This Week in Property: The Latest News (17th September 2021)
Take a look at what our CEO Gill Fielding has to say about this week’s property news…
£1 million decision
Good Morning Britain (ITV’s breakfast show) has just launched a new prize draw that they are calling the £1 million decision because the winner has the choice of winning either £1 million or £10,000 a month for 10 years.
Now £10,000 per month for 10 years equals £1,200,000 so on the face of it the monthly option gives you more money, but the informed, educated, logical choice is to take the £1 million now because if you then invest that at say 10% per year and left all the earnings to roll up (compounding) then in 10 years time then the £1m would be worth – just over £2.5 million!
Even if you took all the 10% earnings (£8,333 per month) each year and lived off that then you would still have the £1m left at the end of the decade. Now if you invested the money at 12% then you could earn the £10k per month AND still have the £1m left to live off for ever.
Now I know where I could get 12% on my money today with certainty but of course I’m a wealth creation expert and have loads of knowledge and education about how money works but for most people they wouldn’t know where to start with investing money or compounding or what to do and so for them the monthly option is better – but it’s the WRONG decision.
Never has it been so clear that the lack of financial education actually forces you to make the wrong decision and to be worse off.
I’m sure you’ve all seen the brilliant news about Emma Raducanu, the wonderful British 18 year old who has just won the tennis US Open. I love tennis and watch it avidly and I’m delighted for Emma and the increased interest in British tennis that her win will spark due to the intense media interest now following her.
What I do find weird however is the media obsession with what she’s going to earn in the future. The media are covering very little about, say her back hand or serve but are all trying to outbid each other with her potential future earnings from endorsements and sponsorships.
Now I’m a money person so this interests me too, but I doubt that it’s crossed her mind much until now. She’s battled and practised from a young child to be able to play the best tennis she can and I’m sure on a wet Wednesday her motivation was to be the best player she could be – not the highest earner.
This is something that ‘ordinary’ people don’t get. What motivates high performers is not normally the money – it’s usually a bigger picture, a mission or purpose – that’s what drives the commitment to practise and work day in and day out, come rain or shine – not the thought of another few quid in the bank because that soon ceases to motivate.
Of course, what tends to happen is that when people are working on their purpose and flying and in flow – then money tends to come along with it – but the purpose has to come first – it’s mission not commission that’s the focus.
The Pandemic and Covid have had some unexpected positive outcomes and I read today that we have currently have about 1 million job vacancies – and we can compare that to the unemployment statistics which estimate that there are about 1.6 million people unemployed.
Broadly this means we have NO unemployment as some of the 1.6 million unemployed are long term unemployed or are between jobs and not really unemployed. So it suggests that everyone who wants a job can get one. It may not be the ideal job for you but at least you can get some work.
As a business owner I’m really struggling to manage my business not necessarily due to job vacancies in my own business but because of staff shortages with my suppliers. As a result there are signs that wage rises are well above average and certainly above inflation. This is great news for any person wanting a job and we could never have expected that unemployment would disappear with the pandemic.
I think there is also partly a mind shift for people as many now don’t want a job because they want to create certainty for themselves and create income via share and property investments rather than relying on an employer to determine their future and for their income. People want certainty and are prepared to take responsibility for that themselves. All these factors contribute to a very unusual jobs market where all the power – and choice – is with the employee.
Who’s spending a penny?
The news from the Royal Mint today is that they’re going to start making 1p coins again – because we’re running out! Now who on earth wants 1p pieces and where are they putting them? I know they’re very easy to lose and they disappear in the bottom of bags and coats and sofas but if we make more – we’ll lose more. Apparently we only minted 88 million 1p pieces in 2020 well below any previous year and although that’s a huge amount of pennies we need more as people have hoarded so many during the lockdowns. As a general rule we use coinage less and less and we need to produce less and the humble penny is unusual because there are no plans to make either 2p or £2 coins for another 10 years. I do wonder then what it is with the solitary penny that makes people want them more than other cions? It’s an odd one as a penny has less and less value in monetary terms and won’t even pay to spend a penny but for some reason people like to hide them, hoard them and love them. Bizarre.
Influencers lose their influence!
I have to admit I’m not a huge social media fan and I certainly don’t get ‘influencers’ and it seems neither do the FCA (Financial Conduct Authority) but the FCA have been forced to join the bandwagon in order to protect young investors.
They have now committed £11 million for an awareness campaign to get ‘influencers’ not to believe other influencers because some social media stars have been advocating investments and there is a huge worry that young people in particular are losing vast amounts of money and getting into debt because they have no knowledge. I personally wouldn’t ever do anything on the recommendation of someone who wasn’t qualified to give that advice but do it for personal financial gain. A survey by investment platform Interactive Investor found that 45% of young investors aged 18 to 29 said their first ever investment was in cryptocurrency, while many were funding this through a cocktail of credit cards, student loans, and other loans.
As a result, the FCA is planning a campaign to help people make well-informed decisions and are using influencers to do it. I guess the FCA are going with the times but I feel uncomfortable with this as a strategy as I’m sure these positive influencers have no more financial education or knowledge than the negative ones.
We need to educate young people how to invest without taking extreme risks and we also need them to differentiate between ‘social’ media (there’s a tip in the term there) and proper financial guidance.
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