Listen to Episode 477
In this week's episode, I discuss the potential impact of the upcoming US election on investment markets, including historical trends and why you need to keep an eye on the performance of the S&P 500. I then discuss the rise of 'ghost brokers' promising cheap car insurance on social media and provide tips on how to identify and avoid such scams. Finally, Andy discusses child trust funds, revealing how many remain unclaimed, before going on to provide tips on how to locate and manage them.
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Podcast summary
Impact of US election on your investments
Summary:
The stock market's performance in the 3 months leading up to the election has historically been a good predictor of the incumbent party's chances, with a positive 3-month return typically indicating a win for the incumbent. However, this indicator failed in 2020. Historically, the stock market has tended to perform better under Democratic presidents, but this is likely due to wider macroeconomic factors rather than just the party in power. The market also tends to perform best when there is a divided Congress, with one party controlling the House and the other the Senate. Overall, the upcoming election could introduce volatility in the markets, particularly around policies related to trade and China, and the strength of the US dollar could also impact various asset classes.
Ghost broker scams
Summary:
Ghost brokers are fraudsters who pose as legitimate insurance brokers to sell fake or invalid insurance policies, often targeting young people on social media. They tend to focus on bogus cheap car insurance policies; however, documents are often forged, or false information has been used to reduce the cost. Sometimes a ghost broker will take out a legitimate policy but then cancel it after purchase, leaving the victim uninsured. This can lead to serious consequences such as fines, driving bans, or car seizures if the victim is stopped by police. Red flags include unsolicited offers on social media, missing or tampered documents, or requests for cash payments. The advice is to only use reputable, verified insurance providers or price comparison sites to avoid falling victim to this scam.
Lost Child Trust Funds (CTF)
Summary:
Child trust funds were government-issued vouchers introduced from 2002-2011 to help families build up savings for children. Over 6.3 million were issued before the scheme was discontinued in 2011. There are currently around 670,000 child trust funds that have matured but remain unclaimed. Parents or the children themselves (if they are over 16) can use an HMRC tool to track down any existing child trust funds. Once tracked down, they can be easily managed, cashed out (if matured) or transferred to a Junior ISA. This is an important reminder for people who may have lost track of child trust funds set up for them or their children years ago, as these accounts could represent a valuable source of savings.
Episode quiz
Questions:
- Which year of a president's term typically sees the best performance for the stock market?
a) Year 1
b) Year 2
c) Year 3
d) Year 4 - Which asset class has historically performed well in the year following a Democratic presidential victory?
a) US Treasuries
b) NASDAQ (US tech stocks)
c) Gold
d) Emerging market equities - Which of the following is a common tactic used by ghost brokers?
a) Forging insurance documents
b) Falsifying information on real insurance policies
c) Buying a legitimate policy in your name but then cancelling it
d) All of the above - What is the current number of unclaimed child trust funds that have matured?
a) 670,000
b) 690,000
c) 760,000
d) 975,000 - How long was the child trust fund scheme in place in the UK?
a) 5 years
b) 9 years
c) 15 years
d) 20 years
Answers:
- c) Year 3
- b) NASDAQ (US tech stocks)
- d) All of the above
- a) 670,000
- b) 9 years
Resources
Links referred to in the podcast:
- Best bank account switching offers
- Lloyds launches £200 switching offer
- Co-op launches £150 switching offer
- How to track down and transfer a Child Trust Fund (CTF)
- Join our community group and help test a brand new MTTM product
- MTTM Deals Page
- Sign up to the Money to the Masses Newsletter
