Whenever you receive a cold call, an unsolicited marketing email, or an offer from a company you’ve never done business with – hang up, delete it, or throw it in the bin.

This strategy will save you from the majority of frauds. It will also improve your life.

I’m sorry if your job is to cold call strangers to tell them about genuine investment opportunities. Or charity drives. Or alumni fund raises.

These things do exist.

But life is simpler and safer if you presume they don’t.

Just hang up.

Cold call as ice

As an on/off fan of Radio 4’s Moneybox over the years, I’ve heard about far more scams, frauds, hucksterism, and shysters than I’ve seen in real-life.

And most – close to all – the schemes that undo the victims start with a cold call. Or a knock at the door. Very occasionally a supposedly random meeting (say with a timeshare pitch at a holiday resort).

Here’s a typical example from Which?:

Member Robert lost £65,000 to fraudsters claiming to represent a firm called TD Global Finance in July 2020.

‘A man phoned and said he was from TD Global. He rattled off a shortlist of familiar-sounding firms and offered to send me an email and prospectus. He said he’d call again in a week, which put me at ease, as scammers try to rush you. The email linked to a professional website. I checked the FCA register and saw TD Global is regulated.’

Robert later discovered that the very convincing website – tdglobalfinance. co. uk – was a clone. Unhelpfully, the real company has no website listed on the FCA register so nothing seemed awry when he checked this.

Robert ended up transferring money in batches, both over the telephone and at his local Halifax branch. He was taken through security in a private room at the bank, during which he explained he was investing in TD Global and showed staff the ‘invoice’ he had been sent.

He was handed a scams pamphlet and warned about cold calls, but no alarms were raised. An FCA warning about a clone of TD Global Finance appeared shortly after the final transfer to the fraudsters.

Horrified, he immediately told the police and his bank. Halifax returned £30,000 but refused to reimburse the rest, stating that Robert had ‘failed to make sufficient checks’ before investing.

Which?, 28 April 2021

Why would anyone respond to a cold call when there are dozens of legitimate investing platforms a mouse click away?

Why would someone think they were being pitched an incredible investment opportunity by a total stranger?

Funky cold calling Medina

It’s easy to mock or despair at such victims.

But firstly, let’s remember they are just that – victims. They’ve been done over by crooks who prey on the better aspects of our nature, such as trust. Victims deserve our sympathy.

Also, scams happen so often there’s obviously something else going on.

Sure, many of the victims are in the vulnerable elder who is out of their depth category. People who rip them off are morally bankrupt pond detritus. (They should really be working in the City – badoom tish!)

But I’ve noticed many of the victims that we hear about seem to be retired company directors or other high-flyers.

Partly that’s because they have the money to steal, no doubt.

Also director details have long been trivially harvested from Companies House.

But I suspect it’s also because in their professional life such people were used to being pitched by suppliers, vendors, and other industry sorts.

So a cold call for them doesn’t trigger the alarm bells that it would for me.

(In my case, picture a klaxon wailing and blue and red lights flashing in an underground bunker at the merest hint of a butt-dial.)

Smart and accomplished people can be prone to over-confidence, too. They may even be experienced in evaluating investments and other opportunities.

But such experience counts for nowt when you’re assessing a scam as if it’s legitimate.

Brains isn’t enough to avoid scams. One recent survey found that 62% of investment fraud victims had a four-year or longer college education.

And blowing the ‘poor grannie’ stereotype out of the water – at least when it comes to the targets of investment scammers – 81% were male. Men have a proven tendency to be over-confident compared to women.

That same survey also found nearly 60% of the victims received at least one investment cold call a month.

Is it any wonder that eventually a scammer got through?

Baby it’s a cold call outside

You might still be thinking that you can tell a fraud from a legitimate pitch.

Or that you’ll know a boiler room con or a scripted scam when you hear it.

Maybe you work for the police or MI5, or you’re a fraudster who can sniff out a fraudster.

Maybe you’re great at reading poker bluffs.

So sure, maybe you can tell a dodgy cold call from a real sales approach.

I like to think I could, too.

But why bother? What’s in it for you or me?

I’m an investing junkie who has read countless money and investing books.

I can’t remember a single one where a person got rich because someone cold called them on Saturday afternoon to take up five minutes of their (oh they understand!) precious time.

Don’t bother. Hang up on as soon as you know you don’t know them.

Thank you! Goodbye. Hang up.

That’s it.

If this isn’t already your policy when you get a cold call then this might just be the most valuable article you’ll ever read on Monevator.

What caught my eye this week.

Five years flies by when your country is shooting itself in the foot, the world’s most powerful nation is led by a man-child, and a global pandemic sinks and then super-charges your portfolio.

Even so, as the dust settled I was surprised to see that my NS&I Index-linked certificates are up for renewal again.

If you have no idea what these are, I don’t blame you.

NS&I’s coveted certificates haven’t been available to new investors for almost a decade. Existing holders have been able to rollover what they have – but only for increasingly measly returns.

Roll over Beethoven

If I renew my certificates for another five years, then I will get a guaranteed return of 0.01% tax-free per annum, plus inflation1.

The same return is also available on rollover into two-year and three-year certificates.

Given that I am sure NS&I is familiar with the time value of money, this unchanging return profile over two-to-five years tells us a lot about where the market appeal lies with these certificates.

It’s all about guaranteeing the preservation of the spending power of your money via the index-linking.

If I rollover for five years, say, my money will preserve its real2 value over that term. But the additional returns on top could be beaten by skipping a latte a year.

That’s a pathetic-looking reward for planning to lock your money away for five years3.

And it gets worse!

In 2019, NS&I shifted the measure used to calculate the index-linking portion of the return. It now uses CPI instead of RPI. There are justifiable reasons for this, but as CPI has tended to run lower than RPI the net result for us investors is smaller gains over the years.

NS&I doesn’t hide the impact of the shift, as illustrated by its table below (which uses 2019 inflation rates). It shows what you would get from a £1,000 investment under the two different inflation measures:

Historically low returns will very likely be even lower with CPI.

Harrumph!

Merrily we roll along

So why do I plan to rollover these certificates again – and for the full five years?

Because even just getting your money back with that inflation-tracking uplift beats cash in the bank. Returns on savings are currently far lower.

And because if inflation should spike dramatically, these certificates provide some protection against that, too.

Meanwhile if inflation turns negative, the NS&I certificates don’t go down in value. You’d just get the 0.01% applied that year. So there’s an asymmetrical risk/reward on offer.

Finally, I’ll renew for the whole five years just in case they decide to scrap them in the next few years.

You’ve got to roll with it

The big potential downside to rolling over is, of course, the probable opportunity cost.

My self-managed portfolio more than doubled over the past five years. Needless to say that smashed the return from my NS&I certificates.

But good investing isn’t just about holding assets with the highest expected returns. We need diversification, and we need an emergency fund, too.

I wrote a lot about my last rollover in 2016 that holds true today. Please check back for a full run through the attractions of these certificates.

The RPI element has gone since then, but that aside the certificates still look like unique asset class that we private investors are lucky to have access to.

Moreover they’re not issuing them any more. When it comes to the rollover it’s use it or lose it for those lucky enough to own them already.

Perhaps the biggest argument against rolling over for me, personally, is that unlike in 2016 I’m now running a big mortgage. I’d expect to earn a (slightly) higher return by cashing in my certificates and paying that down.

But then they’d be gone for me – and with them their unique diversification traits – and my overall investment posture would be less liquid (because I’d swap the semi-liquid certificates for a lower mortgage balance).

The cash value of my certificates could cover a couple of years of my mortgage payments, in a desperate pinch. Liquidity is valuable.

All told, my conclusion is much the same today as it was five years ago:

If these Index-linked certificates turn out to be the weakest performers over the next five years, then hurrah – because it will mean my vastly larger allocation to equities, for example, will have done better.

True, if I had a massive slug of these certificates then perhaps I’d need to think more carefully about how much money I wanted to commit to merely keeping up with inflation.

But like most people I only have a few percent in them, and as we’ve discussed they’re not making them anymore.

A solid hold, then. If only all investing decisions were this easy.

Let’s see where we are in 2026!

Have a great weekend everyone.

[continue reading…]

1. Technically ‘index-linking’ but it amounts to the same thing [↩]
2. i.e. Inflation-adjusted. [↩]
3. You can get the money out early if needed, with a penalty. [↩]

Getting a dream tenant for their buy-to-let is, well, the dream of most landlords.

A tenant who pays on time, tidies up, and refrains from crack parties on a weeknight will make landlord life so much easier

Investing in property isn’t like buying an index tracker. Property is much messier. Buildings and their inhabitants can let you down.

Indeed the consensus around places like Monevator is that buy-to-let is more hassle than it’s worth. Property investing is for the Homes Under The Hammer crowd who don’t know any better.

And I’d agree its glory days are behind us.

But where I differ from many of the Monevator faithful is I’m not leery of real estate as an asset class. Nor of having a stonking big mortgage.

Despite my love of the stock market, I’ve long believed owning your own home is the best investment the average person makes.1

Homes are typically bought with a mortgage. That mortgage is a forced saving scheme that gets the average person socking away money for 25 years. The mortgage also leverages up an initial deposit, hugely boosting the returns from even modest house price growth over the long-term.

Mortgages are a major reason why most of the Haves Have, while the Have-nots are still renting.

Mortgage is an eight-letter word

Despite these dreamy qualities, mortgages get the same cold shoulder as buy-to-let from many seekers of financial freedom.

Indeed there’s a band of Pay Off You Mortgage First militants who show up whenever you mention the M-word on the Internet.

Presumably there’s some kind of bat signal. But it must be pretty targeted, because while YouTube is flooded with heavily-viewed and Liked videos urging you to continually remortgage and re-up your buy-to-let empire, I get taken to task simply for not immediately paying down my big interest-only mortgage the first moment I’ve got some spare cash.

Now, I do get where the anti-mortgage brigade are coming from.

A mortgage – like all debt – introduces risk.

Mortgages are usually cheap and they’re secured against an asset (your house) and today most banks bend over backwards before repossessing.

But you’re still more vulnerable with a mortgage than without.

When I took out my mortgage, I admitted to a friend it was the first time I’d felt nervous about money in decades. Because it was suddenly possible for me to concoct a (far-fetched) scenario in which shares went to zero, my house plunged in value, too, I lost my income, and I was left bankrupt.

Whereas in my debt-free Bohemian days, bankruptcy was impossible.

It’s true, too, that paying off a mortgage delivers an instant, known return.

Pay down £50,000 of your mortgage and you’ll definitely save all the interest you would have otherwise have paid on it.

That’s a precise return. None of the ups and downs of the stock market, and usually more attractive than the fluctuating returns from cash at the bank, too.

There are even tax benefits to paying off a mortgage versus saving cash.

You’re your own landlord

All this came to a head recently as I wondered what to do with a six-figure lump sum I’d conjured up by panicking prudently realizing some capital gains before the last Budget.

I considered everything, from the early repayment of some of my mortgage to buying an investment property in the provinces.

But for me, not paying off my mortgage – and investing the money instead in other assets – still seemed to offer the best balance of risk, reward, and a simpler life.

I mean a simpler life compared to potential buy-to-let headaches, of course.

And my conclusion was hugely enhanced by knowing that I would never find a dream tenant for my buy-to-let who’d be as good to me as … me.

You’re a dream tenant

As a home owner, I effectively rent my house to myself.

This isn’t a fanciful metaphor. There’s a concept called imputed rent that we need to get into some day, which represents the housing services you enjoy by living in your own home.

Some countries even tax homeowners on this notional rental ‘income’.

So yes, I am a landlord already – and my property has the perfect tenant:

• I look after it like nobody else would.
• My rent is never late.
• In fact, I’ve done a deep dive on myself and my financials are spotless.
• I love the furniture, the garden, and the area. I’m in no rush to move!
• There will be no illicit smoking, pets, or neighbour-baiting parties here.

Perfect! I should really send myself a bottle of bubbly this Christmas.

Dream tenant or demanding drain?

Of course you’re not the perfect tenant in every way, not even for you.

You know exactly what buttons to press to get your landlord – you – to accelerate that refurbishment, or to buy a new sofa. Which could be costly.

(Slightly) more seriously, you don’t scale.

You can only be your own tenant in one place at a time. Perhaps two if you buy yourself a commercial property within your SIPP and work from it.

Beyond that, you’ll have to risk a third-party if you want to own more properties.

Alternatively, you could buy yourself a bigger home, get a bigger mortgage, and seek exposure to residential property via listed housebuilders, or the few trading companies that own it such as Mountview Estates or Grainger.

But many people are already over-exposed to residential property. Buying more global equities is probably a better bet.

Method in the mortgage

The main benefit of having me as a tenant is risk reduction.

I am much more comfortable running a sizeable debt this way, compared to if I was relying on a stranger to cover my mortgage via a buy-to-let rental.

Also note that I don’t increase my exposure to the property market by not paying down the mortgage.

My exposure to residential property is the value of the asset that is my home. The size of the mortgage I finance that ownership with is irrelevant.

Still, having a mortgage does ‘gear up’ my overall investable wealth.

I could use mortgage debt to increase my exposure to property (by getting a bigger home or an investment property).

Instead, I’ve effectively deployed it to own a larger basket of shares, high-yielding bonds, REITs, Bitcoin, cash, and various other types of assets.

I am much more comfortable running a big debt this way, compared to if I was relying on a stranger to cover my mortgage via a buy-to-let.

A strategic bet

It can be helpful to look at common financial constructs through a new lens.

For example how a mortgage is money rented from a bank.

Or how a landlord is someone who borrows money on your behalf.

Similarly, don’t overlook your qualities as a home-owning tenant.

Of course I don’t expect the mortgage haters to call up Halifax tomorrow about a five-year fix, just because they read this article.

For one thing, there’s nothing wrong with paying off your mortgage. It has loads of benefits – emotional and psychological as well as financial – and not everyone wants or needs to boost their returns.

But equally there’s nothing intrinsically wrong with having a mortgage, either, especially at today’s low rates. It’s all a matter of knowing what you can afford and can comfortably handle.

With a dream tenant in place to meet the interest payments, a mortgage might be the safest way to enhance your investing returns.

It sure beats YOLO-ing on meme stonks!

1. There’s no need to explain how *you* make 80% a year trading out-of-the-money options or whatnot. I said the ‘average’ person. 🙂 [↩]