This podcast isn’t personal advice. If you’re not sure what’s right for you, seek advice. Tax rules can change and benefits depend on personal circumstances.
This podcast isn’t personal advice. If you’re not sure what’s right for you, seek advice. Investments rise and fall in value, so investors could make a loss. Tax rules can change and any benefits depend on your personal circumstances.
Full podcast episode transcript
[0:09] Susannah Streeter: Hello and welcome to Switch Your Money On with me, Susannah Streeter – Head of Money and Markets.
[0:13] Sarah Coles: And me, Sarah Coles – Head of Personal Finance – and we’re getting all nostalgic in this episode of the podcast, with a look back at what was happening in the world of investment and personal finance, and what we can take away from it.
And we wanted to start by saying thank you for listening this year!
[0:27] Susannah Streeter: Yes – we know there are lots of podcasts out there, so thank you very much for choosing us! If you’ve been with us all year, thanks so much – we really appreciate your loyalty. And, if you’re brand new – hello! – and we hope you’ll stick with us for this episode, which we’re calling ‘A Whistle-stop Tour of 2024.’
[0:45] Sarah Coles: As well as a look at the highlights, we’ll be talking to Helen Morrissey – our Head of Retirement Analysis – about what the year held in store for pensions, and what it’ll mean for your future.
[1:04] Susannah Streeter: We’ll also have Matt Britzman – Senior Equity Analyst here at Hargreaves Lansdown – who will take a look at the companies he said were worth watching at the start of the year – and we’ll find out how they fared.
[1:16] Sarah Coles: And Emma Wall – our Head of Platform Investments – will take another look at the funds she identified as worth keeping an eye on this year.
But let’s start with a look at the big investment picture this year – and what forces have been shaping the markets.
[1:28] Susannah Streeter: 2024 was a big election year – it was huge – with multiple countries around the world heading for the polls. Of course, Labour won a landslide here in the UK – helping restore some stability after years of governmental chop and change – but it was Trump’s win in the US presidential election which was the real market-mover, sending stocks on Wall Street to fresh record highs. His victory unleashed a wave of business optimism – given his tax cutting and deregulation agenda – and US markets had already been riding high on a wave of AI enthusiasm.
[2:08] Sarah Coles: And Tesla has stayed in the news since the US election, after Elon Musk was set to be propelled to the heart of the Trump administration by being appointed Co-lead at the new Department of Government Efficiency – DOGE, for short.
[2:20] Susannah Streeter: No coincidence that that’s the name of his crypto coin as well!
And – talking about crypto – it’s also seen huge increases on a highly volatile journey, as Trump looks set to head to the White House – and his key financial appointments since the win look so pro-crypto. Whether or not the US really will become the crypto capital of the world remains to be seen.
[2:45] Sarah Coles: Gold has been a popular investment, as geopolitical shocks in the Middle East have rattled investors – partly as a result of central banks diversifying their currency reserves away from the US Dollar.
[2:55] Susannah Streeter: As we near the end of 2024, there has been a fresh spurt of hope for extra stimulus for China’s economy, which has been weighed down all year by highly sluggish demand and an ongoing property crisis. After unveiling monetary measures to boost lending in September, there’s increased expectation the authorities will do more on the fiscal front, given the stated aim from the Communist Party’s politburo is now to vigorously boost consumption.
Here in the UK, speculation about potential tax rises held back spending ahead of the Budget.
[3:27] Sarah Coles: Yes – and, although some of the rumoured changes didn’t materialise, the Budget still had a major impact on our personal finances too – especially tax.
When the election was called in May, the rumour mill cranked into action about the threat of more tax rises under Labour. Between the election in July and the Budget in October, there were theories doing the rounds that everything from pensions tax relief to tax-free cash, Council Tax exemptions, and the inheritance tax nil-rate band could be under attack.
[3:53] Susannah Streeter: In the final analysis, changes were painful – but, perhaps as a result of all these rumours, they weren’t quite so dramatic or expensive as many people had feared. We heard that pensions will be drawn into the inheritance tax net. This will have a far-reaching impact, so will mean more estates are likely to be drawn into paying this tax, so more people could consider living gifts during their lifetime to cut the size of their estate.
[4:23] Sarah Coles: There were also inheritance tax changes for farmers, businesses, and AIM investors – plus a further freeze on inheritance tax thresholds.
There were capital gains tax rate rises for stocks and shares investors with assets outside ISAs and pensions – and gains over the annual allowance. That came with the Budget announcement, which raises planning issues for bigger investors.
[4:41] Susannah Streeter: Plus, the stamp duty surcharge on second and subsequent properties was raised – hitting landlords expanding their portfolios. And there was no extension to the stamp duty holiday, which will end on 31st March next year.
Then, there was the rise in employers National Insurance and the minimum wage – which, while not having a direct impact on our pockets, could put a brake on recruitment and pay rises, and risk prices rising to cover additional staff costs.
[5:14] Sarah Coles: Investors have been busy dealing with what the Budget means for them ever since, which will raise the imperative to make the most of their capital gains tax allowances, and put money into ISAs and SIPPs to protect themselves from whatever taxes the future holds.
[5:27] Susannah Streeter: The year will also be remembered for being the year inflation hit the 2% target for the first time since July 2021 – although it’s crept back upwards again. Plus, we’ve had two Bank of England interest rate cuts in recent months. Of course, it’s not unalloyed good news because we’re unlikely to get more interest rate cuts in a spectacular hurry, but it’s a world away from the peak of inflation, when it hit 11.1% in October 2022.
And, of course, one of the areas our finances were affected by all of this was pensions – so this feels like a good time to bring in Helen Morrissey.
So, Helen – it was a particularly big year for pensions, wasn’t it?
[6:15] Helen Morrissey: There was a lot going on for pensions – they were a key battleground in the election. The Labour Party pledged to retain the triple lock on the State Pension, but their other promise – not to increase taxes on working people – did lead to concerns about what might be in store for pensioners.
[6:32] Susannah Streeter: Yes – and it wasn’t helped by their early announcement around the Winter Fuel Payment.
[6:37] Helen Morrissey: You’re absolutely right – the new Government made the controversial choice to restrict the Winter Fuel Allowance to those on means-tested benefits, such as Pension Credit. This has left many pensioners with a hole worth up to £300 in their budgets, as they head into the colder months.
[6:54] Sarah Coles: Although this could prompt more people to check to see if they can get the payment by qualifying for Pension Credit?
[7:00] Helen Morrissey: Yes – it is a massively underclaimed benefit – and it not only tops up the income of the poorest pensioners, it also acts as a gateway to other benefits – like the Winter Fuel Payment, help with Council Tax, and a free TV licence for the over 75s. We have seen a surge in claims in recent months.
[7:20] Susannah Streeter: So, there was plenty happening, even before we got to the Budget – which was busy from a pensions’ perspective, wasn’t it?
[7:26] Helen Morrissey: Absolutely. I think that the Budget was more notable for what wasn’t announced than what was. We had a lot of speculation around whether the Government would tinker with tax-free cash. This didn’t happen, so some of the people who took their tax-free cash – just in case – have now been left wondering what to do with it.
[7:46] Sarah Coles: What issues do they face?
[7:48] Helen Morrissey: Taking it from their pension means it leaves a very tax-efficient environment. You could put up to £20,000 in a stocks and shares ISA – so it could continue to grow – but, if you were to leave it in a savings account, it could lose purchasing power over time.
Some people may look to reinvest it straight back into their pension, but this risks breaching recycling rules, which could leave them with a tax charge. If you have taken your tax-free cash – and you’re wondering what your options are – it can be a good idea to speak to a financial adviser.
[8:21] Susannah Streeter: That seems like a top tip, Helen. So, what else did we see?
[8:25] Helen Morrissey: There were a couple of announcements. The first was that, from 2027, pensions will be included in people’s estates for inheritance tax purposes. The second was the increase in employer National Insurance contributions.
[8:39] Sarah Coles: What impact will the inheritance tax announcement have?
[8:42] Helen Morrissey: I think we will see people give away money – while they’re alive – to mitigate the cost. We could also see people make changes to how they take their retirement income. Up until now, people have often opted for income drawdown, but not necessarily taking much or any income – because leaving money in the pension is a tax-efficient way to pass down assets.
Now, we could see more people opting to go down the annuity route instead. Don’t forget that, as well as considering financial advice, if you’re over the age of 50, you can get a free appointment with the Government’s guidance service, Pension Wise.
[9:19] Susannah Streeter: You mentioned employer National Insurance changes – what impact could they have on retirement planning?
[9:26] Helen Morrissey: If we increase employer costs, they could look to recoup those costs in terms of lower wage increases. They could also be less likely to boost their pension contributions as well.
[9:39] Sarah Coles: It sounds like it’s been a busy year in ‘Pensions-land!’
[9:42] Helen Morrissey: Indeed – and the Budget wasn’t even the last major announcement that we had. The Chancellor’s Mansion House speech in November promised big changes for pensions with consolidation of schemes in a bid to drive up standards and boost investment in productive assets in the UK. We can expect more on this in the coming months.
[10:01] Susannah Streeter: It’s certainly been a big year for pensions – but I know that every year you think it’s a big year for pensions!
[10:07] Helen Morrissey: It is – I don’t know why you’re not on-board with how exciting pensions are.
[10:12] Susannah Streeter: Maybe that should be on my to-do list for 2025! But, in the interim, we also wanted to catch up with companies we were talking about as ‘Ones to watch’ at the start of the year. Matt Britzman – our Senior Equity Analyst – has been looking closer at their progress.
So, Matt – what can you tell us?
[10:34] Matt Britzman: Greggs has had a good year – and, while like-for-like sales growth is slowing, that was expected. Growth has come from delivery partnerships, menu upgrades, and staying open later to tap into the evening market – plus there are plans to expand to around 3,000 shops and move into travel locations like train stations. All in all, management is executing well.
It’s not been plain sailing though – and the UK Budget threw a spanner in the works, as new tax changes are expected to rack up tens of millions in extra costs. Great businesses adapt to unforeseen changes, and we think Greggs will do just that – though there are no guarantees.
[11:12] Sarah Coles: It’s always good to get an update at the festive-bake time of year. Was Lloyds as tasty in 2024?
[11:18] Matt Britzman: We’ve been pleased with progress. We felt the outlook at the start of the year was unfairly negative for UK banks – and things have largely played out how we hoped.
Total income may not be as high as last year, but fears that higher rates would cause trouble for borrowers haven’t come to pass.
That said, a key risk has emerged, with the FCA investigating the mis-selling of motor finance. Lloyds is more exposed than other peers and has already set aside £450m in preparation for potential costs. It’s hard to say if that figure is enough, so it’s an ongoing risk to be aware of.
[11:53] Susannah Streeter: You also had vet group, CVS, in your sights too!
[11:58] Matt Britzman: Yes – for them, 2024 has been dominated by the regulator’s investigation into the industry. It’s impacting investor sentiment and reputational damage is being called out as a major contributor to softening demand.
The underlying business is still attractive, with hundreds of vet clinics and a range of other services to cater for every stage of your pet’s life.
That said, volatility is likely to remain elevated until the regulator provides guidance on its recommendations, which isn’t expected until next May at the earliest.
[12:30] Sarah Coles: Thanks, Matt – you looked at a couple of overseas stocks too, didn’t you? So, how did Coca-Cola get on?
[12:35] Matt Britzman: It’s continued to show why it’s such a force to be reckoned with. With such a strong brand comes the ability to lead on price – and that pricing power has been key this year – and one of the reasons guidance has been upgraded three times.
We’ve got one eye on volumes – even Coca-Cola enthusiasts have a price limit – and there was a little volume weakness creeping into the most recent set of results.
There’s also a small strategy update underway – with a focus on sharpening its proposition – but it looks more like a refinement than a revolutionary change. Aside from that, the business looks as strong as ever – though there are no guarantees.
[13:11] Susannah Streeter: And, finally, it’s Baker Hughes, isn’t it? And, for anyone less familiar with the name, it is one of the largest providers of equipment and services to the oil and gas industry.
[13:22] Matt Britzman: Growth this year has been good – driven by the Industrial and Energy Technology Division – particularly the build-out of liquefied natural gas (LNG) infrastructure.
That said, while Baker Hughes is less sensitive to oil and gas prices, any prolonged weakness could still hurt performance.
[13:38] Sarah Coles: Thanks, Matt.
Please remember, investing in an individual company isn’t right for everyone – because, if that company fails, you could lose your whole investment. If you cannot afford this, investing in a single company might not be right for you. You should make sure you understand the companies you’re investing in and their specific risks. You should also make sure any shares you own are part of a diversified portfolio.
This isn’t personal advice or a recommendation to buy, sell, or hold any investment. No view is given on the present or future value or price of any investment, and
investors should form their own view on any proposed investment.
So, Matt will be back with us next time to take us through the companies he thinks are worth watching in 2025 – which will be another eye-opener.
In the interim, Emma Wall is here. So, Emma, you’ve been looking back at those funds you suggested were worth watching this year. So, how has 2024 been for these fund selections?
[14:23] Emma Wall: 2024 has given investors a lot to think about. Interest rates haven’t fallen as much as expected, and geopolitical tensions have also intensified. Stock markets have broadly performed well, but bond markets have been more challenged.
Our first selection for 2024 was Artemis Corporate Bond – and it is ahead of the average fund in the IA Sterling Corporate Bond peer group. While it’s not been an easy time for bond markets, some of the fund’s bonds – particularly in the financials and real estate sectors – have helped returns. We continue to think it is a good fund to own, given the outlook for interest rates.
The fund aims to generate income and growth over the long-term and could form part of a diversified bond portfolio – or diversify a share-focused portfolio.
[15:08] Sarah Coles: So, fund number two was a multi-asset fund, wasn’t it?
[15:11] Emma Wall: Yes – Troy Trojan. Rather than trying to shoot the lights out, this fund aims to grow investors’ money steadily over the long run, while limiting losses when markets fall. The managers have tended to focus on companies based in developed markets, like the US and UK, as well as bonds and gold.
Over the year so far, the fund has beaten inflation. One of the biggest contributors was the fund’s gold holdings. The shares and the funds have also generally performed well. Volatility will be a mainstay for 2025, so this fund could continue to add ballast to a cautious portfolio – though, like all investments, it can still fall in value.
[15:49] Susannah Streeter: The third fund is more focused on shares, isn’t it? How has that done?
[15:53] Emma Wall: That’s right. Fidelity Global Dividend has a focus on valuation and income, which means it is a global fund, but with more in Europe and the UK – and, typically, it’s less exposed to the US market. As a result, it’s lagged the broader global stock market, which has a much larger weighting in the US. However, the fund still outperformed the average return for the IA Global Equity Income sector.
Given the likelihood of growth slowing in many developed markets, the income this fund provides could help cushion the blow if stock markets do fall in 2025.
[16:27] Sarah Coles: Fund number four is another income selection, isn’t it?
[16:30] Emma Wall: Yes. Artemis Income invests in UK companies that the managers think can pay a sustainable income through the market cycle, regardless of the economic backdrop.
Over the year so far, the fund is ahead of the FTSE All-Share Index. Despite its good run, the UK is still out of favour with a lot of investors, but we expect it to stay an attractive market for income-seeking investors for some time to come.
Finally, our fifth selection looks further afield – the iShares Emerging Markets Equity Index. This fund invests in a broad spread of companies across emerging markets. It’s posted double-digit returns so far this year, and is marginally behind its benchmark. This is what we’d expect for a passive fund, given the costs involved. Please remember that past performance is not a guide to the future.
[17:19] Susannah Streeter: Thanks, Emma.
I should add that, before investing in a fund, you should make sure the fund’s objectives align with your own, you understand the fund’s specific risks, and it forms part of a diversified portfolio. Investing in these funds won’t be right for everyone – if you’re not sure what’s right for your circumstances, you should ask for personal advice.
You can find more information on all of these funds – including their risks, charges, and performance – on our website.
You’re listening to Switch Your Money On from Hargreaves Lansdown – and, before we go, there’s time for a speedy fact of the week.
We had so much to choose from, but we are going back to elections. This year, more than 60 countries went to the polls, but do you know what proportion of the world’s population was covered by the elections? Was it 20%, 30%, or 50%?
[18:19] Sarah Coles: I’m assuming it’s more than a fifth, but half seems quite extreme. So, I’m gonna go down the middle – I’m gonna say 30%.
[18:26] Susannah Streeter: I am sorry – you have ended the year in traditional form by getting a quiz answer slightly wrong! Impressively, it was 50%, which is one reason why next year is going to be so interesting from a political perspective.
[18:39] Sarah Coles: Yes – and that’s something we’ll delve into more next time when we look ahead to what 2025 holds.
[18:44] Susannah Streeter: But that’s all from us for this time. I hope you have a very merry festive season – but, before we go, we do need to remind you that this was recorded on 13th and 16th December 2024 and all information was correct at the time of recording.
[18:58] Sarah Coles: Nothing in this podcast is personal advice – you should seek advice if you’re not sure what’s right for you. Investments and any income they produce can rise and fall in value, so you could get back less than you invest. Tax rules can change and benefits depend on individual circumstances.
[19:10] Susannah Streeter: This hasn’t been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication.
Non-independent research is not subject to FCA rules prohibiting dealing ahead of research – however, HL has put controls in place (including dealing restrictions, physical and information barriers) to manage potential conflicts of interest presented by such dealing.
[19:31] Sarah Coles: You can see our full non-independent research disclosure on our website for more information. So, all that’s left is for us to thank our guests: Helen, Matt, Emma, and our Producer, Elizabeth Hotson.
[19:39] Susannah Streeter: Thank you for listening – we’ll be back again soon. Goodbye!