Julian Knight: Suffer the little children ... just invest in Africa

The new junior individual savings account announced by Alquity is a real eyebrow-raiser

It's rare in the heady, exciting world of personal finance (irony alert) that a received email is genuinely eyebrow-raising. But the one I had from Alquity announcing the launch of a junior individual savings account (JISA), which invests in African companies, was such a moment.

Few financial firms make a fist of African equity investment. Fund management group New Star, for instance, had to close its Africa fund a couple of years ago due to poor performance and lack of liquidity – which in simple terms means you can't effectively buy and sell stocks.

I was told by one fund management firm which has a track record of emerging market investment, that when its team visited a raft of central African countries the domestic stockmarkets shot up in value on the news of their arrival.

In short, they felt the locals were marking up their prices in the hope some investors from abroad were about to sink some cash. Values were purely based on sentiment and whether new cash was about to enter the pyramid.

Now there are some reasons for African investment – namely a young population and a growing consumer sector – and Alquity promises to sink some of its management fees into local development, giving the investment an ethical wash.

But demographic and consumer good news can be found elsewhere without the political instability, currency risk and liquidity issue.

What's more, a JISA is an investment for your offspring so do you really want to put it at such great risk? Invest in Africa by all means, but best leave the kids out of it.

Milking the saver

For British savers it's been a painful three years. In order to kick the can of unsustainable personal and sovereign debt down the road just a little bit further, savers have had record low rates of return foisted upon them.

Monday is the third anniversary of the Bank of England's rate cut to 0.5 per cent, yet we seem further than ever away from a genuine market in loans and savings.

Savers get less than 1 per cent on average so that borrowers can get rates which are far below what, at this point in the economic cycle and in a world of robust inflation, they should be getting.

This is all in the interests of economic growth, but there is none of that around. Nevertheless, savers continue to be milked. In the three years we have had rates at 0.5 per cent, I estimate a saver with £50,000 has, on average, seen the spending power of their cash pile cut by around £6,000.

With some analysts pushing the next rate rise out another two years, heaven knows how little your cash pile will be worth.

Keep the 50p top tax rate

Don't get me wrong, the 50p top rate of income tax is the worst type of policy: it was designed with pure politics in mind – a ruse by Labour to put the Tories in a difficult place at the 2010 election – and what's worse it makes no economic sense.

Over a certain level of tax you get avoidance deployed and people are not motivated to earn more. As a result tax take goes down. In fact, the latest self-assessment figures suggest the 50p rate has actually led to a fall in revenues of £500m so far.

But putting aside its pernicious nature, the 50p tax should actually stay for another year or two because, put simply, at a time of austerity, continued fury over banker bonuses and potential social unrest, to roll back the top rate of tax will be seen, wrongly, as a sop to the so called fat cats.

This will only exacerbate the feeling that we are far from "all in this together", and over the coming years we are going to need ever bit of cohesion we can muster.

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Customer Service Advisor

    £15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

    Recruitment Genius: Compliance Manager

    £40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

    SThree: Talent Acquisition Consultant

    £22500 - £27000 per annum + OTE £45K: SThree: Since our inception in 1986, STh...

    Day In a Page

    John Palmer: 'Goldfinger' of British crime was murdered, say police

    Murder of the Brink’s-MAT mastermind

    'Goldfinger' of British crime's life ended in a blaze of bullets, say police
    The Real Stories of Migrant Britain: An Algerian scientist adjusts to life working in a kebab shop

    The Real Stories of Migrant Britain

    An Algerian scientist struggles to adjust to her new life working in a Scottish kebab shop
    Bodyworlds museum: Dr Gunther von Hagens has battled legal threats, Parkinson's disease, and the threat of bankruptcy

    Dying dream of Doctor Death

    Dr Gunther von Hagens has battled legal threats, Parkinson's disease, and the threat of bankruptcy
    UK heatwave: Temperature reaches 39.8 degrees on Central Line - the sweatiest place in London

    39.8 degrees recorded on Tube

    There's hot (London) and too damn hot (the Underground). Simon Usborne braved the Central line to discover what its passengers suffer
    Kitchens go hi-tech: From robot chefs to recipe-shopping apps, computerised cooking is coming

    Computerised cooking is coming

    From apps that automatically make shopping lists from your recipe books to smart ovens and robot chefs, Kevin Maney rounds up innovations to make your mouth water
    Jessie Cave interview: The Harry Potter star has published a feminist collection of cartoons

    Jessie Cave's feminist cartoons

    The Harry Potter star tells Alice Jones how a one-night stand changed her life
    Football Beyond Borders: Even the most distruptive pupils score at homework club

    Education: Football Beyond Borders

    Add football to an after-school homework club, and even the naughtiest boys can score
    10 best barbecue books

    Fire up the barbie: 10 best barbecue books

    We've got Bibles to get you grilling and smoking like a true south American pro
    Seifeddine Rezgui: What motivated a shy student to kill 38 holidaymakers in Tunisia?

    Making of a killer

    What motivated a shy student to kill 38 holidaymakers in Tunisia?
    UK Heatwave: Temperatures on the tube are going to exceed the legal limit for transporting cattle

    Just when you thought your commute couldn't get any worse...

    Heatwave will see temperatures on the Tube exceed legal limit for transporting cattle
    Exclusive - The Real Stories of Migrant Britain: Swapping Bucharest for London

    The Real Stories of Migrant Britain

    Meet the man who swapped Romania for the UK in a bid to provide for his family, only to discover that the home he left behind wasn't quite what it seemed
    Cheaper energy on the way, but it's not all sunshine and rainbows

    Cheaper energy on the way, but it's not all sunshine and rainbows

    Solar power will help bring down electricity prices over the next five years, according to a new report. But it’s cheap imports of ‘dirty power’ that will lower them the most
    Katy Perry prevented from buying California convent for $14.5m after nuns sell to local businesswoman instead

    No grace of God for Katy Perry as sisters act to stop her buying convent

    Archdiocese sues nuns who turned down star’s $14.5m because they don’t approve of her
    Ajmer: The ancient Indian metropolis chosen to be a 'smart city' where residents would just be happy to have power and running water

    Residents just want water and power in a city chosen to be a ‘smart’ metropolis

    The Indian Government has launched an ambitious plan to transform 100 of its crumbling cities
    Michael Fassbender in 'Macbeth': The Scottish play on film, from Welles to Cheggers

    Something wicked?

    Films of Macbeth don’t always end well - just ask Orson Welles... and Keith Chegwin