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; request a free guide on NISAs from Hargreaves Lansdown

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

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

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Reach Volunteering: Trustee – PR& Marketing, Social Care, Commercial skills

    Voluntary Only - Expenses Reimbursed: Reach Volunteering: Age Concern Slough a...

    Reach Volunteering: Charity Treasurer

    Voluntary Only - Expenses Reimbursed: Reach Volunteering: Crossroads Care is s...

    SThree: Trainee Recruitment Consultant - Soho

    £20000 - £25000 per annum + OTE £35,000: SThree: We consistently strive to be ...

    Ampersand Consulting LLP: Markit EDM (CADIS) Developer

    £50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...

    Day In a Page

    In a world of Saudi bullying, right-wing Israeli ministers and the twilight of Obama, Iran is looking like a possible policeman of the Gulf

    Iran is shifting from pariah to possible future policeman of the Gulf

    Robert Fisk on our crisis with Iran
    The young are the new poor: A third of young people pushed into poverty

    The young are the new poor

    Sharp increase in the number of under-25s living in poverty
    Greens on the march: ‘We could be on the edge of something very big’

    Greens on the march

    ‘We could be on the edge of something very big’
    Revealed: the case against Bill Cosby - through the stories of his accusers

    Revealed: the case against Bill Cosby

    Through the stories of his accusers
    Why are words like 'mongol' and 'mongoloid' still bandied about as insults?

    The Meaning of Mongol

    Why are the words 'mongol' and 'mongoloid' still bandied about as insults?
    Mau Mau uprising: Kenyans still waiting for justice join class action over Britain's role in the emergency

    Kenyans still waiting for justice over Mau Mau uprising

    Thousands join class action over Britain's role in the emergency
    Isis in Iraq: The trauma of the last six months has overwhelmed the remaining Christians in the country

    The last Christians in Iraq

    After 2,000 years, a community will try anything – including pretending to convert to Islam – to avoid losing everything, says Patrick Cockburn
    Black Friday: Helpful discounts for Christmas shoppers, or cynical marketing by desperate retailers?

    Helpful discounts for Christmas shoppers, or cynical marketing by desperate retailers?

    Britain braced for Black Friday
    Bill Cosby's persona goes from America's dad to date-rape drugs

    From America's dad to date-rape drugs

    Stories of Bill Cosby's alleged sexual assaults may have circulated widely in Hollywood, but they came as a shock to fans, says Rupert Cornwell
    Clare Balding: 'Women's sport is kicking off at last'

    Clare Balding: 'Women's sport is kicking off at last'

    As fans flock to see England women's Wembley debut against Germany, the TV presenter on an exciting 'sea change'
    Oh come, all ye multi-faithful: The Christmas jumper is in fashion, but should you wear your religion on your sleeve?

    Oh come, all ye multi-faithful

    The Christmas jumper is in fashion, but should you wear your religion on your sleeve?
    Dr Charles Heatley: The GP off to do battle in the war against Ebola

    The GP off to do battle in the war against Ebola

    Dr Charles Heatley on joining the NHS volunteers' team bound for Sierra Leone
    Flogging vlogging: First video bloggers conquered YouTube. Now they want us to buy their books

    Flogging vlogging

    First video bloggers conquered YouTube. Now they want us to buy their books
    Saturday Night Live vs The Daily Show: US channels wage comedy star wars

    Saturday Night Live vs The Daily Show

    US channels wage comedy star wars
    When is a wine made in Piedmont not a Piemonte wine? When EU rules make Italian vineyards invisible

    When is a wine made in Piedmont not a Piemonte wine?

    When EU rules make Italian vineyards invisible