Julian Knight: Suffer the little children ... just invest in Africa
The new junior individual savings account announced by Alquity is a real eyebrow-raiser
Sunday 04 March 2012
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.
- 1 'He was lucky he didn't die' - George Michael fell out of speeding car onto M1 motorway, according to eye witness
- 2 Austerity has hardened the nation's heart
- 3 Gay couple beaten in park urge MPs to moderate language on gay marriage
- 4 Why Arsène Wenger must spend to put icing on the cake and buy likes of Stevan Jovetic for Arsenal
- 5 'It was just like the movie Twister': Man survives Oklahoma tornado by taking refuge in horse stall
BMF is the UK’s biggest and best loved outdoor fitness classes
Find out what The Independent's resident travel expert has to say about one of the most beautiful small cities in the world
Win anything from gadgets to five-star holidays on our competitions and offers page.
iJobs Money & Business
£180 - £230 per day: Orgtel: Operations Analyst - Leading Bank in the City of ...
£500 per day: Orgtel: A top tier banking client urgently requires Finance Busi...
£425 - £550 per day: Orgtel: Senior Finance Project Manager - £550 - Bristol -...
£150 - £250 per day: Orgtel: KYC Analyst - London - Banking - £150-250/day C...
Day In a Page
A modern home of almost 1,000sq ft is close to Stoke Newington's high street. £499,950
A five-bedroom bungalow in Hoveton with riverside garden and mooring dock, £550,000
A refurbished one-bedroom flat with south-facing reception and high ceilings. £579,950
A four-bedroom Grade II-listed house in Nazeing with large gardens. £550,000
A modern four-bedroom house in a converted stable within walking distance to Peckham Rye. £695,000
Three-bedroom house in a quiet residential area within close distance to Battersea Park. £450,000
A three-bedroom cottage within commuting distance of London, Norwich and Cambridge. £250,000
A two-bedroom cottage with a sun room and gardens in South Chard. £350,000.
A three-bedroom semi-detached house with original features including fireplaces and wooden flooring. £399,950
A modern two-bedroom flat split across two floors and close to several public transport links. £595,000
A one-bedroom flat with an open-plan reception/kitchen and private balcony. £315,000.
A bright two-bedroom garden flat between South Acton and Chiswick Park. £499,950.
A listed four-bedroom farmhouse with stables, set in four acres. £500,000.
A three-storey family home with four bedrooms and an extended kitchen/diner. £995,000.
A three-bedroom Hamstone cottage in the rolling Somerset countryside. £430,000.
A luxury one-bedroom apartment on the first floor of a converted Victorian house. £425,000.