MTTM Podcast Episode 545 – Spring clean your finances & the UK investment gap

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Spring clean your finances

Summary:

Andy reveals 9 practical ways you can spring clean your finances to ensure your money is working as hard as possible. He explains how taking our free Money MOT can provide a quick financial health check, and highlight the importance of reviewing credit reports, credit card interest, and unnecessary subscriptions. Finally, Andy outlines why it is crucial to check your tax code, audit your savings, engage with your workplace pension, and ensure you are claiming all eligible tax allowances.

Key Insights:

• Take Damien's Money MOT a free financial health check - Damien's Money MOT is a free tool that takes just a few minutes to complete and provides a personalised action plan to help improve your finances.
• Cut the cost of debt - Check the interest rate on your credit cards and consider using a 0% balance transfer card or the "snowball method" to clear high-interest debt faster.
• Stop auto-renewals - Insurers rarely reward loyalty. Set a reminder approximately 20 to 24 days before your policies renew and use comparison sites to secure a better deal.
• Check your tax code - Millions of tax codes are incorrect each year. Review your first payslip of the new tax year to ensure you are not overpaying on tax.
• Claim what is yours - Millions of pounds in government benefits and tax allowances, such as the Marriage Allowance and Child Benefit, go unclaimed simply because people do not realise they are eligible

The UK investment gap

Summary:

I look at the growing UK investment gap, noting that there is an estimated £610 billion of surplus cash currently sitting uninvested. I explain the illusion of safety that cash provides and how inflation quietly devours its purchasing power over time. I then compare the long-term returns of holding cash versus investing in a globally diversified portfolio, before sharing tips on how to secure the best interest rates for those who still prefer to hold cash.

Key Insights:

• Cash loses value over time - While keeping money in cash feels safe, research shows that cash savings have lost over 40% of their real value over the last 20 years due to the impact of inflation.
• Investing beats hoarding - Historically, investing in a diversified portfolio has significantly outperformed cash savings over the long term. For example, over 20 years, the S&P 500 increased by 840%.
• Volatility is normal - Market fluctuations, such as those caused by recent geopolitical events, are a standard part of investing and do not equate to permanent financial loss unless you crystallise those losses.
• Time in the market matters - Attempting to time the market by exiting before a crash and re-entering at the bottom is practically impossible; staying invested is usually the more effective strategy.
• Shop around for savings rates - If you choose to keep your money in cash, make sure you use best buy tables and savings platforms to secure an interest rate that beats inflation.

• Sign up to our weekly newsletter
• Take out a free trial of 80-20 investor
• Damien's Money MOT
• Check your credit files for free (ClearScore, Experian, Credit Karma)
• The Debt Snowball Method Explained
• How to check your tax code
• Pension calculator
• Entitled To (Benefit calculator)
• Best Savings Accounts in the UK (Best Buy Tables)
• Hargreaves Lansdown Active Savings review