What caught my eye this week.

With 2024’s decline in mortgage rates arrested – if not yet quite beaten-up for resisting said arrest – it is likely house prices will continue to go nowhere for a while.

Especially given the higher stamp duty for buy-to-let landlords that came in with the October Budget.

The now-5% stamp duty surcharge they pay is survivable. But it’s hardly going to spur animal spirits.

Nor will the gloomier economic backdrop.

Curbed enthusiasm

Right-wing pundits are falling over each other to blame Labour’s October Budget for all the UK’s woes.

As if Labour’s plan to increase public spending by 2-3% has really flipped the UK economy overnight into a “Socialist Worker’s Paradise” that’s “capitalist in name only” and all the rest.

Not to mention the nonsense of a five-month-old government being held responsible for the past 15 years of stagnant real wage growth, rising public sector debt, and taxes steadily ratcheting upwards.

Tricky fellows, these reds! They must have been pulling the strings from opposition all along?

Still, I’m not going to bat for Labour’s hike in Employer’s National Insurance.

As I said at the time I feared for jobs – and profits – especially in the hospitality and retail sector.

That downside is already coming through in company downgrades and commentary. From an unenviable set of options for raising revenue, hiking the cost of employment wasn’t the way to go.

What’s more, Reeves and Starmer are in part responsible for the national mood music.

And that has been akin to going to a Saturday night dinner party where the host has Joy Division’s Isolation on rotation.

The only way isn’t up

None of which can be expected – to get back to where I started – to buoy the housing market.

For many of the two-thirds of British households that own their own home, that’s bad news I suppose.

People argue their home is not an asset or an investment, inexplicably to me.

Yet they expect its price to go up over time. And they – perhaps secretly – get surly when it doesn’t!

Personally, I’d argue the relatively sluggish property prices of recent years – especially in the South East, which was previously so overheated – has been a silver lining to these years of  gloom.

Stalled sticker prices have enabled a real-terms price crash. That has begun to redress decades of unsustainable growth.

Given the centrality of housing to the UK economy, I’d take such an inflation-adjusted silent crash – that is, price falls in inflation-adjusted terms – to an actual plunge in nominal prices any day.

Take me back to dear old Blighty

From a long-term historical perspective, UK property remains achingly expensive.

Data from Mojo Mortgages this week compared the landscape in 2024 to half a century ago:

Yes – it is definitely far harder to buy a home today than it was for our parents and grandparents.

The table even understates the issue. I make that a 310% increase in the deposit as a percentage of a house.

The upshot is that house prices have risen by 2,534% in 50 years.

Yet salaries have grown by just 1,791% over this period.

Which means, Mojo calculates, that today’s salaries are £13,676 short of keeping pace with house prices.

Or alternatively that house prices should be £75,000 cheaper.

Nobody’s happy

There are a lot of reasons why British people feel gloomy about their finances.

Stagnant wages, higher taxes, years of political disappointment. The moribund UK stock market even.

But with going-nowhere house prices we now have a double-whammy of housing miserableness.

At least homeowners could previously feel good about their often-biggest asset escalating further in price. Even if they publicly tutted about how hard it was for young people.

But now the home-owning majority have seen the value of their nest egg stall for years, and actually fall in real terms.

Yet homes still remain out of reach for most young people. Not without a big leg-up from Mum and Dad – or a City job that comes with a six-figure bonus.

Of course Labour says it wants to build 1.5 million new homes to address the supply side.

Good thing those homes won’t need to built by workers that they just made more expensive to employ, eh?

Um… have a great weekend.

[continue reading…]

Hello, my name is Squirrel and I suffer from a Certain Medical Condition. But I’m not going to tell you exactly what condition, because that’s not the point of this post. (Also I’m hoping that an air of mystery will make it seem more exotic than it actually is.)

Let’s just say I have a mystery condition, it’s lifelong, and it gets in the way of work quite a lot, which is annoying. And until recently I just accepted that.

I mean, them’s the breaks, right? Some people just have it tougher than others.

Somewhere along the line I’d absorbed the idea that pushing through without complaining was the right thing to do.

I see other people with disabilities or chronic conditions do it too, saying things like:

“I don’t want to be a burden.”

“It’s my problem, I’ll handle it.”

“Don’t mind me – I’ll catch up…”

“Sorry to be such a nuisance!”

That was me. My line was:

“Hi, I’m Squirrel! I have this condition – but don’t worry, I never let it get in the way of my work!”

There would usually be a cheery and slightly self-deprecating smile to go with it. But I don’t know how to write that, and The Investor seems to frown on emojis in articles!

Conditioned to costs

I am not here to write about my specific medical challenges, as I say.

Monevator is a financial site – and the problem I’m here to highlight is that like many in similar circumstances, I’ve been bearing all the costs. 

There are time costs. Sometimes when work piles up I push myself too hard and get exhausted. It takes me time to recover. Or there are appointments to go to – always during the work week – which wipe me out. The cost of that displaced time is borne by me. I’m the one who has to work all weekend to make up.

There are opportunity costs, too. Often I say no to opportunities that would help me progress in my career, because I know I wouldn’t be able to manage some aspect of them. The travel perhaps, or long hours without a break. So those go to somebody else – somebody who can manage without any help.

There’s also a weird cost which I think of as the self-esteem cost. It feeds into all the others.

If you know that you have particular limitations, you tend to overcompensate in other areas in order to feel better about yourself, or to prove to everyone that you’re still the right person for the job. You push yourself too hard, get exhausted, lose time, and you have to turn down opportunities. It’s a cycle of cost that pushes you around in circles and keeps you from moving forward.

But that’s just the way the cookie crumbles, right? Or so I thought until recently, when someone mentioned the government’s Access to Work scheme…

…and they kept mentioning it, until I dropped the stiff upper lip and actually listened.

What is Access to Work?

The Access to Work scheme has been described as the government’s best-kept secret. (Though I myself suspect there are bigger skeletons in Number 10’s cupboards…)

It’s a discretionary grant scheme designed to help people in England, Scotland, and Wales with disabilities and health conditions to find their way into work – or to help them stay in work if they’re already there.

The scheme allows for costs of up to £69,260 a year per person. The funds can pay for all sorts of equipment and support.

Think about that for a minute. £69,260 is a very big pot of money. There is more money in that one person-specific pot than I have ever actually earned in a year. And in theory it’s all there to help me.

Discovering Access to Work is like having a fairy godmother who appears with a magic biro and a big stack of forms instead of a wand.

Or rather – it’s like having a fairy godmother you don’t know about, so you miss going to the ball and then find out 20 years later that you’ve spent your entire life washing dishes instead of living in a palace because nobody bothered to tell you about her. 

Okay, I might be just a bit bitter that I didn’t know about Access to Work years ago.

But I’m not the only one. Apparently only a tiny proportion of the people who are eligible actually apply for Access to Work because the Department for Work and Pensions (DWP) manages the cost of the scheme by keeping it quiet.

Hence I’m doing my bit here to raise awareness!

(Sorry DWP, old chaps. Nothing personal, you understand.)

Who can access the scheme?

The interesting thing is you don’t need a formal diagnosis to apply for Access to Work. You just need to be able to demonstrate that you have a need which can’t be met by normal workplace adjustments.

If you’re over 16, UK-based, in paid work (there are a few other situations that apply too), and have a disability or physical or mental health condition, you can apply for an assessment. It’s surprisingly inclusive.

The mental health element is worth highlighting. If you report you have a mental health condition then that sends you down a slightly different route, through one of two specific organisations which are set up to help you access the scheme and provide mental health support at the same time. They also keep the details quiet from your workplace.

So in short, it’s a scheme that’s open to anyone who needs some extra support or equipment to compensate for health problems that are affecting their work.

How does Access to Work work?

You apply in a personal capacity, not through your place of employment, because the grant is tied to you.

This means that you can get help not just with your main job, but also with any other work you might do, say as a freelancer.

You can ring up the Access to Work people and talk to an advisor. Alternatively you can fill in an online form that asks about the barriers you’ve encountered at work and the types of support that might help.

I went down the online route, and honestly I found the form quite friendly and accessible. (Much easier than applying for things like the Disability Living Allowance and Personal Independent Payments, which are nightmarish).

The form asks for your personal information and some details about your workplace. There are also text entry boxes enabling you to provide information about how and why your condition is making things tough for you in your job.

You do also have to provide a workplace contact – usually a line manager or someone in HR – unless you’re self-employed. That’s because in some circumstances (not all) your employer might have to pay a contribution too.

How can Access to Work work for you?

There are a number of different types of help available. All of which seem, quite frankly, wonderful.

For instance, if you have problems accessing public transport to get to work, they can pay for regular taxis. (That one almost makes me wish I didn’t work from home!) They can provide training, either for you or for your workplace. They can pay for a British Sign Language interpreter, a job coach, or a support worker to help you with the parts of your job that cause you the most difficulty. They can even fund a job aide to take over from you at work if you run into a problem. It’s an impressive menu of options.

There is – of course – a backlog. I’ve sent in my forms. But it could be six months or more before I hear anything about an assessment, so I’m not holding my breath.

However I am cautiously excited.

I’ve read lots of accounts from people online, including people with the same Condition as me, who say that this grant is life-changing and has enabled them to do extraordinary things. For some, it’s the magic biro they never thought they’d be given.

But what about you?

Maybe you’ll see yourself in this post and start thinking that you might be able to apply for help too. Or maybe you know a colleague or family member who would be a good candidate for support. Maybe you’ll just file this away in your memory banks, waiting for it to become relevant someday. 

Whatever the case, do spread the word!

(But spread it quietly. We don’t want to make the DWP cry, do we?)

Why would you want to unitize your portfolio? I mean life is short – and there’s a lot of good stuff on Netflix.

Well… maybe you’re a stock picker who wonders whether you’re beating the market?

Or perhaps you’re a passive investor keen to see how the returns from your DIY ETF portfolio compares to Vanguard’s LifeStrategy fund?

Whatever the motivation, you’ll need to track your performance versus active and index funds to know for sure.

And that means comparing your results calculated using the same methodology that they use – portfolio unitization or time-weighted returns.

If you think you’re a great investor but really you’re lagging the market by 3% a year, it will have a disastrous impact on your wealth compared to if you’d used index funds.

That’s not to mention the many hours wasted in fruitless research. (Unless you happen to enjoy it…)

Still want to know how you’re doing?

How to unitize your portfolio to track your returns

I believe the best way to track your returns is to unitize your portfolio.

Granted, you can use online portfolio tools or work out various numbers on-demand. But I think it’s better to take charge for yourself so you understand not just the numbers, but what is driving those numbers.

Moreover, it’s easy to do. You don’t have to pay a monthly subscription fee, nor worry about losing your data when that aging app is discontinued. 

To make it even easier we’ve created a unitized / time-weighted return spreadsheet to help you on your way.

Spread the word! You’ll find our example spreadsheet makes more sense after you’ve read the article that follows. But for now know there are two tabs – one to track cashflows and the other to track capital values and units. We’ve pre-populated the cells to illustrate how somebody might be tracking the ups and downs of their portfolio over a few years – as the market climbs and they add new money, receive dividends, and decide to withdraw some cash. Make a copy of the spreadsheet to delete our example data and start tracking your own.

What is unitization?

Unitization is the method used by fund managers who must account for money that flows in and out of their open-ended funds.

And because it’s the industry standard method for measuring returns, unitization means you can compare your performance with any existing fund.

You can also compare a unitized portfolio’s performance against a benchmark such as an index.

And unitization encourages you to keep decent records – also important if you’re trying not to kid yourself.

As physicist Richard Feynman warned: “The first principle is that you must not fool yourself, and you are the easiest person to fool.”

Why open-ended funds are called unit trusts

You are probably already familiar with unit pricing when it comes to funds.

If not, here’s a quick refresher.

When you invest your money into an open-ended fund, you buy a certain amount of units in that fund with your money.

For instance, let’s say I have £18,420.58 invested in the European Index Trust run by Fictitious Fund Co (FFC).

The FFC website tells me how it calculates this:

Number of units I own: 6,564.712
Unit price Buy/Sell: 280.6p/280.6p
Value: £18,420.58 (i.e. 280.6 pence x 6,564.712 units)

All investors in FFC’s European index fund would see exactly the same unit price.

However they will own different numbers of units, depending on how much they have invested.

Making more units

Whenever investors put additional money into the European Index Trust, FFC creates new units at the prevailing unit price.

The new money buys the right number of units at that price for the money invested.

For example, if the unit price were 280.6p, then investing £5,000 would buy you 1,781.9 additional units.

The new cash you’ve invested now comprises part of the assets of the unit trust, which offsets the creation of those new units.

The fund’s total Assets under Management (AUM) have increased, but the returns haven’t changed just because new money has been added. This is confirmed by the unchanged unit pricing.

Finally, the fund manager deploys your extra money to buy more holdings in order to keep the fund doing what it says on the tin.

In this example, he or she buys more shares to match the European Index.

Unit prices and new money

The crucial point is that adding new money does not change the price of a unit.

Only gains and losses on investments, dividends and interest, and costs that are charged against the portfolio’s assets will change the price of a unit.

For example, if the companies owned by the European Index fund rose 10% in value, then the unit price would be expected to increase by 10%, too.

So here the new unit cost would be:

280.6*1.1 = 308.66p.

Measuring changes in the value of units like this – as opposed to measuring the total monetary size of the fund – enables the manager to maintain a consistent record of performance.

A record that is not distorted by money coming in and going out.

Also, when an investor wants to cash out from the fund, there’s no confusion about what percentage of the assets they own or anything like that.

They’ll own a certain number of units. To cash out, they sell them back to the fund manager at the prevailing unit price.

For instance, let’s say you own 600 units.

At 280.6p per unit, you’d cash out with:

£2.806 x 600 = £1,683.60

By unitizing your portfolio, you can use the same principle to measure your own returns – whether you’re saving and investing extra cash or you’re withdrawing money from the portfolio.

How to unitize your portfolio

So far, so boring.

Well, we are talking about accountancy here!

I’ll level with you. Things aren’t going to get any more exciting.

However the good news is that unitizing your portfolio is a very straightforward process. 

1. First decide on an arbitrary unit value

The first thing you need to do is to decide what one unit in ‘your fund’ is worth.

It’s a totally arbitrary decision, as it will just be used as the base for future return calculations.

Many people choose £1.

I chose £100 for egomaniacal reasons.

2. Calculate how many units you currently have

As it’s Year Zero for unitizing your returns, you need to work out how many units you currently have.

This is based on the total value of everything in the portfolio you’re tracking, together with the unit value you just came up with.

You simply divide the former by the latter.

Let’s say your portfolio is £50,000 and your unit value is £100.

This means you have 500 units to begin with, like so:

£50,000/£100 = 500 units

Create a column on your spreadsheet to track the unit number. 

Pop in another column to track the value of each unit:

£50,000/500 units = £100 unit value. Think of this column as the index value of your portfolio. It starts at 100 points. 

As time goes on, you can chart your progress by plotting your (hopefully) growing unit/index values on a graph. (See the Portfolio unit value column on our accompanying spreadsheet.)

I track these numbers on my own spreadsheet. It tells me what my portfolio is worth right now, what one unit is worth, and how many units I have.

From this it also works out and tells me my returns over various periods.

3. If you don’t add new money you can now easily track your returns

Let’s say you never did add or remove another penny from your portfolio.

You know how many units you have, and you know the starting unit value.

Working out your unitized returns from here is a doddle.

For example, let’s say your portfolio increases to £60,000.

The unit value is now:

£60,000/500 = £120

Your return to-date is the change in unit value.

£120-£100/£100 = 20%

However you hardly needed to unitize to see that!

4. Adjust your total units as you add new money

The whole point of unitizing is to properly take into account money added or removed from the portfolio.

Every time you add new money, you need to calculate and take note of the value of one unit.

For instance, let’s say that when your portfolio hits £60,000 you decide this investing lark is a piece of cake, and so decide to add in another £6,000.

The unit value before the additional cash is added, as above, is £120.

Now we need to calculate how many units our new money buys:

New money added / unit cost = number of new units
£6,000/ £120 = 50 new units

This means your £66,000 portfolio now comprises 550 units.

You can see this calculation in our dummy spreadsheet. The new £6,000 is inputted into the Cashflow tab, and you can see the extra 50 units show up on the Unitized return tab – Unit change column. 

5. Keeping ‘buying’ new units as you add money

This process is simply repeated over your investing lifetime.

Let’s say the value of your portfolio increases to £69,850, and you decide to add an ISA contribution of £15,240.

First:

Unit value = portfolio value / number of units
Unit value = £69,850/550
And so…
Unit value = £127

Number of new units that £15,240 buys:

New money added/ unit cost = number of new units
£15,240/£127 = 120 new units

With the new ISA money your portfolio is now worth £85,090, and is comprised of 670 units (that is, 550+120).

As always you note down the total unit number for next time.

6. What happens when you remove some money?

When money is removed entirely from the portfolio, the principle is exactly the same as when money as added. The number of units changes as a consequence, but not the unit value.

You are effectively ‘selling’ units in your own fund to free up the cash. Obviously this procedure doesn’t change the returns you have achieved on the mix of assets you happen to hold.

For example, let’s say your portfolio continues to motor on and breaks through six figures to hit £100,165.

At this point you get collywobbles (I told you there was a downside to tracking your returns) and you decide to spend £10,000 of it while you’ve still got your teeth.

You know from your records that your portfolio currently consists of 670 units.

This means the unit value currently is:

£100,165/670= £149.50

You decide to remove £10,016.50 from the portfolio to keep the sums simple:

£10,016.50/£149.50 = 67 units

After the withdrawal you have £90,148.50 in your portfolio represented by 603 units (670-67).

The sale is noted in the Withdrawals column of our spreadsheet in the Cashflow tab. The liquidated units are tracked in the Unitized return tab. 

7. Work out your unitized return at any point

At any moment in time you can see exactly what your return is by looking at your unit value.

For instance, let’s say that after all of the above, your portfolio ends the year with a value of £90,450.

Your unit value is:

£90,450/603= £150

So your unitized return since you unitized your portfolio is:

£150-£100/£100 = 50%

This is the return that you can compare with trackers and other funds and benchmarks that report their returns over the same period.

Let’s say at the end of next year a unit was worth £160.

You started the period with a unit value of £150. So your return over the year is:

£160-150/150= 6.67%

You see how easy it is to calculate and note down your annual return figures every year.

What about expenses?

If you cover costs like broker fees, stamp duty, and accrued interest with external money that you add to your investment account, then these amounts should be included in your incoming cashflows. 

The treatment is different if you pay your costs by selling assets, or if you use dividends, or other cash lying around the portfolio.

In the latter case, the expenditure is taken care of by a reduction in your portfolio’s value. You needn’t even note when these costs are paid. Your portfolio will simply be smaller than otherwise next time you record its value. If all prices remained the same then you’d see that a small loss had been inflicted by the fees.

As ever, fees reduce returns and higher costs are a greater drag factor than lower ones. 

What about dividends, interest, redemptions, spin-offs, and so on?

You needn’t worry about these so long as they’re retained within your portfolio. 

The number of units you own doesn’t change because you were paid a dividend – no more than if one of your shares went up by 20p.

But your units do now represent more assets, in the form of that extra dividend cash. That increases the value of each of your units.

You can see this play out in the dummy spreadsheet when the portfolio receives £3,000 worth of dividends on 1 January 2026. (Yes, this is Doctor Who’s portfolio.) 

The unit value rises from 160 to 164.98 and the portfolio gains 3.11%. 

However, if you withdraw any of this income from your investment account then it should be logged as an outflow. 

Our sample spreadsheet books a £1,000 dividend withdrawal on 2 Jan 2026. The value of the portfolio decreases but it doesn’t count as a loss because the number of units is reduced to compensate. 

Hmm, unitization sounds like a lot of work

It’s really not, once you’ve set it up properly.

My spreadsheet tells me my current portfolio and unit value at any time.

A sheet also tracks money added and subtracted over the year, and calculates the number of units added or subtracted when I do so. They get added to the ongoing tally.

At the end of the year I simply record all the relevant values for my records. (I also export a snapshot of the spreadsheet as a PDF to serve as an archive).

Then, on the first trading day of the New Year, I hand-update the spreadsheet with my starting unit value and the total number of units.

This makes it easy to see and record my discrete total return figures for every year.

What if I have multiple dealing accounts, SIPPs, and the like?

I track all my different holdings on one spreadsheet.

Then I unitize the returns on this entire portfolio, and also track expenses, portfolio turnover, and other interesting figures across the entire piece. If you take monthly snapshots you can track your volatility, too. 

This is exactly how I measure my own total returns across half a dozen different platforms and brokers.

There’s not a lot of point in tracking the returns in a SIPP separately from returns in an ISA, in my view.

Ultimately it’s all your net worth. They’re just different baskets.

However if you did want to track how particular accounts are doing – perhaps because you employ different investing strategies in one versus another – then you could create separate spreadsheets to follow them.

You’d also have to track separate money flows in and out of each them, and generate unitized return figures for each ‘pot’ of cash.

Remember, you’d still want to unitize the entire portfolio to properly track your overall returns. (Rather than, say, averaging the returns on the different accounts, as this would not account for the different amount of money in each – though you could create a weighted average I suppose).

Time-weighted returns versus money-weighted returns

There are many different ways of calculating returns. They all have value in different circumstances. And they usually deliver different numbers.

Unitization offers a time-weighted return while the main alternative uses the XIRR Excel function to calculate your money-weighted return. 

• Time-weighted returns – all time periods are weighted equally, irrespective of how much money is invested when. Unitization tells you the underlying investment performance, and strips out the impact of money flowing in and out. This is the best way to compare your results against other portfolios, funds, indices, and even rival assets like cash in the bank or the price of Bitcoin.  

• Money-weighted returns – this means that time periods in which more money is invested have more of an impact on the overall return than equivalent time periods in which less money is invested. So doubling your first £50 does not count for as much as doubling £500,000 does later on.  

Monevator reader John Hill’s excellent comment below sheds additional light on the two measures with some illuminating examples. 

Getting the measure of market timing

XIRR calculates the Annualised Internal Rate of Return on a portfolio. The gist is that you supply the XIRR function with a column in your spreadsheet that lists these cash additions and withdrawals. The function then uses an iterative process to hone in on your returns.

It makes sense for the fund industry to use unitization. That’s because a fund manager typically has no control over when money is added or removed from their fund – it comes from the fund’s customers – and also because it’s the choice and performance of the underlying assets that matters when evaluating how skilful a manager is. (That’s the same reason I unitize my returns).

However some would argue that a money-weighted return like XIRR makes more sense from the perspective of a private investor. You are in control of money flows and what matters to you is your personal rate of return.

Many private investors derail their results with poor market timing. But by calculating and comparing both the unitized return and a money-weighted return you can spot the impact of poor (or – who knows – maybe good) market decisions timing on your portfolio.

The Henry Wirth investing blog explains:

• If your money-weighted return rate is greater than your time-weighted return rate, then your market timing is adding value to your portfolio.

• If your time-weighted return rate is greater than your money-weighted return rate, then your market timing is subtracting value from your portfolio.

The Accumulator tracks both. Read his companion post on how to calculate your money-weighted return. 

Do it for yourself

Personally I think if you’re going to keep track of the money flows in and out of your account, then you might as well go the whole hog and unitize your portfolio.

Once you’ve setup a spreadsheet to do the sums it’s very easy to stay on top of things. Moreover you’ll have the satisfaction of knowing your returns are directly comparable with those reported by fund managers.

That’s not to say there’s a right or wrong way to measure returns.

It all depends on context, and on knowing what you’re measuring and why.

Also remember that in itself a return figure tells you nothing about the volatility or risk you took to get those returns. Nor about the maximum troughs (aka drawdown, or losses at the portfolio level) that you endured along the way.

But if you unitize your portfolio and keep records of, say, the daily unit price, then you can track that sort of thing for yourself if you’re so inclined.

Indeed, once you’ve unitized your portfolio, you can go crazy if you want to and use it as the basis for calculating all kinds of extra stuff – such as the Sharpe Ratio that might help you understand if your returns are down to skill or risk taking.

Who knows – if you’re young and feisty, maybe you could even include your unitized returns in your cover letter asking for a job with Ficticious Fund Co!

Credit to The Accumulator for the unitization spreadsheet he made to accompany this update. Many thanks TA! Please let him know if you spot any errors via the comments below… 😉