not be the first person to have lived there and therefore they may not be willing to pay the premium that you paid for being the first person to live there combine that with the oomph under it of the help to buy scheme where where we were lending people the deposits and what you've got is a scenario where lots of people bought into flats at inflated prices and the developers were able to flog them at inflated prices due to inflated demand and that then combines with people being sold down the river on the stuff that helen was talking about leasehold cladding etc so there is a whole chunk of people who bought new build flats and certainly new build flats in london who are certainly well within their rights to feel seriously aggrieved at how they got totally mugged off by the system.

36:22Terry Smith: All right, then. Now, you've probably noticed this. Perhaps if you've bought a train ticket online or maybe from your bank just for paying your monthly direct debits. Cash back offers. They promise we can earn money while carrying out our everyday spending. Money for nothing. Great. While some are very lucrative, some say they can pay thousands in some cases, others are poor deals and could leave you out of pocket so is cashback too good to be true simon thinking back on podcast past i'm thinking more of cashback sites here am i right in thinking you're not the biggest fan of this concept but just explain cashback what is it i believe my statement might have been something along the lines of life is too short for cashback i thought Because life is too short for loyalty cards.

37:13Terry Smith: Life is too short for loyalty points as well. This might be a trope. There's a danger that I trot out the same old lines again and again. Simon Bingo. Exactly. Cashback. It's a way of getting some money back for something that you do. So you could use a cashback site to get some money back on your shopping. You could have a cashback deal from your bank account, where when you spend money, you get some cash back. You could have it on your credit card as well. you could have it for moving some money to an investment platform you can get it in lots of different ways and if you're savvy and very very smart about how you do it and you stick by the rules and you make the absolute most of it it can prove to be very lucrative indeed although it should be noted that to make the most amount of money you will need to start with a lot of money in the first place.

38:04Terry Smith: Like so many things, Helen, like so many things. Whenever I think of cashback, as I said, it's always these cashback sites. And I'm quite sensible with it. I only ever use it for things that I would buy. And I think I've made, I'm just checking here,£2 ,000 over 10 years. So it's not a massive amount, but it's something. So when I read your article that you can make thousands upon thousands, what is this?

38:28Nick Train: Yeah, I think with these things, I'm a bit like Simon I don't really do cash back however I do have friends that are really into it and I think what you have to do is you have to fully commit to it if you want to make any kind of worthwhile amount from it you have to go all in you have to make sure you know every debit card that you use has a decent rate of cash back on spending you know if you invest your investment platform is giving you money for moving cash you know you use cash back sites like Jermaine mentioned I think you have to go you have to fully live the cash back lifestyle so the way that you can make a lot of money is as simon said having a lot of money in the first place so one of the examples in our article is you could get 10 000 pounds of cash back but that's by moving a investment pot worth 1 million pounds uh to a new platform so you know yeah exactly what simon means there it's it's those kind of numbers that will get you sort of thousands and thousands and however I think you know the point of it is for people the more normal budget is sort of letting it add up over time right so say if you spend£1 ,500 a month and you've got a Chase account so that pays one percent on essentially a lot of your normal spending like groceries petrol train tickets transport and you can earn 15 pounds a month if you spend 1 ,500 pounds so that's you know that's that's the amount that a lot of people could feasibly spend on things like that in a month you know if you're a family and I suppose if you do that every month and then you know maybe you could be a bit smart and take all those 15 pounds and put them in a higher interest savings account you can invest them and I think that's the way that you know you really start to make it work for you.

40:23Terry Smith: is this an unqualified good because there's also suggestion that actually it could leave you out of pocket well yeah because if you fall foul of some of these things then you could end up losing money so for example let's take a scenario where in order to get your cash back you have to pay some money now if you pay the money and then you don't make the most of it you could end up paying more money than you get back in cashback. So if you book a train ticket, a train line for example, you might see a pop-up come up. It invites you to join a cashback scheme called Complete Savings. Now this is an online membership scheme but as Sam Bromley points out in our article it costs £18 a month.

41:09Terry Smith: In return though you get 10 % cashback at more than 1 ,000 retailers. So the money builds up in your Complete Savings account and you can withdraw to your bank after you've earned at least five pounds you can get 10 cash back at retailers such as any van clarins snow and rock um but 10 cash back means you need to spend 180 pounds a month to claw back the online monthly membership fee okay now you might manage to get that fee waived if you make a qualifying purchase claim but you if you don't jump through all the hoops if you don't meet all the terms and conditions you will end up spending more money than you actually get back and we talked about this last week any deal where someone is offering you something like cash back or points or reward points or avios points or all these kind of things you need to think you know why is someone offering you this we were talking about the 750 pound cash back you could get for opening that hsbc bank account right why does hsbc want to offer me 750 pound to open bank account because he thinks he's going to make more than 750 pounds off me why does why does someone want to offer me cash back on this is because it will get me to sign up and they think that ultimately they'll make more money off of me so play the game hit all the rules do exactly what you're meant to do and you can win but if you don't do that then you won't and i would use an example i've used many times on this podcast yours truly's unbelievably mind-bendingly stupid use of a ba amex card in order to collect avios points i've had one for years i've spent on it and i'm terrible at forgetting to pay the balance off in full and sometimes i don't do that and so i do obviously pay the minimum payment i'm not complete klutz right yeah but i don't pay the balance off in full then i end up paying interest on because i'm using it for lumpy spending i might have like booked a holiday on it or books park books somewhere we're staying for a holiday you know putting like a grand on it or put some flights on it and then you don't pay that all of a sudden you get hit with the interest and you you incur interest charges that will massively outweigh any benefit you get from the flights especially if you've never ever managed to book a flight with the points which until very recently was me but i have now managed to book a flight with the points so at least i feel slightly better about the situation so learn from my mistakes there and be careful what you sign up for i'm in a similar situation to you simon except for the fact that i am fastidious in paying off my amex and for the first time after how many years two years i finally finally it felt good and you used a companion voucher as well so actually you're not in a similar position to me what you old to not use using it properly you're actually the direct opposite of me you've saved it up until you could actually use the points to do something useful with it and then you used a companion voucher in order to get the max in value so my guy has paid a load of interest over the years never booked a flight and then the flight that i've booked is one single leg flight no companion voucher no nothing i'm an idiot that's not good is it my was quite impressed of mine i got a business return flight for two people for 600 quid to toronto that's not bad is it that's really good there you go so the only similarity there simon was that well one we had the card and two we both recently spent the points for the first time the rest is like mine's a happier sort of ending story yours is less so anyway we're going to move on finally read a question i feel like we haven't had a good reader question in a while we've got in here it's all about electric cars.

44:47Terry Smith: I want to buy, not me, but if this was me, I would have a similar sentiment because they don't want to buy a Tesla. I would be there too. And a used compact EV for under 10 ,000. I never buy new. Under 10 ,000 sounds about right. They also want a decent range. Who doesn't? So anyway, I need to be able to travel at least 200 miles between charges and I have no brand and affiliation, except what they don't want. So I'm open-minded about all other manufacturers. It too needs to be spacious enough for my husband, I wonder where that was going, who is taller than average, taller, and often struggles with comfort in cars.

45:23Terry Smith: But we also don't want a huge SUV, and that will struggle to park. Can you help? Sally from Essex. Simon, firstly, no Tesla. No Tesla. No, I mean, you're ruling out one of the most popular, and also i wouldn't know by don't care by dent of being one of the most popular one of the most available on the used market electric cars and the tesla model 3 as is a very very competent car there are a lot of people though who have decided that due to elon musk's recent behavior and pronouncements and all those other things that they will not be buying a tesla uh and there are people driving around with stickers on their cars stickers i've seen those i bought this before he went mad you know apologizing for their car so anyway if you don't want to buy a tesla right because the answer to this could just be go buy go buy used model three they're actually incredibly good value and they're quite good cars right if you don't want to buy one and you want a cheap run around what can you get now frida has driven a lot of electric cars in her time she is a genuine motoring expert Frida Lewis Stemple our motoring reporter and she's a genuine EV expert and she has picked out a couple here and also we've got the price what you could buy used so basically looking at a car that is between three and five years old and that fits the bill of what we were talking about Volkswagen ID3 used price 9 ,500 pounds really popular small electric car has a range of 260 miles we found a 2020 car with 98 000 miles on the clock for nine and a half grand battery is still just under warranty this is a solid car people really like these and you're always going to probably benefit in terms of depreciation from having a car with a vw badge on the front the kia soul this is a more boxy uh car it's been discontinued it's probably not going to benefit in the same way in terms of holding its value as the vw but kias are very popular cars great range 280 miles 8600 pounds for one of these uh comes also comes with a seven year 100 000 mile warranty plan and a separate eight year 100 000 mile warranty for the battery pack as long as it still has at least 70 of its original capacity when you buy it watch out for this kind of stuff when you are buying used electric cars check out all this stuff read read the buying guides and check the stuff carefully another kia the nero six and a half grand hyundai kona sister brand takia that would be 10 000 pounds uh and then the voxel corsair electric that would be 7 000 pounds and finally you could also opt for something like a mini but then you're going to be paying more money all right then simon your stats of the week 30 that is the amount that silver is up almost 30 i should say this year already it has more than tripled in value since the start of 2025 eclipsing the rise in the gold price which was about when this article was written about eight percent since the start of the year and 80 since the start of last year so whilst there's been a lot of attention on gold it's silver that has actually been going like the absolute clappers you know it's speculation largely metals are you know rising quite substantially and you know silver is chasing the gold price up what i would say if anybody is thinking of investing in silver off the back of this is just be very careful because what goes up very quickly can't down very quickly all right then that's it thank you very much helen thank you simon you can keep up to date with all the latest breaking money news just go to this is money.co.uk or download the app and if you have any comments or questions for the team or anything you'd like them to look into simon you can email us at podcast at this is money.co.uk send us your questions and tell us what you want to know uh also come to this is money.co.uk forward slash podcast and join in the debate and read the comments and you can find all podcasts past to listen through our back catalogue and find your greatest hits.

49:36Terry Smith: Awesome. And if you like our podcast, why not raise us wherever you found us? It helps other people find us too.