What caught my eye this week.

Blogger 3652 Days has a great post up about why they’re shifting more of their money into private market investments, writing:

As a passive investor, I’m supposed to do nothing. Ideally forever. Also: I dislike thinking too much.

But public markets keep shrinking – fewer IPOs, more delistings, and an ever-increasing proportion of capitalism conducted behind NDAs and closed doors.

So, in a lapse of principle, I’ve been buying shares in listed private equity vehicles and management outfits – Oakley Capital Investments (OCI), Brookfield Corp (BN), and Blackstone (BX), to name a few.

This is the private equity exposure accessible without the $5 million minimum investment, a Cayman lawyer, and a relationship manager who calls you by first name and means it.

It is, admittedly, a semi-active decision. But then, so is breathing.

I’ve long identified the same trends in markets. For good or ill, as an active investor it’s a lot easier for me to shuffle some money into different pockets of the private space, whether it be through crowdfunded investments, or via some of the vehicles that 3652 Days discusses in their article.

But purely passive investors face a quandary with private markets. Investing widely in private companies is a very different proposition to buying into a basket of public companies via an index tracker.

Not only in the many technical ways that 3652 Days outlines. But also because by definition when you buy a private asset you cannot lean so much on the wisdom of the crowd (the public market) to assume you’re (usually) paying something like the appropriate price.

It’s a big existential divergence. It also potentially brings company analysis and fund manager skill back into the picture, which inevitably means higher fees.

No wonder the financial services industry likes private and alternative assets…

Fee-ver pitch

As I wrote recently for Moguls:

The fees on private funds are much higher than for cheap index funds. And as I explained above, private assets are always more opaque and illiquid.

Yet if we run the trend to stay/go private to its logical conclusion – and public markets continue to shrink – then we could all end up paying more in annual fees to hold much the same equity mix we once got cheaply via a tracker. And we’ll have far less idea about what we own and what it’s worth for the privilege.

Maybe this is what ultimately defeats the rise of indexing and passive investing?

The zero-sum maths of active investing in public stocks is irrefutable. So perhaps financial services simply changes the game instead.

A world where a huge proportion of our money goes into private market investments – and into the pockets of private managers – would be a step backwards for everyday investors.

Run to the logical conclusion, it’d mean we’d pay more for less transparent and likely less comprehensive diversification than we already get today from trackers. And yet with all that private money pooled into big pots, you’d not even have the fun of pursuing a 100-bagger.

We’re not there yet. We can still diversify widely via index funds. And it’s too soon to be sure that listed small caps are underperforming simply because the best start-ups are remaining private.

However the push to private (both in equity and debt) is for now the clear direction of travel. So take some time to read the roadmap at 3652 Days.

Have a great weekend!

[continue reading…]

New contributor Frugalist is back to explain how he gamifies chasing the best regular saving accounts to make his cash work harder.

There’s something deeply satisfying to me about maximising my return on cash.

Not as an alternative to investing, of course. I’ve got bigger ambitions than simply fighting a slugging match against inflation with respect to my long-term goals.

But when you’re anticipating the risk of your boiler exploding in December, you’re wondering why your car’s clutch smells funny, or you’ve built up a giant stoozing hoard, cash savings accounts fit the bill.

Many people treat cash as afterthought. Whether through prudence or – let’s face it – laziness, they’ll put up with a less-than-1% interest rate from their bank.

But I won’t! Instead I’ve developed a hobby of finding the savings accounts with the juiciest rates.

If I’ve got cash I’ll always try to squeeze every drop of interest out of it.

I love big rates (and I cannot lie)

What gets me really giddy and excited are regular savings accounts.

The principal feature (/downside) of regular savers is that they invariably cap how much money you can put in each month.

Sometimes you can freely withdraw money whenever you like. More often your money is locked up for a time. They may pay a set rate of interest for a year before maturing, or the rate may be variable (which tends to mean downwards in the current climate…)

Either way the key is they usually won’t let you add money indefinitely. Instead you’ll earn interest for a year and then they’ll mature and you’re back to square one.

What’s the upside? Well in return for these limitations you can score some pretty attractive interest rates.

How about Virgin smashing the leaderboards with a 10% account in 2024? Or Saffron Building Society grabbing headlines with a 9% rate?

Kerpow!

When you clickthrough to read about these great rates though, you’ll typically find authors and readers in the comments alike saying the rates are too good to be true. 

Geoff from Shrewsbury might claim: “I get more interest putting £40,000 in a normal easy access account.”

Mildred from Ramsbottom adds: “Erm, actually you’ll only get half the advertised rate.”

It’s almost impressive how much vitriol can be generated by something as seemingly uncontroversial as a regular savings account.

Regular savings accounts needn’t be confusing

I’m here to tell you that these accounts are far simpler than people suggest – and that you can do better than Mildred moans.

Hopefully I’ll provoke less fury in the Monevator comments for my troubles, too!

Let’s consider that Virgin account (though it’s no longer on the market as I write).

Virgin paid 10% (10.38% AER) on a maximum deposit of £250 per month for 12 months.

• By the sixth month, Mildred could have loaded it with £1,500 of contributions
• But the balance would only reach its maximum £3,000 in the final month
• So Mildred would get interest on the full £3,000 balance only in the twelfth month

To calculate what she’d earn over a year, a rough rule of thumb is to take the average balance (£1,500) and multiply that by the AER (10.38%), giving £155.70.

Getting a more precise number is a nightmare. It depends on the number of days elapsed when cash qualifies as interest-bearing in your account. Weekends and Bank Holidays aren’t just for frolicking – they are also for playing havoc with financial predictions and computer systems.

Anyway, if by comparison you put £250 into a 5% easy access savings account each month, then you would receive £82.50 in interest in a year.

That’s roughly half what you earned from Virgin’s 10% offering – just as you’d expect from a 5% account.

Limits are frustrating

Of course there are legions of people out there with tens or even hundreds of thousands in cash savings. Such people may remember – wistfully and rather selectively – heady 7% easy access savings interest rates being paid long ago by the likes of Icesave and Kaupthing. (Ah, great days!)

So when a flashy headline nowadays touts, say, a 9% interest rate, it’s excellent clickbait to attract these frustrated savers.

And it’s not surprising if on reading the restrictions in the T&Cs, some of these people then complain that regular savings accounts are pointless as you can only save £250 per month.

However just because you have £20,000 in total savings doesn’t mean you need to put the entire lot into one bank account.

Your savings pot is not monolithic

Separating your cash into pots instead and then maximising the interest rate on each can make a big difference to your total return, as I’ll demonstrate.

Do check those terms and conditions though. As I mentioned some regular savings accounts insist on no withdrawals until the term is up.

If you’re relying on a pot of cash for emergencies, you’ll need easy access. So check the clauses carefully.

The numbers feel unfair

If Mildred worked hard to put £3,000 in her 10.38% savings account, then she might have thought she could earmark a £311 interest payment for a new TV.

When she instead received roughly £150 over a year – and she doesn’t understand why – you can see how she’d feel diddled.

Now she repeats that same mantra for a decade: “They only pay half the rate”.

My issue is not that these people have these feelings – even if they are misinformed – but how their complaints get amplified and repeated, tarring regular savings accounts unfairly.

Institutions are partly to blame too for touting the juicy headline rate rather than the actual interest payments someone can expect for a year.

How I look at the maths 

To be clear, ‘half the rate’ is actually no different mathematically to my ‘half the balance’ rule of thumb from earlier.

• £3,000 multiplied by half of 10.38% is £155.70. 

If you didn’t fall asleep in your maths lessons, you will know that the order in which you multiply and divide numbers makes no difference to the result.

But psychologically, it’s totally misleading. The bank is not paying half the amount of interest owed. They are paying the full amount of interest on the average balance.

Not appreciating this can needlessly discourage people from opening such accounts, and hence from earning the most interest they could.

Making the best of regular savings accounts

Most of us function on regular income. We get paid monthly. We pay our bills monthly. 

So if an account lets us save each month, that actually aligns with our finances. 

If you can save a fresh £250 from your paycheque per month, then when you open a 10% regular saver you are maximising its benefits.

Whereas if you whinged about it ‘not really being 10%’ and instead stuck that £250 each month into a 5% easy access account, you would be missing out on double the interest.

But what if you’re in the camp of having a starting pot of cash? Say £3,000.

You don’t need to keep it under your mattress doing nothing as you slowly load it into your regular savings account. Instead:

• Put £3,000 in a 5% easy access account
• Each month, move £250 into the 10% regular savings account
• Earn 5% on £1,500 (£75)
• Earn 10% on £1,500 (£150) as well
• After a year withdraw your £225 in £5 notes and throw them into the air like Scrooge McDuck 

That’s far better than the £150 you’d get using just one of the accounts. It’s an effective interest rate of 7.5%.

Testing this out with an example

Assume you amassed £10,000 to stash over the course of the past year. Let’s see what you might have earned in doing so.

I’ll use some recent examples of regular savers rather than only limiting myself to ones available right now.

That’s because the examples quickly get out-of-date anyway, and with regular savers it’s important to jump on opportunities when they arise. Products are withdrawn quickly if they prove too popular.  

Consider for example the Monmouthshire Building Society. In August it launched two accounts allowing members to earn 7% on a whacking £1,500 per month! But it didn’t wait even a month before closing such accounts to new customers.

In the following table of recently available regular savings accounts, those in bold could still be opened as of October 2025:

Utilising all of these products to save money each month would have seen you earn £741 in total interest after 12 months.

In contrast, putting £9,900 into a standard savings account at 4.5% would have generated just £446.

Hence someone using the regular savings accounts would have generated £295 additional income (pre-tax), compared to simply taking out the best easy access account and leaving it there.

This is a little pessimistic though, as many of these regular savers are either fixed or are held at high rates despite base rate reductions. And that can’t be said for the market-leading easy access accounts.

Also I’ve not cherry-picked the best rates here. Swap those harder-to-get Monmouthshire accounts in for the RBS and Nationwide options, and your returns would be even higher.

Many happy returns

It’s easy to nitpick the scenario I’ve laid out. In practice it isn’t quite so simple. 

You might be thinking, for instance, that a chunk of that £10,000 would have to wait for several months on the sidelines before it could be moved into a regular saving account. I’ll get to that in a minute!

As far as the maths is concerned though, it’s correct insofar as I’m assuming an average balance of £10,000 earning c. 7%. And from a ROCE1 perspective that’s around £700.

In my opinion this is where many articles get a bit stuck in the weeds. They focus on individual accounts and drip-feeding money across. It all sounds a faff.

However as I see it, if you’re looking at cash management as part of your wider portfolio, it’s more about how much you earn from maximising your return on your cash over many years. It’s a process, not a one-time thing.

In practical terms, you’ll look to open up these accounts as they are launched and when their rates pique your interest. As spare cash becomes available you’ll simply deploy it into the highest-paying accounts at your disposal, subject to their contribution limits.

If you’ve got, say, ten of these accounts then money will be cycling in and out of them periodically – such that you aren’t actually performing a mechanical drip-feed from an easy access to a regular saver.

You’re simply deploying cash (from whatever source) as it becomes available into your best-paying regular savers and recycling money as your accounts mature.

In this way cash from maturing accounts will only sit in easy access accounts for short periods of time, before being shuffled off into the next regular saver.

Still all this does raise another pushback…

Are regular savings accounts worth the effort?

Perhaps you think that £295 is not worth the hassle of maintaining all of these accounts.

You may also earn enough interest to pay tax on savings interest. That takes a further bite out of the possible gains.

Moreover with some building societies you must be an existing member to qualify for the best accounts. Even I wouldn’t recommend you speculatively join Saffron BS in the hopes of receiving £24 interest in some future year.

That said, joining the Monmouthshire BS a couple of years back definitely paid off for me now that I’ll be earning £630 from its exclusive 7% accounts.

And strategically choosing to start doing business with one or two key building societies might be worth the (digital) paperwork.

Nationwide is growing its user base consistently, so I’ll use its regular saver as an example of one that might be opened by Monevator readers.

With it paying 6.5% interest on £200 per month, we can quickly compare Nationwide’s regular saving to a 4.5% easy access alternative on an after-tax basis:

Don’t forget, if you’re a 20% taxpayer earning less than £1,000 in interest per year or a 40% taxpayer earning less than £500 in interest per year, you would also sit in the first row. 

By opening the regular savings account, you’ll benefit by roughly £24.

If the only requirement is a couple of minutes of tapping away on an Nationwide app you already have installed, that’s a pretty good return on your time IMHO.

But the big win comes when you have a portfolio of such accounts. This enables you to maximise the benefits of all and spread the maturities through the year.

You’ll also likely end up with a monster of a spreadsheet that you can show off to your friends and family.

Does it spark joy?

Everyone is different, so I can’t argue that regular savings accounts are for you.

Clearly if you’re a new saver with a few thousand pounds who has just started rolling your snowball, then these tactics are going to be more consequential than for grizzled Monevator veterans sitting on six- or seven-figure investment portfolios.

Even so, some people take real satisfaction out of extracting the most benefit from our cash for its own sake. I’ll let you guess whether that includes me. (Clue: I spend my free time writing about savings for Monevator!)

But I won’t stretch to the more extreme tactics employed by some, such as:

• Timing their payments based on which specific days qualify for interest at the receiving bank
• Opening fixed-rate regular savers speculatively in case rate drops make them more useful in future
• Finding loopholes to cram extra cash into their accounts

I think the law of diminishing returns kicks in here, given the limits of how much cash you can practically put away through even a portfolio of regular savings accounts.

But in more everyday ways, if you’re going to hold some cash then why not shoot for getting the best rate you can? 

You’ll need to keep an eye on services that track rates. (Try MoneyFacts.) You’ll also need to get in before the masses of regular saver aficionados overwhelm new offerings and applications are closed, especially with the smaller buildings societies.

Happy stashing! Just please promise me that you’ll never say regular savers only pay half the advertised interest.

1. Return on Capital Employed. [↩]

If you’re wondering whether your asset allocation is right for you, then running it through our favourite investing rules of thumb is a great way to test your thinking.

Too often asset allocation is reduced to a single variable – age – whereas in reality a portfolio that lets you sleep at night also depends on:

• How much risk you can take
• How close you are to achieving your objective
• When you actually need the money
• Your individual response to market turmoil

Each of the heuristics below helps you reexamine your asset allocation along one of those dimensions. All are more directly relevant than your age alone.

After all, there are 70-somethings capable of weathering a stock market storm like Easter Island statues.1

Before we start – Each rule of thumb offers a maximum equity allocation. The remaining percentage of your portfolio is divided among your defensive holdings. Choose wisely and you should be appropriately diversified in other asset classes whenever stocks take a dive, as they inevitably do.

Okay, let’s have at it.

What’s your timeline?

How long do you think you’ll invest for? The closer you are to needing the cash the less Larry Swedroe thinks you should hold in stocks:

This heuristic highlights how we’re better able to bear the risk of holding equities when we’ve got more time to recover from a stock market setback.

Or – to look at it from the other end of the telescope – it’s sensible to switch to wealth preservation rather than growth when time is short.

A retiree might adopt a minimum stock floor if they intend to remain invested for the rest of their life. Whereas it makes sense to be entirely in cash in the last few years if you’re investing to buy something specific, such as a house, annuity, or child’s education.

Tim Hale provides a simpler version of this rule in his UK-focused DIY investment book Smarter Investing:

Own 4% in equities for each year you will be investing. The rest of your portfolio will be in bonds.

What’s your target number?

This rule is great for budding FIRE-ees and anyone else charging towards a defined financial target. Jim Dahle shows how you might sync your equities with the amount of your goal achieved:

Once you’ve gained some experience, you can easily adjust these numbers to suit your individual risk tolerance. I also like the way Dahle’s guideline nudges an investor to:

• Take more risk off the table if you over-achieve. (That is, to stop playing when you win the game)
• Increase your stock allocation if a crash knocks you back

Most people will probably feel burned in that latter scenario, and may struggle to buy more beaten-up shares. However there’s a strong chance that stock market valuations will be indicating it’s a good time to load up on cheap equities.

How big a loss can you take?

So far we’ve looked at asset allocation strategy from the perspective of our need to take risk. This next rule considers how much risk you can handle.

Swedroe invites us to think about how much loss we can live with before reaching for the cyanide pills:

I’m always amazed by how many people believe that their investments should never go down. It’s a valuable exercise to be confronted with the idea that you are likely to be faced with a 30%-plus market bloodbath on more than one occasion over your investment lifetime.

Personally I found it next to impossible to imagine what a 50% loss would feel like – even when I turned the percentages into solid numbers based on my assets.

At the outset of my journey, my assets were piffling. So a massive haemorrhage didn’t seem all that.

Experience is a good teacher though, and it’s worth reapplying this rule when your assets add up to a more sizeable wad. You may feel differently about loss when five- or six-figure sums are smoked instead of merely four.

The Oblivious Investor, Mike Piper, uses a slightly more conservative version of this rule:

Spend some time thinking about your maximum tolerable loss, then limit your stock allocation to twice that amount — with the line of thinking being that stocks can (and sometimes do) lose roughly half their value over a relatively short period.

Just remember that stock market losses can exceed 50%. It doesn’t happen often but it does happen.

Read about the worst collapses to hit UK, Japanese, German, and French investors if you really want to scare educate yourself.

How do you respond in a crisis?

It’s hard to know how painful a serious market crunch can feel until you’ve been run over by one yourself. It’s never fun, but at least you can put the ordeal to good use afterwards.

William Bernstein formulated the following table to guide asset allocation adjustments after your portfolio has dropped 20% or more, based on what you did while it was busy slumping:

Bernstein believes actions speak louder than words. If you didn’t sell up but you also didn’t feel comfortable buying into a falling market then your asset allocation is probably about right. 

If the setback made you feel miserable or panicked, adjust your stock allocation downwards. It’s probably too risky for you at current levels.

Reapply this test throughout your life. Your risk tolerance may well change over time – especially with greater assets. 

If you’re worried the market is too expensive 

Another technique advocated by William Bernstein is overbalancing. He recommends it as a method of gradually reducing your exposure to a market that may be overvalued.

Here’s Bernstein’s explanation:2

If the stock market goes up X%, you want to decrease your asset allocation by Y%.

What’s the ratio between X and Y?

If the market goes up 50%, maybe I want to reduce my stock allocation by 4%. So there’s a 12.5 ratio between those two numbers.

Well, that’s what it really all boils down to: What’s your ratio between those two numbers?

Bernstein is indifferent as to whether your allocation changes by 2%, 4% or 5% in response to the big market shift.

Like most heuristics this one is based on intuition-driven experience. It’s not a scientific formula, hence you can adjust it to suit yourself or ignore it entirely.

Keep in mind that usefully predicting market valuations is extremely difficult.

The Harry Markowitz ‘50-50’ rule of thumb

If all that sounds a bit complicated then consider the oft-quoted approach of the Nobel-prize winning father of Modern Portfolio Theory.

When quizzed about his personal asset allocation strategy, Markowitz said:

I should have computed the historical covariance and drawn an efficient frontier. Instead I visualized my grief if the stock market went way up and I wasn’t in it – or if it went way down and I was completely in it. My intention was to minimize my future regret, so I split my [retirement pot] 50/50 between bonds and equities.

The ‘100 minus your age’ rule of thumb

This rule of thumb is so old it belongs in a rest home. But it’s still got legs because it’s very simple:

Subtract your age from 100. The answer is the portion of your portfolio that resides in equities.

For example, a 40-year-old would have 60% of their portfolio in equities and 40% in bonds. Next year they would have 59% in equities and 41% in bonds.

A popular spin-off of this rule is:

Subtract your age from 110 or even 120 to calculate your equity holding.

The more aggressive versions of the rule account for the fact that as lifespans increase we will need our portfolios to stick around longer, too. That often means a stronger dose of equities is required.

Following this rule of thumb enables you to defuse your reliance on risky assets as retirement age approaches.

As time ticks away, you are less likely to be able to recover from a big stock market crash that wipes out a large chunk of your portfolio. Re-tuning your asset allocation strategy away from equities and into bonds is a simple and practicable response.

The Accumulator’s ‘rule of thumb’ rule of thumb

Here’s my contribution:

Rules of thumb should not be confused with rules.

I have to say this, of course, lest the pedant cops shoot me down in flames, but it’s true that rules of thumb are not fire-and-forget missiles of truth.

They are exceedingly generalised applications of principle that can help us better understand the personal decisions we face.

(Hopefully Monevator’s long grapple with the 4% rule has seared that into our brains!)

The foundations of a proper financial plan are a realistic understanding of your financial goals, your time horizon, the contributions you can make, the likely growth rates of the asset classes at your disposal, and your ability to withstand the pain it will take to get there. (Amongst other things…)

But rules of thumb can help us get moving and, as long as they’re tailored to suit, can start to tackle questions to which there are no real answers such as: “What is my optimal asset allocation strategy if I wish to be sitting on a boatload of retirement wonga 20 years from now?”

Take it steady,

The Accumulator

1. Most likely because they don’t need the money. [↩]
2. The original interview now seems to have gone walkies from ETF.com [↩]