What caught my eye this week.
A bad week for those who long for sunlit uplands swathed in magic money trees.
National insurance [1] rates up. Dividend tax [2] rates up. The triple-lock on pensions suspended [3].
It’s good that the government has at least made a stab at fixing the social care crisis, with a new cap on lifetime costs [4].
But otherwise the best that can be said about this week’s machinations is that nearly everyone has something to moan about.
Time to pay
Credulous people who voted to leave the EU on the promise of a £350m a week ‘dividend’ for the NHS – £17bn a year – might wonder why their incomes are now being docked in part to fund the health service.
Those who saw in Tory Brexiteers a plan for Singapore-on-the-Thames might question why taxes on wealth creators are rising and UK graduates will soon face a marginal tax rate of effectively 50% [5] [search result].
Meanwhile those on the left – for whom even the unprecedented hundreds of billions [6] of public money spent on Covid relief measures wasn’t enough – have been reminded that one way or another the bill always come due.
And those who argue – with some justification – that today’s low rates mean it’d be better for the government to keep borrowing rather than hiking taxes are re-learning that politics doesn’t work that way [7].
All this while the economy stops and starts, supply chains snag, and the US return to work stalls.
A rebuke to those who thought we could just put daily life into suspended hibernation via repeated lockdowns without deep economic consequences.
Tax take
None of this is to argue that lockdowns, the pausing of the triple-lock, extra money for the NHS, or even Brexit was necessarily a bad thing.
Well not today, anyway.
I’m just highlighting that this week’s reality check ought to be felt more widely than simply in one’s (digital) wallet.
It’s a theme picked up by Merryn Somerset-Webb in the FT [8] [search result]:
You might be beginning to feel the sands shifting slightly beneath your feet.
Nothing is quite what it used to be — or supposed to be.
Indeed. When even the cosseted pensioner class starts complaining, the times are surely a-changing.
For us as investors of course, it’s (always) time to take evasive action [9].
This latest mishmash of tax measures makes things yet more complicated.
But nobody is more interested than you are in getting yourself through this tax maze.
(And yes, National Insurance is just income tax with better PR).
Hands off my castle
Make strenuous efforts [10] to fill your ISA to avoid being taxed on your gains again later.
(Probably) only after contributing all you can to your pension, to truly soften the blow.
But when we recover from this week of tax whammies, we might ask ourselves why those owning property outside of a limited company [11] were spared a hit to their income.
Or why as ever Government policy is hellbent on protecting those who would inherit a family home from the impact of social care costs.
All at the expense of young people from less-moneyed backgrounds who stand no chance of ever buying their own home.
It’s all very feudal.
Most Britons are against inheritance tax paid by those who’ve done nothing to earn it.
Yet they will shake their fist at this week’s tax hike on others struggling just to get by – whether young wage earners or pensioners living off dividends.
I suppose we can’t see the wood for our own magic money trees.
From Monevator
How to read a bond fund web page – Monevator [12]
Is there a case for gearing up your investments? – Monevator [13]
From the archive-ator: Never say never again – Monevator [14]
News
Note: Some links are Google search results – in PC/desktop view you can click to read the piece without being a paid subscriber. Try privacy/incognito mode to avoid cookies. Consider subscribing if you read them a lot!1 [15]
Triple-lock pension guarantee to be temporarily suspended – Which [16]
UK house prices up 7.1% to hit new record high in August – ThisIsMoney [17]
‘Why have we not grown any giant companies?’: the UK’s attempt to take on Silicon Valley [Search result] – FT [18]
Brexit bungling sees EU nationals in the UK hit by status SNAFUs – Guardian [19]
Nuisance robo-calls could lead to multimillion-pound fines – Guardian [20]
Bitcoin crashes on first day as El Salvador’s legal tender… – BBC [21]
…but El Salvador’s president tweeted he bought the dip – via Twitter [22]
[23]
Rents outside London increase at the fastest rate for 13 years – Zoopla [24]
Products and services
A deep dive into Lloyds’ new £100 switching offer – Be Clever With Your Cash [25]
Nationwide to end free European travel insurance for FlexAccount customers – Guardian [26]
Sign-up to Freetrade via my link and we can both get a free share worth between £3 and £200 – Freetrade [27]
Six benefits of getting a Power of Attorney – Which [28]
Get up to £500 cashback when you transfer your pension to ii [Offer ends 30 September 2021] – Interactive Investor [29]
Homes fit for a start-up, in pictures – Guardian [30]
Comment and opinion
[31]
The US house price boom is small potatoes on the global stage – AWOCS [32]
The importance of drawdowns in retirement planning – Validea [33]
Hiding in the doing – My Quiet FI [34]
Allan Roth: Six things learned in business school that turned out to be absolutely wrong – Advisor Perspectives [35]
‘Bucketing’ a retirement portfolio in withdrawal mode – Humble Dollar [36]
Cripes, @ermine has bought [a bit of] Bitcoin – Simple Living in Somerset [37]
Research finds selective memory drives investor overconfidence – Ars Technica [38]
Future of funds mini-special
Direct indexing: the next big thing in passive investing [Podcast] – Oddlots [39]
Are funds still the future? – Morningstar [40]
Naughty corner: Active antics
The two types of investors – Compound Advisors [41]
Dave Nadig on apes, rocks, and the future of finance [/NFTs]… – ETF Trends [42]
…Seth Godin says such speculation is the new luxury good – Seth Godin [43]
Should we abandon fair value calculations? – Part One [44] and Part Two [45] by Klement on Investing
Was Ben Graham a quant? – Albert Bridge Capital [46]
Covid corner
Boris Johnson to publish Covid blueprint for ‘difficult’ winter – Guardian [47]
Rare heart inflammation side-effect dogs decision to vaccinate teens – BBC [48]
How Valencia crushed the coronavirus with AI – Wired [49]
When an athlete gets long Covid – ESPN [50] [hat tip Abnormal Returns [51]]
Kindle book bargains
Stuffocation: Living More with Less by James Wallman – £0.99 on Kindle [52]
The Basics of Bitcoin and Blockchains by Antony Lewis – £2.19 on Kindle [53]
Captivate: The Science of Succeeding with People by Vanessa van Edwards – £0.99 on Kindle [54]
The Smartest Guys in the Room: The Fall of Enron by Peter Elkind and Bethany McLean – £0.99 on Kindle [55]
Environmental factors
Space-based solar power will finish off fossil fuels – Charlie Stross [56]
There’s gold in green investing – Evidence-based Investor [57]
Off our beat
The exponential age will transform economics forever – Wired [58]
Study links too much free time to lower sense of well-being – Guardian [59]
One woman’s mission to rewrite Nazi history on Wikipedia – Wired [60]
Video games will change humanity as we know it – Bloomberg [61]
Can progressives be persuaded that genetics matter? – The New Yorker [62]
Why William Gibson is a literary genius – The Walrus [63]
The history of the Frappucino – History of Business [64]
How computationally complex is a single neuron? – Quanta [65]
“A stranger secretly lived in my home…” – Guardian [66]
And finally…
“I have an income nearly sufficient for my wants (no one’s income is ever quite sufficient, you know).”
– Anthony Hope, The Prisoner of Zenda [67]
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