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.
Investments rise and fall in value, so investors could make a loss.
Full podcast episode transcript
[0:08] Susannah Streeter: Hello and welcome to Switch Your Money On from Hargreaves Lansdown. I’m Susannah Streeter – Head of Money and Markets.
[0:14] Sarah Coles: And, me, Sarah Coles – Head of Personal Finance.
[0:17] Susannah Streeter: And today, we’re also joined by Helen – great to have you with us. Helen is Head of Retirement Analysis here at HL.
[0:25] Helen Morrissey: Thank you for having me!
[0:27] Susannah Streeter: So, really important that we get all the views in this programme because we are talking about how to build your investments, particularly in turbulent times. And we’ve had a fair few of those recently, haven’t we?
[0:41] Sarah Coles: Yes – it’s fair to say it’s been quite hectic!
[0:44] Susannah Streeter: It seems we’ve been across all the airwaves, trying to reassure people and make sure they have their long-term horizons mapped out amid all of this market volatility – because, of course, President Trump’s trade policies did take the world by surprise when he spoke that infamous speech in The Rose Garden – and set off a lot of market volatility.
For example, we’ve seen sharp falls for London’s FTSE, but not just here in London. Wall Street’s been a really sharp decline – but also, there’s been plenty of feathers ruffled right across Asia as well – really steep falls on various different indices. And, in fact, that was prompted after China retaliated against US tariffs – and so there is this real fear that a trade war will escalate, and that’s what’s causing a lot of this nervousness, uncertainty, and volatility.
[1:43] Sarah Coles: Yes – and it’s not just affected the markets, it’s also affected people as well. One of the areas that people are very concerned about – when they look at their investments – is also looking at their pensions, particularly if they’re coming up for retirement.
Helen – that must be something that you’re looking at a lot at the moment?
[1:58] Helen Morrissey: Absolutely – I’m getting a fair few queries about this. It is really concerning to see this market turmoil – and wondering what it means for your retirement saving – but what I would say to people is pensions are a long-term gain, and you have to take a long-term approach to your investments.
Markets will go up and down at various periods throughout your entire pension-saving journey – and making knee-jerk reactions to changing investment strategy or reducing contributions could mean that you lock in losses – and leave yourself worse off, long-term. So, the key thing is keep calm, carry on, take that long-term approach.
[2:40] Susannah Streeter: Keep calm and carry on – and we’ve been trying our best to be the reassuring voice amid all of this turmoil, haven’t we, Sarah? I’ve been phoned up [laughs] in the middle of the night by radio stations – and asking to go on – and I know you have too – and talking on television quite a lot about how we should navigate through all of this market uncertainty – because it is a bit nerve-racking.
But the point is, you’ve really gotta keep your eye on a long-term horizon – and we’re gonna be going into this later in this episode when it comes to looking at the ways and the building blocks of building up your investments. But not making that knee-jerk reaction is absolutely crucial.
[3:22] Sarah Coles: Yes – and the thing to bear in mind – particularly with pensions, when you’re paying in monthly – and also if you have monthly payments into an investment -. the fact that you’re buying now means your money is going a bit further, so you’re buying in while shares are down, which means that you stand to benefit from the recovery. So, there is an upside.
I’ve been talking about another upside, which is to do with mortgages. With all this concern about what this might mean for global growth, there has been an element by which the markets think that the central banks are gonna be cutting interest rates. And, if the markets think this is gonna happen, then it gets priced into mortgages, so we could see some really good mortgage deals.
Finally, we’ve got something pleasant to say on all this turmoil!
[4:01] Susannah Streeter: Yes – and, even though, on the face of it, the UK looked like it had been dealt a slightly better hand by President Trump – when he dished out all of those tariffs – it’s so interlinked with the global economy.
So, the economy is gonna be buffeted by the winds blowing through the global economy, and the worry is that global growth is gonna take a knock. That’s partly why we’re seeing changes in expectations for interest rates, going forward. But, as we know – ever since he said, ‘Tariffs are a beautiful word’ – during the election campaign - we’ve been following this closely – we knew that they were probably coming, but there’ve been so many different twists along the way. We had some of the tariffs imposed on China and Mexico – and then there was a delay. So, we don’t quite know where all of this is going to land, eventually – and there are still going to be hopes that he will roll back from some of the most onerous tariffs – and that could lead to fresh market movement.
I think the thing is, keeping your eye on those long-term horizons – because it’s risky to do, day-to-day.
[5:16] Sarah Coles: Yes – and that’s why we wanted to talk about how to build those investments at these tough times. It’s really important to have that long-term horizon – and it also makes a massive difference if you’re diversified – so, if you’re holding different sorts of assets at this sort of time.
I know this is an area that you are very expert in, Susannah – so can you just talk us through as to how people should be looking at this?
[5:38] Susannah Streeter: Yes – so, when you’re talking about diversification, the best thing is not putting all your eggs in one basket – in case you trip up, and fall, and all of those eggs smash.
So, if you’ve got a number of different baskets, you might drop one, but you’re not necessarily gonna drop the others – and keep holding them. And that’s the way that we like to talk about when diversifying – because, if you spread your investments around - so, we’re not just talking in a geographical sense – but that’s very important.
So not, for example, making sure you’ve got too much concentration in the US market. You’ve gotta spread them around geographically – but also spread them around in terms of asset classes and types of investment. For example, you may want – within your portfolio – to have equities, but also bonds – and, in times of uncertainty, it’s important to hold some cash too.
This is where funds can come in – because, unlike a share – which is essentially a slice of one company – a fund is like a gateaux. What you’re getting is layers of different companies – but, with a gateaux, you’ve got slices of lots of different companies in that one big slice. So, that does bring diversification, straightaway, by investing in a fund – and it’s useful if you can have lots of pieces of gateau – so you’re spreading your risk even more! [Laughs]
[7:07] Sarah Coles: I like the big push for as many slices of gateau as humanly possible!
[7:12] Susannah Streeter: And then, if you want to invest in shares as well, think of them as cupcakes around those pieces of gateaux – they’re an individual ‘Bite’ of a company that you are investing in. But it is really important to spread your risk, particularly in times of uncertainty like this.
But it’s not just in times of uncertainty – it makes sense even when the markets seem to be a little calmer.
[7:38] Sarah Coles: You’re talking about gateaux – so, in order to push this metaphor as far as possible, there are different flavours of gateau, aren’t there? Those different
funds – they come in different types, don’t they?
[7:49] Susannah Streeter: Absolutely. You can invest in tracker funds that track a specific index in the world – for example, the FTSE 100 – but you can also go for a managed fund.
Now, these may carry a higher fee – but, remember, you are paying for that fund to be managed – and specific companies to be chosen in that fund – because the particular fund manager believes that those companies have good, long-term opportunities. And so, that’s why they may attract a higher fee than a fund that just tracks a particular index – like the FTSE 100 – like the S&P 500 in the United States.
You can also invest in Exchange Traded Funds – and these are listed on the stock exchange as well. But it’s really important to look at the different types of funds that are available – and whether they might suit you at any one time.
But, if all of this sounds confusing, you can also opt for what’s called ‘Ready-Made Investments.’ That is where those funds and investments have been chosen in part of a package to help guide you through – without having to make all of those individual decisions by yourself.
[9:08] Sarah Coles: I’m still sticking with the gateaux! Presumably, you need a menu to find out a bit more about these gateaux – and what’s inside them. How can people find out what’s in particular funds – and what to look for?
[9:25] Susannah Streeter: For example, if you go onto the Hargreaves Lansdown Wealth Shortlist – and you can click on an individual fund that you may want to invest in – and it will tell you what the components are of that fund. And say, for example, you want to go for a fund that tracks the global economy, you can opt for those funds. But, remember, it’s also really important to click on that list of ingredients, because you could find that, within that fund, there is still a predominance of US companies because of the weight that they have on the global markets.
So, if you check that out, you might want to then balance your investments with another fund that isn’t weighted heavily towards the United States, for example. And bonds could be another good addition to your portfolio to spread that risk.
Now, bonds are known as fixed income – and that’s because, if you invest in a bond, essentially, the Government is paying you to buy a little slice of their debt – and they will pay you interest to hold that debt until fruition. And so, because it pays a fixed level of intertest, that is often seen as another good way of diversifying your assets.
But bonds also come with some risks – because the price of bonds can fall. And so, that’s why it’s really important – but, again, bonds are held as part of a diversified portfolio as well.
[10:47] Sarah Coles: So, now we’re talking about funds, we really ought to speak to Emma Wall.
[10:50] Susannah Streeter: Yes – so we’ll hear from Emma now – our Head of Platform Investments – and she is going to look at some of the funds to watch right now.
[10:59] Sarah Coles: Hello, Emma – thanks for joining us to share three funds that the HL Research Team have selected as a good way to start building your portfolio.
[11:07] Emma Wall: Yes – that’s right. The golden rule for starting a portfolio is diversification. A multi-asset fund, therefore, could be a good first choice – especially if you’re not sure where to invest and want to spread your investments over different areas without having to make complicated decisions yourself.
The Fund Research Team’s first pick is the BNY Mellon Multi-Asset Balanced Fund. It focuses on companies from across the globe – and uses some bonds and cash for diversification. The fund’s managed by Simon Nichols – who’s built a strong track record in multi-asset investing.
Most of the fund invest in shares – and Nichol’s favours established companies that often pay a dividend. He likes companies that pay a dividend because of the discipline that this puts on company management. The rest of the fund is made up of bonds and cash – which act as diversifiers when stock markets fall in value.
Note – this fund has the flexibility to invest in emerging markets, smaller companies, high-yield bonds, and derivatives – all of which add risk, if used.
[12:06] Susannah Streeter: Thanks, Emma – that sounds like a pretty good starting point for a diversified portfolio. That’s what we’ve been talking about – not putting all your eggs in one basket.
So, what’s the second fund you’d like to highlight today?
[12:17] Emma Wall: It’s not uncommon to feel slightly nervous about the prospect of investing – especially when markets are as they are. So, a Total Return Fund – like Troy Trojan – is a more conservative starting point.
This fund aims to limit the chances of big losses when stock markets fall. It might not grow as quickly when markets rise, but that’s exactly the point. Rather than trying to keep up with every sharp move in the market, the managers aim to grow investors’ money steadily over time, while limiting losses when markets fall.
This could reduce volatility [s.l. compared 12:48] to the stock market – and it’s designed to smooth the bumps. It does this through investing in a mix of shares, bonds, gold, and cash.
The fund has the flexibility to invest in higher-risk, smaller companies – and, while
the fund contains a diverse range of investments, it is concentrated – which is a higher-risk approach.
[13:06] Sarah Coles: Thanks, Emma – it’s really useful to hear about funds that could actually suit different types of investor.
What’s your third and final idea for today?
[13:12] Emma Wall: If you can afford to take a bit more risk, a Global Equity Fund – such as Rathbone Global Opportunities – could be worth a closer look.
Importantly, diversification still applies here, as the manager invests in different counties and sectors. James Thomson – the Fund’s Manager – views the world a little differently to others. He looks for businesses that can grow to dominate their industry and defend themselves from competition. He’ll also search, off the beaten track, to find companies with superb potential that might be overlooked by other investors.
The manager has the ability to invest in smaller companies and emerging markets. While he doesn’t tend to invest in these areas, they would add risk.
[13:51] Susannah Streeter: Thank you, Emma – great to hear from you to talk us through those funds to watch.
[13:57] Emma Wall: Thank you!
[13:58] Susannah Streeter: So, let’s bring Helen back in – and we’ve had a little snapshot about how you’ve really gotta keep your eye on that long-term horizon.
Pensions is where lots of people’s investments journeys actually start – so what should they be keeping in mind when they take that first step – or they’re thinking, ‘I really need to boost my pension right now?’
[14:19] Helen Morrissey: It’s really interesting ‘cause pensions are usually people’s first stepping stone to investment – and we’ve had auto-enrolment, which has brought millions more people into pensions-land.
The big problem is that, because they’ve auto-enrolled into a pension, a lot of people don’t actually realise that they’re investors. So, we did some research recently that showed that only 40% of people actually realise that they are invested through a pension – so that is a big hurdle that we need to get over.
The good news is that younger people tend to be more aware, but there’s still a long way that we’ve got to go before we get people to realise that, if you’ve got a pension, you are an investor.
[15:03] Susannah Streeter: But the upside of that is that people may be less tempted to
start tinkering around, and stopping payments, and looking at market volatility – and worrying about it. Because, for a great deal of people, just sitting tight, and holding on – and keeping with that long-term investment horizon – is the best way to go.
[15:24] Sarah Coles: And one of the big benefits is that you’re in what’s known as ‘The default fund.’ Can you explain what that is?
[15:29] Helen Morrissey: Yes – that’s one of the big reasons people don’t recognise that they’re investors – because, in many cases, you will be put in what’s known as ‘The default fund.’
Now, this is a fund that is chosen because it will meet the needs of the vast majority of pension-scheme members. You were talking about diversification earlier on – so they tend to be very well-diversified over asset classes, geography – and you will find that’s where the vast majority of people are invested.
[16:04] Sarah Coles: It’s worth bearing in mind that that’s the one-size-fits-all solution. I think there is a real benefit in people digging down – finding out what their pension’s invested in – and looking at whether they want to diversify – do something slightly different with their pensions.
[16:21] Susannah Streeter: Yeah – and, particularly given the age that you are – ‘cause that may have an impact on where you want your investments to be working the hardest in your pension.
[16:29] Helen Morrissey: That’s exactly it. So, just because you’re in the default fund, it doesn’t mean to say that you can’t change it. And, going back to what you were saying earlier, there will be a lot of information that your pension provider can offer you if you want to find out more about where you’re invested. So, for instance, there will be fund factsheets online that you can download – have a look – and say, ‘Right, where am I invested – and does it meet my needs?’ But also, in terms of what your values might be as well.
So, you might find that you don’t want to be invested in oil and gas – or tobacco companies, for instance – and you look at where you’re currently invested – and you’re like, ‘Oh, actually, I’ve got quite a lot of my pension money going into this – and I don’t want that.’ You do have the option to go and speak to your provider – say, ‘What can you offer me in terms of alternative investment approaches?’ You may choose to go down the Self-Investor Personal Pension route – like HL – where we can offer wider investment choice. But there is a lot of information out there that will enable you to invest in line with your ethics and your values – as well as where you are in your pension-saving journey.
[17:43] Sarah Coles: And, I suppose, one of the really weird things about pensions is that, at
the start of the process – when we’re getting into pensions - it’s relied on us to do nothing about it and so to be automatically put into the pension. Then, you get to the very end, and you’ve gotta make some really serious decisions about what to do in terms of taking the money out.
So, being engaged throughout also gives you that advantage that you’re really thinking it through – and you’re really making plans for your future.
[18:03] Helen Morrissey: Absolutely. So, one thing about a lot of default funds that people don’t recognise is that a lot of them will be set up as so called ‘Lifestyling arrangements.’
Now, what that means is that you will usually start your pension-saving journey primarily invested in equities – and the idea being that, as you get closer to retirement, they will move you into bonds.
If you were, for instance, wanting to take an annuity for your retirement income, then you might find that lifestyling approach absolutely suits your needs – and that’s fine. But, if you were wanting to remain invested – through income drawdown, for instance – you might say, ‘Well, I don’t want to be invested so heavily in bonds at this stage in my journey’ – in which case, you can have a look at what else in out there, you can take financial advice if need be, and make sure that you are taking the approach that best suits your needs.
[18:59] Susannah Streeter: All of this market volatility and turbulence... it is worrying – particularly for people who are approaching their retirement. How should they try and navigate this?
[19:10] Helen Morrissey: I think it’s just trying to keep your options open. So, if you are approaching retirement – and you are looking to take an income through income drawdown, for instance – then you might, if you’re able to, delay retirement for a while – just wait for those markets to recover, and that could be a really good of preparing and making sure that your pension remains resilient.
You might be going down the option of annuities – getting that guaranteed income for life. The good news for that is that annuity incomes have been really good value at the moment – and the idea of getting that guaranteed income may encourage a lot more people to take the leap now – and to secure that. What I would say is that you could be retired for 20 years or more – and you need to think about options, such as the impact of inflation on your purchasing power over the long-term – and make sure that you’re getting the right options for you.
[20:12] Sarah Coles: So, when we talk about pensions, we always have to say that, when you put money into a pension, it is locked up to the age of 55 – and that is set to change to the age of 57.
We also like to mention that it’s not just a question of, ‘Get advice or get nothing’ – there’s something in the middle, isn’t there?
[20:28] Helen Morrissey: Yeah – there’s what is known as a guidance service. So, there is a government-run guidance service – known as Pension Wise. You can do telephone calls with them – you can get online help – and they will help you to understand your retirement options.
[20:45] Susannah Streeter: Thank you, Helen – really useful stuff for everybody to absorb – and we need that right now!
Before we go, we have got our famous stat of the week.
[20:56] Sarah Coles: Yes – so, when we talk about building your investments – and building your investment portfolio – sometimes, we talk about having those big things at the core – so those planets – and then we have the satellites going round the outside.
So, I looked into satellites – and I want you to tell me how many satellites you think there are currently orbiting the Earth. And, because it’s really hard to randomly guess that, I will tell you that there are fewer than 10,000 – just to give you a bit of a clue.
What d’you reckon – how many?
[21:31] Susannah Streeter: I reckon 8,500. I think there’s a lot.
[21:35] Sarah Coles: There’s a lot of debris floating around.
[21:37] Susannah Streeter: Yeah – space wars.
[21:39] Helen Morrissey: I think I’m gonna go slightly under what Susannah said – I’m gonna go with 7,800 – ‘cause I do think there’s a lot, but maybe not quite as many as Susannah’s thinking.
[21:50] Sarah Coles: That’s nicely strategic. I think a lot of the things that happen is that, as old technology burns up – and comes [s.l. like many 21:55] – so the numbers come down again. So, it is only about 3,000.
[21:58] Susannah Streeter: Oh, is it?
[21:59] Sarah Coles: So, there you go.
[21:58] Susannah Streeter: Oh, God - we were way out!
[22:00] Helen Morrissey: Does that mean that I still win?
[22:02] Susannah Streeter: You did win – definitely did!
[Over speaking 22:02]
[22:03] Helen Morrissey: ‘Cause I was closest!
[22:04] Sarah Coles: You can have one of Susannah’s gateaux as a prize!
[22:06] Helen Morrissey: [Laughs] Excellent.
[22:07] Sarah Coles: [Laughs]
[22:07] Helen Morrissey: I’m happy!
[22:09] Susannah Streeter: Thank you – that’s all from us for now – we’re going to go and eat cake! But, before we go, we should say this was recorded on 7th April 2025, and all information was correct at the time of recording.
[22:19] 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 – and past performance is not a guide to the future. Tax rules can change, and benefits depend on individual circumstances.
[22:31] Susannah Streeter: So, all that’s left is for us to thank our guests: Helen here in the studio, and Emma, and our Producer, Elizabeth Hotson.
Thank you very much for listening. We’ll be back again soon – goodbye!
[22:42] Sarah Coles: Goodbye!
[22:43] Helen Morrissey: Goodbye!