It seems a long time ago now, but back in April 2025, the US raised trade tariffs aggressively. At the time, there was a lot of discussion about how much damage higher tariffs would do to global trade flows and global growth. 

For now at least global trade has held up better than we might have feared a year ago. The chart below shows global trade volumes over the past 25 years. On this measure, global trade volumes are running a little above long-term trends.

As you’d imagine, China has been an important part of this. The chart below shows Chinese exports globally and to the United States. There was a significant shift in trade flows – away from the US – in the wake of the 2025 tariff increases. In recent months, though, we’ve seen an increase in Chinese exports to the US. We think that’s a combination of increasing demand for capital goods, related to Artificial Intelligence (AI), and to legal challenges against US tariff policies.

But stronger exports aren’t just a China story. The chart below shows export growth for the UK, Germany and Korea. The impact of the AI boom is clearly reflected in strong Korean export growth, but we’ve also seen export growth accelerating for both the UK and Germany in recent months.

Where are these exports going? The US is still an important destination. The chart below shows the growth in imports of capital goods to the US, which are typically used in new manufacturing facilities. Growth in capital goods imports has correlated pretty well in the past with GDP growth. We’ve seen a significant acceleration in recent months, suggesting that US economic growth should hold up quite well going forward.

What does it mean for markets? Generally speaking you’d argue that stronger exports should mean stronger global growth and better corporate earnings. 

This relationship seems to hold pretty well for Emerging Markets (EM) in particular. The chart below compares the growth in EM exports with earnings growth for these markets’ equities over time. 

In 2026, it looks like EM earnings have grown even faster than export growth would suggest. We think that reflects the increasing importance of technology in Emerging Markets earnings. Replacing EM exports with Korean exports in this chart highlights the point, given the weight of tech hardware in Korean exports. Korean exports attract attention partly for their tech exposure, but also because they are among the most up-to-date macro data releases – coming usually only a few days after the end of the month.

So where does this get us? In a world with so much uncertainty, this trade data highlights some areas of strength in the global economy over the past few months. We think it also highlights how the AI theme is driving macroeconomic data as well as financial market returns. Spending on AI might account for close to half of current US GDP growth, according to some estimates. It remains a key focus of attention as we think about how to manage our exposure to this important trend.

The post The AI signal in the macro data appeared first on MoneyFarm Insights.

As September rolls in and the children go back to school, it’s a good time to reflect on what, other than education, can be the best things for setting them up for the best future possible. For parents, grandparents, or guardians looking to give children a financial head start, the Junior ISA (JISA) is one of the most powerful tools available in the UK today. 

Introduced in 2011 as the successor to the Child Trust Fund, the JISA allows families to save or invest up to £9,000 per year (2026/27 allowance) in a tax-efficient wrapper. The money grows free of income tax and capital gains tax, and when the child turns 18, it automatically converts into an adult ISA that they can access or continue to grow.

The core benefits of a Junior ISA

Before comparing the two main types, it’s worth highlighting the key benefits that apply to all JISAs.

• Tax-free growth: all interest, dividends, and capital gains earned within a JISA are completely tax-free. Over 18 years, this can add up to thousands of pounds in saved taxes. This is on top of an adult’s ISA allowance – so it’s a perfect way to protect more of your family’s wealth against tax.

• Generous annual allowance: families can contribute up to £9,000 per child, per year. For those who can afford to use the full allowance, that’s £162,000 saved over 18 years – before growth is even factored in. But no amount is too small: in fact small amounts, regularly and early, can still help to put your child on the best track possible to hit adulthood. Remember, it’s not just the parents who can contribute, grandparents (and anyone else for that matter) are able to contribute to your child’s future. For those lucky enough to have plenty of savings, if you combine both parents and a child’s allowance, you can shelter £49,000 per year, with extra increments for each child. With increasing taxes on wealth and more difficulty in passing wealth to the next generation, the Junior ISA is a great vehicle for parents, guardians or grandparents.

• Locked away until 18: unlike ordinary savings accounts, the money in a JISA cannot be withdrawn until the child turns 18. While this might feel restrictive, it’s actually a benefit: it ensures the pot is preserved for the child’s future, whether that’s higher education, a first car, or a deposit for a home – giving them the perfect headstart in life.

• Flexibility at 18: at adulthood, the JISA converts into an adult ISA automatically. The child can either keep the money invested tax-free, or use it towards immediate needs.

Why stocks and shares JISAs have the edge

On the surface, the choice seems simple: you can open a Cash JISA, which works much like a tax-free savings account, or a Stocks and Shares JISA, which invests in equities, bonds, funds, or other assets. But which is best for your child’s long-term future? 

While both types of JISAs carry clear advantages, the case for Stocks and Shares JISAs becomes particularly compelling when you take a long-term perspective:

Harnessing the power of compounding

Investing in Stocks and Shares JISAs allows money to benefit from the twin engines of growth and compounding. Historically, investments have shown that over long periods, they can outperform cash savings, particularly for those that have time to ride out the ups and downs of financial markets. Whilst past performance isn’t always an indicator of future performance, investing in a well diversified portfolio can help to boost your child’s start to adulthood.

For example, £10,000 in a Cash JISA growing at 3% per year becomes about £17,000 after 18 years, whereas £10,000 in a Stocks and Shares JISA growing at 6% per year becomes about £28,600 after 18 years.

Investing comes with risk, markets go up as well as down. The benefits of investing have been shown to be best experienced over the long term.

Protection against inflation

Cash is vulnerable to inflation. Even if a Cash JISA offers 3-4% interest, if inflation is running at 4-5% the child’s savings are losing value in real terms.

By contrast, equities represent ownership in companies, many of which can raise prices in line with inflation. This means they often preserve, and even grow, their real value over time.

Time horizon works in your favour

A JISA is locked away until age 18, which is a long-term time frame. Stock markets are volatile in the short run, but over periods of even 7+ years the probability of achieving positive returns rises dramatically.

Parents investing for a toddler, for example, can afford to ride out market cycles. Short-term dips matter less when the investment horizon is nearly two decades. 

Also, stocks and shares JISAs can be different risk levels, some with more investments into safer investments such as bonds and others with more exposure to stock market investments – with a whole mix in the middle. You can adjust the risk of a Stocks and Shares JISA as your child gets closer to their 18th birthday.

Building financial education

There’s also a softer benefit: opening a Stocks and Shares JISA can be a great way to teach children about investing. Parents can show them how markets rise and fall, explain the concept of dividends, and instil good financial habits.

Cash vs Stocks and Shares JISA – looking at an example

To illustrate the impact of compounding over 18 years, let’s imagine a parent contributes £50 per month (that’s £600 a year) from the day their child is born until they turn 18.

We’ll assume:

• Cash JISA grows at 3% per year (optimistic for cash savings over the long term).
• Stocks and Shares JISA grows at a conservative 6% per year (broadly in line with long-term stock market averages).

That’s a difference of over £5,500, simply by choosing to invest rather than save in cash.

Now imagine if a family were able to contribute £200 per month (£2,400 per year):

The difference here is more than £22,000, enough for a deposit on a first home or to cover a large chunk of university costs.

A balanced approach: blending cash and stocks

The decision doesn’t have to be either/or. Many providers allow you to split contributions between a Cash JISA and a Stocks and Shares JISA, provided the total annual allowance isn’t exceeded.

This can be useful for families who want:

• Safety net + growth potential: keeping some funds in cash provides security, while investing the rest allows for growth.
  
• Age-based strategy: younger children might have a higher proportion in stocks, shifting towards cash as they approach 18.

However, one thing to be conscious of, is that you can only have one of each type of JISA per child. So one Stocks and Shares JISA and one Cash JISA, but not two of the same type.

So, which one should I choose?

Junior ISAs are one of the most effective ways to give children a financial springboard. Both Cash and Stocks and Shares JISAs offer valuable tax-free growth and the discipline of locked-in savings.

However, when considering the long-time horizon, the threat of inflation, and the potential for compounding growth, the argument leans strongly in favour of Stocks and Shares JISAs. While Cash JISAs offer safety and predictability, their returns are unlikely to deliver the same wealth-building power.

For parents willing to embrace some investment risk, starting a Stocks and Shares JISA early could transform modest contributions into a meaningful nest egg. It’s not just about building savings, it’s about giving the next generation the best possible financial start in life.

We offer low cost managed Junior ISAs within our Wealth offering, each portfolio expertly managed by our investment team in the same way as our ISAs and Pension portfolios. For more details, you can go to our website or speak to our team.

The post How to choose the best JISA for your child appeared first on MoneyFarm Insights.

Welcome to a new episode of A Matter of Interest podcast, your fortnightly reality check on global markets, hosted by Moneyfarm. Every two weeks, Richard Flax (our Chief Investment Officer) and Jack Amy (our Quantitative Trading Analyst) cut through the noise to serve up fresh market trends, data-driven insights, and strategic takeaways, minus the textbook jargon.

In this episode we cover recent US fiscal and monetary policy decisions, then look at the growing regulatory pressure on Big Tech. Giving a bit more context, we explore what secret risks might be lurking in the US Treasury’s latest moves, why the Fed’s new stance could catch markets off guard, and whether multi-billion dollar fines and local data center pushback will actually dent Big Tech’s unstoppable momentum. Enjoy listening!

Key takeaways

• The new US policy landscape – from 0:28
• Big Tech’s momentum faces new challenges – from 17:26

You can also listen to the episode on Apple Podcast and YouTube.

The post When US policy meets Big Tech appeared first on MoneyFarm Insights.

Many parents and grandparents want to provide not only love and guidance but also a strong financial foundation for their children or grandchildren. Two popular UK investment options for achieving this goals are the Junior ISA and the Junior SIPP.

In this guide, we compare Junior SIPP vs Junior ISA, exploring their features, benefits, potential drawbacks, and scenarios in which each may be most suitable.

At a glance

Both are tax-efficient; choice depends on goals and time horizon.

Junior ISA: £9,000 annual allowance, tax-free growth, access at 18.

Junior SIPP: £2,880 annual allowance plus 20% tax relief, access from age 55 currently, rising to 57 from 6 April 2028.

What is a Junior ISA?

A Junior ISA (Individual Savings Account) is a tax-efficient savings or investment account for UK residents under the age of 18. It can be cash-based or invested in stocks and shares.

• Annual allowance: £9,000 for the 2026/27 tax year (unchanged since 2020/21)
• Tax treatment: No income tax or capital gains tax on returns
• Access: Funds available when the child turns 18
• Typical uses: University fees, first-home deposit, starting a business, or travel

What is a Junior SIPP?

A Junior SIPP (Self-Invested Personal Pension) is a pension savings account for a child, offering the same tax advantages as an adult SIPP but with contributions made by parents, relatives, or guardians.

• Annual allowance: £2,880, with 20% tax relief added by the government, taking the total to £3,600
• Tax treatment: No tax on investment growth; withdrawals taxed as income in retirement
• Access: From age 55 currently. Under rules confirmed by HMRC’s Pensions Tax Manual, the Normal Minimum Pension Age will rise to 57 from 6 April 2028; no further increase to 58 has been confirmed.
• Typical uses: Long-term pension planning, maximising the benefits of compound growth

Junior SIPP vs Junior ISA: full comparison

Example – Junior ISA

A parent invests £100 a month from birth until age 18 in a Stocks and Shares Junior ISA, with a 7% annual return:

• Total contributions: £21,600
• Estimated value at 18: ~£42,000
• Potential uses: University costs, house deposit, business start-up

Example – Junior SIPP

The same £100 monthly contribution to a Junior SIPP benefits from 20% tax relief, becoming £125 invested per month. Left untouched until age 60 at a 7% annual return:

• Total contributions (including tax relief): £27,000
• Estimated value at 60: £300,000+
• Potential use: Supplementing retirement income

Figures are illustrative only, assuming 7% annual growth. Actual returns will vary and are not guaranteed.

Practical example: splitting contributions between both accounts

The Bennett family wants to give their newborn daughter, Ava, both a flexible fund for early adulthood and a head start on retirement. They decide to contribute £150 a month between birth and age 18, split £100 into a Junior ISA and £50 (net) into a Junior SIPP, assuming 7% average annual growth:

Figures are illustrative only, assume constant 7% annual growth with no charges deducted, and are not a forecast. The example shows how allocating even modest sums to each account can build both a flexible fund for early adulthood and a head start on retirement — with the Junior SIPP portion left to compound untouched for several more decades before it can be accessed.

JISA or Junior SIPP – which is right for you?

Both Junior ISAs and Junior SIPPs (Self-Invested Personal Pensions) offer powerful, tax-efficient ways to invest for your child’s future. A Junior ISA is generally suited to medium-term goals like university or a first home, while a Junior SIPP is designed for long-term retirement planning.

Junior SIPP: You can contribute a maximum of £2,880 per tax year to a child’s SIPP, but you’ll benefit from 20% tax relief on contributions, bringing the total to £3,600 per year. It’s a longer-term option, as your child can’t access the money until later in life (currently age 57+), and the power of long-term compounding could make it a strong contender for building future wealth.know they can confidently manage their money and you’ve given them the best possible start in life.

Junior ISA: pay in up to £9,000 per tax year, tax-free growth, no capital gains or income tax, and your child can access the money at age 18. Ideal for education, travel, a deposit on a house, or even starting their own business. They can also transfer it to a standard ISA and keep investing after they turn 18.

Pros and cons

Teach your children  how money works

Creating wealth isn’t just about putting money away. It’s about mindset, too. As your children grow, helping them to understand how money works is just as important. Focus on teaching them how to budget, save, invest, and avoid bad debt.

Try these simple tips:

• Let them help you set a family budget.
• Use a pocket money account or app to teach saving, spending and giving.
• Introduce them to the concept of interest and investing using a simple app or calculator.
• Involve them in discussions about your own financial goals. Showing how you save or invest for life’s big events and purchases.

Build knowledge, not just their bank balance

Helping your children is about more than just a lump sum of money. It’s about giving them the tools, habits, and confidence to build their own financial future.

Small, regular contributions to a JISA or Junior SIPP are a great place to start. But the impact of your actions and teachings today could go far beyond childhood and into their adulthood, their retirement, and even into the lives of their own children.

On this Parents’ Day, consider starting that journey as soon as you can. And while setting up an account for them today is a great start, don’t forget to educate and involve them – the aim is to empower them for the future.

How to choose between a Junior SIPP vs Junior ISA

When deciding between a Junior SIPP vs Junior ISA, consider:

• Time horizon: will the funds be needed within 20 years (Junior ISA) or are you comfortable locking them away for decades (Junior SIPP)?
• Purpose: what is the main goal of this investment? Education, or a first home (Junior ISA) or retirement (Junior SIPP)?
• Balance: many families use both, allocating some funds to each for short- and long-term goals.

Key points to remember

• Both options offer tax-efficient growth and the potential for higher returns than traditional savings accounts.
• Junior ISA is more flexible, Junior SIPP benefits from government tax relief.
• Contribution limits and access rules differ significantly.
• Using both can balance medium-term needs and long-term financial security.
• Always consider your objectives, time horizon, and risk tolerance before investing.

Ready to get started? Contact Us

We make it easy to invest for your child’s future with a fully managed Junior ISA. You choose the monthly contribution, we do the rest – from selecting the right portfolio to managing it over time. And, when they’re ready, you’ll know they can confidently manage their money and you’ve given them the best possible start in life.

FAQ

The post JISA vs. Junior SIPP? How to Invest for Your Child’s Long-Term Future appeared first on MoneyFarm Insights.

In recent years, index funds have gained popularity among investors in the UK. These are passive investment vehicles that track the performance of a market index, such as the FTSE 100 or the S&P 500. Index funds offer a simple and efficient solution for those who want to diversify their portfolio without high costs.

In this comprehensive guide for 2026, we will look at what index funds are, how they work, what advantages and disadvantages they offer, and who they are best suited for. We will also provide some practical tips on how to integrate index funds into a long-term investment strategy.

What are index funds?

An index fund is a mutual fund or ETF (Exchange-Traded Fund), which is a passively managed financial instrument that replicates the performance of a benchmark index. This means that the fund manager does not actively select securities, but simply buys the same assets in the index, in the same proportions.

To give a concrete example, a fund that tracks the FTSE 100 holds shares in the 100 leading companies listed in London. This approach significantly reduces management costs, as no active selection or in-depth analysis is required. Here are some example of the best index funds in 2026, according to Morningstar:

• Fidelity 500 Index FXAIX
• iShares Core S&P 500 ETF IVV
• Schwab S&P 500 indexPX
• State Street SPDR Portfolio S&P 500 ETF SPY
• Vanguard S&P 500 ETF VOO
• iShares Core S&P Total US Stock Market ETF ITOT
• Schwab US Broad Market ETF SCHB
• State Street SPDR Portfolio S&P 1500 Composite Stock Market ETF SPTM
• T. Rowe Price Total Equity Market Index POMIX
• Vanguard Total Stock Market ETF VTI 
• Fidelity Large Cap Growth Index FSPGX
• iShares Core S&P US Growth ETF IUSG
• iShares Russell 1000 Growth ETF IWF
• Schwab US Large-Cap Growth ETF SCHG
• Vanguard Growth ETF VUG 

How do index funds work?

Before looking at when it is advisable to invest in index funds, it is important to understand how these financial instruments work. Specifically, when an investor buys shares in an index fund, the money is used to purchase all the components of the chosen index. The value of the fund therefore tends to closely track the performance of the index, net of management fees.

There are two main approaches to replicating an index:

• Physical replication: the fund directly purchases all the securities in the index, ensuring a direct and transparent match.
• Synthetic replication: the fund uses derivatives to achieve a return similar to that of the index without physically holding all the securities.

Generally, physical replication is more common in the UK, as they are considered clearer and more understandable for retail investors.

Why choose index funds?

There are many reasons for the growing popularity of index funds. First of all, index funds have low costs thanks to the absence of active management. In fact, with passive management, management fees are usually lower than those of traditional funds. In addition, it is possible to achieve broad diversification even with limited capital, accessing hundreds or thousands of securities through a single transaction. This makes investing simple and transparent, with an approach that allows you to clearly understand where your money is being invested.

In terms of performance, however, it has been observed that over the long term, many index funds manage to achieve results in line with or even superior to actively managed funds. This is due, in part, to lower costs and the efficient nature of the market. So, the key benefits in 2026 are:

• Low costs: index funds generally have lower management fees than actively managed funds, helping investors keep more of their returns.
• Diversification: with a single investment, you can gain exposure to hundreds or even thousands of companies or other securities, helping to spread risk.
• Simplicity: index funds follow a specific market index, so they are easy to understand and monitor.
• Transparency: you can clearly see which index the fund tracks and what type of assets it invests in.
• Long-term potential: by tracking the performance of a market or sector, index funds can offer the opportunity to benefit from long-term market growth.
• Easy access to global markets: you can use index funds to have access to markets and sectors around the world without having to select individual investments.
• Suitable for regular investing: index funds can be used for regular contributions.

Risks and limitations of index funds

Of course, index funds are not without risk. Their return is closely linked to the performance of the benchmark index: if the market falls, the fund will also suffer losses. Furthermore, there is no active attempt to mitigate such declines through dynamic management, as the fund strictly follows the composition of the index.

Another aspect to consider is the so-called tracking error, i.e. the difference between the fund’s performance and that of the index. Although the tracking error is generally low in index funds, it can still affect overall returns over time and this aspect must be carefully considered when selecting funds for your portfolio. Index funds offer several advantages, but they also come with some limitations.
Here is a summary of the main pros and cons to consider:

How to choose an index fund

Choosing an effective index fund requires attention to several factors. It is important to evaluate the index that the fund intends to replicate, for example, the FTSE 100 for the UK market, the MSCI World for investors with a global outlook, or other thematic indexes. Another key factor is the level of fees, often represented by the Total Expense Ratio (TER): the lower it is, the higher the net returns for the investor.

A good fund should also have a low tracking error, meaning that it should always replicate the index accurately. Other important indicators are the size and liquidity of the fund, as these characteristics affect the stability and ease with which you can enter or exit the investment.

So when choosing an index fund, it is important to consider a few key factors:

• The index: check which market, region or sector the fund tracks.
• Fees: compare the Total Expense Ratio (TER) and other costs.
• Tracking error: look for funds that closely follow their chosen index.
• Fund size: larger funds may offer greater stability and liquidity.
• Liquidity: check how easily you can buy or sell the fund.
• Diversification: consider how many securities and markets the fund covers.
• Risk: make sure the fund’s risk level matches your investment goals and time horizon.
• Fund provider: consider the provider’s reputation, experience and track record.

Index funds and ETFs: what are the differences?

Although they share the philosophy of passive investing, index mutual funds and ETFs have some practical differences. ETFs are traded in real time on the stock market, just like stocks, while traditional mutual funds are valued and purchased only once a day, based on their net asset value.

This feature makes ETFs more flexible for those who want more control over the timing of their trades, although it requires more attention in day-to-day management. Mutual index funds, on the other hand, may be more suitable for those who prefer a “set and forget” approach. If you want to discover more about ETFs, you can visit our dedicated page.

A practical example: investing in the FTSE All-World Index

Let’s now consider a practical example, assuming an investor who wants to gain broad geographical and sector exposure. An ideal solution could be an index fund that tracks the FTSE All-World. This index includes thousands of globally listed companies, covering both developed and emerging markets.

This gives investors access to a wide range of stocks in different countries and sectors through a single instrument, resulting in a naturally balanced portfolio that can reduce specific risk.

Index funds and long-term strategy

Index funds are particularly effective as part of a long-term investment strategy. They are ideal, for example, for pension plans or for gradually accumulating capital for future goals. Thanks to the power of compound capitalization, even small regular contributions can translate into significant returns over time.

Adopting a “buy and hold” approach, combined with regular purchases over time (accumulation plans), allows you to benefit from the average purchase cost. This makes it possible to reduce the impact of market volatility and improve the stability of returns over time.

Index funds are a simple, inexpensive, and effective solution for building a diversified portfolio. Although they are not risk-free, index funds are a valuable tool for those who want to invest for the long term without any complications.

Moreover, the growing popularity of index funds in the United Kingdom confirms the confidence that many savers have in these passively managed financial instruments, which are a useful and attractive option for balanced long-term investing.

Frequently Asked Questions

The post Investing in Index Funds: A Complete Guide for UK Savers appeared first on MoneyFarm Insights.

Pension income is taxable in the UK. Whether it is your State Pension, a workplace scheme or a private pension, the income you receive counts towards your annual taxable income.

At a Glance

• Pension income in the UK is taxable once your total income exceeds the personal allowance (£12,570 in 2026/27, frozen since 2021/22).

• The State Pension is included in your taxable income, even though tax is not deducted at source.
• You can usually take up to 25% of your pension pot tax-free from age 55 (rising to 57 by 2028).
• Tax relief is available on pension contributions, but the process depends on the type of scheme.
• Different pension types (state, defined benefit, defined contribution) have different rules and tax implications.

Will you pay income tax on your state pension?

The State Pension is taxable income, although tax is not deducted at source. You usually receive the full gross amount, and if your total income for the year exceeds the personal allowance (£12,570 in 2026/27), you may have to pay income tax on it.

Any income above this threshold is taxed at your marginal rate (20%, 40% or 45%) according to the UK income tax bands: 20% basic rate applies from £12,571 to £50,270, 40% higher rate from £50,271 to £125,140, and 45% additional rate on income above £125,140.

For any given tax year, your taxable income includes the following: 

• Your state pension
• Other pension payments you receive
• Any earnings from self-employment
• Any receivables from rentals
• Any interest from banks and building societies
• Receivables from investments

How Much of Your Pension Is Tax-Free? 

Pensions are not fully tax-free in the UK. From age 55 (rising to 57 in 2028), you can normally take up to 25% of your pension pot as tax-free cash. The remainder is treated as taxable income and will be taxed according to your income tax band when withdrawn. This 25% is capped in cash terms at £268,275 across all of your pensions for most people (Source: GOV.UK), so very large pension pots may not get the full 25% tax-free.

This tax-free amount can usually be taken either as a single lump sum or in stages, depending on your pension scheme rules. Any further withdrawals are subject to income tax.

Are other types of pension taxed as income?

Income tax is not deducted from your state pension. However, the full new state pension forms part of your total receivables.

According to GOV.UK, the full new State Pension for 2026/27 is £241.30 a week — £12,547.60 a year. This means that of your £12,570 personal allowance, someone receiving the full new State Pension has only £22.40 of tax-free headroom left before any other pension or income becomes taxable. This gap has narrowed sharply in recent years: the personal allowance has been frozen since 2021/22, while the State Pension keeps rising each April under the triple lock, so the two figures are now nearly level.

If you have other pensions that will use up this balance and exceed it, you will pay income tax on the excess pension income at the usual rates because the rates don’t change in retirement.

Practical example: State Pension plus a small private pension

Suppose Margaret receives the full new State Pension and also draws £5,000 a year from a small workplace pension. Here is how her tax bill for 2026/27 would be worked out:

This is a simplified illustration assuming no other income or reliefs apply; HMRC normally collects this tax by adjusting the tax code on the private pension, since tax is not deducted from the State Pension itself.

National Insurance Contributions Explained

You must pay National Insurance contributions during your working life, whether you are employed or self-employed. It starts from the age of 16 and remains a requirement until State Pension Age.

Employees pay Class 1 contributions, deducted automatically from earnings.

Self-employed workers with profits above £7,105 a year no longer pay Class 2 contributions directly — since April 2024, these are treated as paid to protect your National Insurance record (Source: GOV.UK). Those with lower profits can still choose to pay Class 2 voluntarily, currently £3.65 a week, to protect their record. Class 4 contributions, based on annual taxable profits above £12,570, are charged at 6% up to £50,270 and 2% above that — down from 9% before the April 2024 reform.

The Other Types of Pensions in the UK and Their Tax Treatment 

Aside from your state pension, the other pensions generally fall into one of two categories – defined benefits pensions and defined contribution pensions. 

Defined benefit (DB) pension schemes

A defined benefit pension (DB) scheme pays you a retirement income based on your salary plus how long you worked for your employer. These are also referred to as “final salary” and “career average” pension schemes.

You only generally encounter these in older workplace pension schemes or as pension schemes in the public sector. But either type can fall into the bracket of a pension taxed as income if it pushes your annual income over your personal tax allowance.

Defined contribution (DC) pension schemes

Defined contribution (DC) pension schemes, sometimes called “money purchase” pension scheme, are usually personal or stakeholder pensions. They might be:

• Workplace pensions organised by your employer
• Private pension schemes set up by you

The money paid into these types of schemes is put into investments like stocks and shares by your pension provider. The value of pension pots can appreciate or depreciate depending on how the products they are invested in perform. 

As you approach retirement (currently transitioning from age 66 to 67 — see below), providers may gradually shift your pot into lower-risk investments, though this is not automatic in all cases. You can also hold a Self-Invested Personal Pension (SIPP) alongside a workplace pension if you wish.

From age 55 (rising to 57 in 2028), you can usually take 25% of your pot tax-free, while the remainder is taxed as income when withdrawn.

OPEN A PRIVATE PENSION WITH MONEYFARM

Taxes on Pensions UK: State Pension vs Defined Benefit vs Defined Contribution

The State Pension age is no longer simply “66” for everyone: according to GOV.UK, the rise from 66 to 67 began in May 2026 for people born from 6 April 1960 onwards, who reach their own State Pension age at 66 years plus a number of months, with the increase completing by 2028.

Pension lump sums and taxation

Since the 2015 pension freedoms, individuals aged 55 and over (rising to 57 from 2028) can access savings from defined contribution pensions more flexibly. You are no longer required to buy an annuity or enter a drawdown plan. Instead, you can withdraw some or all of your pension pot.

Access to part of your pot will cause the remaining investments to appreciate, but a pension drawdown is required. 

Most people now take advantage of the 25% lump sum tax-free rule instituted in 2006, taking 25% of their pot without paying any income tax. However, the remaining 75% will be taxed as income under the annual tax threshold rules.

The position with defined benefit schemes is a little more complex. Whereas you still have the option to withdraw 25% as a tax-free lump sum, what happens with a defined benefit scheme is that something called the “commutation factor” comes into play. It is a factor that calculates the amount of income you will receive in retirement after taking a tax-free lump sum upfront.

Pension contributions and tax relief

You get tax relief on the contributions you make to your pension, but the way you claim it depends on the type of pension scheme in question.

The net pay system

Some workplace pensions use the net pay system, and you don’t need to do anything to ensure you get full tax relief. That’s because your pension contributions are deducted from your salary before income tax is paid, and your pension scheme provider automatically claims back the tax relief at the appropriate rate. You do not need to take any further action.

The relief at source system

This system is applied to all types of personal pensions and some workplace pensions. In other words, you should take note if you have a private pension via an insurance company or a SIPP (Self Invested Personal Pension).

If your contributions are made via your employer, they will take 80% of your contributions from your salary. It is referred to as “net of basic rate tax relief.”

Your pension scheme provider then issues a request to HMRC, resulting in an additional 20% tax relief being paid into your Pension. However, with tax relief at source systems, higher or additional rate taxpayers have to fill out a self-assessment tax return form to receive the extra tax relief they are entitled to.

In some cases pension contributions reduce your taxable income, but you will have to claim any tax relief over and above the basic rate by yourself.

Tax-Free lump sums

From age 55 (rising to 57 in 2028), you can usually take up to 25% of each pension pot as tax-free cash. The remainder is treated as taxable income when withdrawn. If you have multiple pensions, each may offer its own 25% tax-free entitlement, up to a combined lifetime cap of £268,275 for most savers (Source: GOV.UK).

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Scottish Tax Relief

The income tax bands in Scotland are slightly different from those in the UK. You can claim additional tax relief on:

• 20% up to the amount of any income on which you paid 40% tax
• 25% up to the amount of any income on which you paid 45% tax

As regards claiming additional tax relief on private pension contributions, you can claim:

• 1% up to the amount of any income on which you paid 21% tax
• 21% up to the amount of any income on which you paid 41% tax
• 26% up to the amount of any income on which you paid 46% tax

Withdrawals from private pensions are taxable, though there are strategies to reduce the overall tax burden.

Do I have to pay income tax on my pension if it is an ISA?

Individual Savings Accounts (ISAs) are not pensions but tax-efficient investment wrappers. Money held in an ISA grows free from both Capital Gains Tax and Income Tax, and withdrawals are also tax-free. This means that unlike pension income, which is taxable beyond your personal allowance, you do not pay income tax on money you take from an ISA. You also do not need to declare ISA holdings or withdrawals on your self-assessment tax return. 

However, contributions to ISAs do not benefit from tax relief in the way that pension contributions do. For example, payments into a Self-Invested Personal Pension (SIPP) attract tax relief, while ISA contributions are made from post-tax income (read more on how to invest in a SIPP and SIPP vs ISA).

There are several types of ISA that can support long-term saving. A Stocks and Shares ISA allows investments in funds, equities and bonds to grow in a tax-efficient way, while a Lifetime ISA (LISA) can be used to save for a first home or retirement, with a government bonus on contributions up to £4,000 per year.

ISAs therefore complement, rather than replace, traditional pensions:

• pensions usually offer more powerful tax advantages for retirement planning;
• ISAs provide greater flexibility, as savings can be withdrawn at any time without additional tax charges.

Many people choose to combine the two, using pensions for long-term income in retirement and ISAs for accessible, tax-free savings.

Key Takeaways

• Pension income in the UK is taxable once your total income exceeds the personal allowance (£12,570 in 2026/27).

• The State Pension counts as taxable income, but tax is not deducted at source.

• The full new State Pension (£12,547.60 in 2026/27) now leaves only about £22 of personal allowance headroom before other income becomes taxable (Source: GOV.UK).

• You can normally take 25% of your pension pot as tax-free cash from age 55 (rising to 57 in 2028).
• Pension contributions receive tax relief, though the process differs between the Net Pay and Relief at Source systems.

• The State Pension age is currently rising from 66 to 67, in stages between 2026 and 2028.

• National Insurance is not payable on pension income and stops at State Pension age.

FAQ

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For many UK investors, the idea of becoming an ISA millionaire may feel out of reach. Yet with consistent contributions and long-term planning, it is more achievable than ever.

According to HMRC, the most recent data — for the 2022/23 tax year, the latest year for which figures have been disclosed — puts the number of ISA millionaires in the UK at around 5,070, up roughly 5% on the year before (most are aged between 60 and 72, although the youngest ISA millionaire is 35): in this guide we will give you insight on how to become the next ISA millionaire.

At a Glance

• To become an ISA millionaire try to maximise your ISA allowance (£20,000 in 2026/27 tax year).

• Focus on Stocks and Shares ISAs for growth potential.

• Reinvest dividends to harness compound returns.

• Consistency and patience are key.

Invest Wisely: Let Your Money Propel You to ISA Millionaire Status

The first and most important tip is that you need to be putting your money to work. With the current inflation rate at 2.9% (Source: ONS, 12 months to July 2026), merely holding your money in cash may not be the best strategy for significant long-term growth because the presence of inflation can still lead to a gradual decrease in the real value of cash savings over time. Capital at risk.

For your ISA to reach £1 million you would need to invest the full £20,000 allowance for the 2026/27 tax year over roughly 26 years with an annual growth rate of 5% and if you were able to achieve returns of 7% the timeframe could fall to around 23 years, since no cash account offers interest rates anywhere near these levels it is important to consider your investment options.

A stocks and shares ISA is our recommendation as understanding the power of compound interest of a stocks and shares ISA and reinvesting dividends can accelerate your journey.

It is important to remember that all investments carry risk: the value of your investments may fall or rise, and you could receive back less than the amount originally invested.

If you’re aiming for significant enough returns, financial markets may be your best bet. Also, utilizing an ISA millionaire calculator can help you plan and track your progress.

Practical example: Sarah’s journey to £1 million

Sarah starts investing at 30, contributing £15,000 a year into a Stocks and Shares ISA and reinvesting all dividends, with an illustrative average annual growth rate of 6%. Here is roughly how her ISA could grow over time:

Figures are illustrative only, assume constant 6% annual growth with no charges deducted, and are not a forecast — actual returns will vary and are not guaranteed. The example shows how the bulk of the growth in the final decade comes from compounding on the contributions made in earlier years, which is why starting early matters more than the size of any single contribution.

Long-Term Vision: Building Your ISA Millionaire Portfolio

Becoming an ISA millionaire is a long-term goal. It typically takes decades of steady contributions and reinvested growth.

Avoid any kind of ‘get rich quick’ scheme or speculative trading. You can lose money with any investments, and backing the wrong horse on a speculative trading strategy can be disastrous. This extends to particularly volatile assets like cryptocurrencies or NFTs – people have made and lost a lot of money trading them, but we wouldn’t see them as part of any long-term strategy.

To safeguard your path to becoming an ISA millionaire, it’s crucial to avoid early withdrawals and short-term trading. These can significantly hinder the compound growth of a healthy portfolio. It’s important to take a long-term approach at all times and avoid being drawn into speculative trading.

How to Become an ISA Millionaire in 4 Steps

Step 1: Maximise Your Annual ISA Allowance

One of the most effective ways to build towards ISA millionaire status is to make the most of your annual ISA allowance. For the 2026/27 tax year, the allowance is £20,000. From 6 April 2027, confirmed reforms will cap the cash component of this allowance at £12,000 for savers under 65 (Source: GOV.UK), though the £20,000 combined limit is unaffected and Stocks and Shares ISAs — which matter most for this goal — keep their full allowance. Consistently investing close to this maximum each year can, over time, accelerate your progress towards a seven-figure ISA.

In practice, not everyone will be able to commit the full £20,000 annually. However, maximising contributions within your means remains valuable. Even smaller, regular amounts benefit from tax efficiency and compound growth over time.

Step 2: Put Lump Sums to Work

Lump sums, such as an inheritance or work bonus, can also be put to good use by spreading contributions across multiple tax years. For example, rather than holding £300,000 in cash, using the ISA allowance each year allows the funds to grow tax-efficiently, while reinvested dividends enhance long-term returns.

It is also worth remembering that the ISA allowance operates on a “use it or lose it” basis. Unused allowance cannot be carried over, so planning contributions before the 5 April deadline is essential. Whether your contributions are large or small, consistency and discipline are more important than reaching a specific figure.

Step 3: Stay Consistent and Avoid Withdrawals

Becoming an ISA millionaire is a long-term ambition, best approached with patience and realistic expectations. Few people will be able to invest £20,000 every year. Contributions of £5,000, or even less, can still result in a substantial ISA over time, provided they are made regularly and invested wisely.

Avoiding withdrawals is also fundamental, as this interrupts the compounding process that underpins portfolio growth. We recently produced a video explaining how important it can be for the value of your long-term investments. Watch it here.

Step 4: Focus on Long-Term Wealth, Not Just the “Millionaire” Label

The real focus should not be on the “millionaire” label, but on building sustainable wealth for the future. Consistency, diversification, and reinvesting dividends are the key drivers of long-term success. 

The journey towards an ISA millionaire portfolio is about financial wellbeing, not a single number. A disciplined strategy, aligned with your goals and risk tolerance, will leave you better positioned for retirement and other long-term needs.

You can speak to a consultant who can help you create a plan that fits your long-term goals and financial situation.

Financial Planning: The Backbone of Your ISA Millionaire Ambition

You won’t become an ISA millionaire without some careful financial planning. Without it, you might have to commit the cardinal sin of having to withdraw your returns to pay for unplanned events. No one is exempt from falling foul of unexpected events that need money to cover them. The more well-off you are financially, the higher these unforeseen costs can be.

The place to start is by creating a budget. This budget needs to include all of your regular expenses and expected income. Only by establishing a budget can you accurately determine the amount of disposable income remaining once all expenses have been accounted for.

Firstly, before you earmark any surplus for investing, you should create an emergency fund, even if you are relatively wealthy. Regard your emergency fund as a short-term investment. It’s there to be tapped into when necessary, and the most popular vehicle for this type of short-term saving is an easy or instant-access savings account. Once you tap into the fund, you should top it up again, or it will surely dwindle away. This, too, should be a feature of the budget plan you create.

Having a healthy emergency fund means that you can safely invest the rest of your income in, say, a stocks and shares ISA as a long-term investment. By keeping all returns inside the tax wrapper, compound interest can get to work and help you along the road to one day becoming an ISA millionaire or at least being very comfortably positioned when retirement finally comes around.

Key Takeaways

• Maximising your ISA allowance each year can accelerate progress towards £1 million, but even smaller contributions build over time.
• Stocks and Shares ISAs offer higher growth potential than cash, though returns are not guaranteed.
• Reinvesting dividends is essential to benefit fully from compound growth.
• The journey typically takes decades, and the timeframe depends on market performance as well as contribution levels.
• Diversification, consistency, and patience are fundamental

• From 6 April 2027, only £12,000 of the £20,000 ISA allowance can go into cash if you’re under 65 (Source: GOV.UK) — a reason to plan any large cash holdings destined for a Stocks and Shares ISA sooner rather than later.

FAQ

The post How to Become an ISA Millionaire: The Complete UK Guide appeared first on MoneyFarm Insights.

Are you thinking about gifting money to children but unsure of the tax implications? Understanding the rules around financial gifts, and how they interact with inheritance law and Inheritance Tax, is essential to making the most of your gift.

In this guide, updated for the 2026–27 tax year according to Government rules, we explain the main factors to consider before making a gift, from annual exemptions to the seven-year rule, and how to choose the most effective and tax-efficient way to give money to your children.

Inheritance tax (IHT) in short: what it is and how it works

Inheritance tax (IHT) is a taxation on the value of a person’s estate, calculated at the time of death, and includes real estate, savings, investments and other assets. In the United Kingdom, the amount payable depends on:

• the size of the estate
• deductions, thresholds and allowances
• how the assets are distributed

Key thresholds and deductions for 2026-27

• Nil-Rate Band (NRB) of £325,000 for each person. If the value of the estate is less than this amount, no inheritance tax is payable.

• Residence Nil-Rate Band (RNRB), of £175,000 on top of the NRB, which applies if you transfer your main residence to a direct descendant (e.g. a child or grandchild). The RNRB is not automatically available when you leave your main residence to a child or other direct descendant. Certain conditions must be met, and the allowance cannot be more than the value of the qualifying residence. The RNRB is also reduced for estates worth more than £2 million, by £1 for every £2 above this threshold.
• Couples’ allowance: married couples and civil partners can combine their NRB and RNRB, potentially transferring up to £1 million tax-free. Any allowance not used by one partner can be transferred to the other.

Standard IHT rate

The standard IHT rate is 40% on the value of the estate exceeding the available allowances, reducible to 36% if at least 10% of the net estate is left to charity.

Some transfers and assets can be exempt from IHT or benefit from specific reliefs:

• Spouse or civil partner: transfers between spouses or civil partners are generally exempt from IHT, with no value limit. But special rules can apply where one spouse or civil partner is not a long-term UK resident. Since 6 April 2025, long-term UK residence has replaced the previous domicile-based rules for these purposes.
• Charitable gifts: gifts and bequests to qualifying charities are generally exempt from IHT. There is no general value limit on the charitable exemption. In addition, leaving at least 10% of the relevant net estate to qualifying charities may reduce the IHT rate from 40% to 36%.
• Business and agricultural property: certain qualifying business and agricultural assets can benefit from Business Property Relief (BPR) or Agricultural Property Relief (APR). From 6 April 2026, 100% relief is generally available on up to £2.5 million of qualifying agricultural and business property, with qualifying value above this amount generally receiving 50% relief. The £2.5 million allowance can also be transferable between spouses and civil partners in certain circumstances.

Gifting money to your children: 2026-27 rules and legal procedures

Many parents and grandparents choose to leave money to their children after their death. It is a convenient way of investing for children. But there is a growing trend to gift money before parents or grandparents die. Many give the gift of premium bonds to children, others may decide to open a child’s savings account.

Whether you decide to gift money to children through your last will and testament as part of your estate or earlier, you need to know how to navigate the tax rules. So first, let’s look at inheritance tax, sometimes referred to as hereditary tax in the UK.

Can I gift money to my children via my last will and testament?

Yes, you can, and there is one important, fundamental rule whereby inheritance tax gifts to children will be exempt from inheritance tax (IHT for short) if the total value of your estate is less than £325,000.

This is the inheritance tax allowance if no property is included in the estate. If property is included, the allowance increases to £500,000. Any excess over and above these allowances, and the answer to the question, “How much inheritance tax will be deducted,” is 40%, unless the excess goes to your spouse, civil partner, a charity, or an amateur community sports club.

It’s also worth knowing that if the IHT threshold belonging to your spouse or civil partners wasn’t used to its maximum, the unused value could be added to your own IHT threshold. Technically, any money you bequeath in your will is not counted as a gift but as part of your estate and is subject to inheritance tax rules.

UK rules outside inheritance tax to gift money to your children

How much money can you gift your children or grandchildren tax-free while you are still alive? It varies, as you will see when you read on, but you need to be aware that it can be subject to tax as a Potentially Exempt Transfer (PET) depending on the amount, and something called the 7-year rule.

If you die 7 years or more after you have gifted money to your children or grandchildren, it will not be subject to IHT. However, inheritance tax could be due if you die before seven years have elapsed.

So, if you’re asking yourself, “Can I gift money to my children tax-free?” – you can, but it depends on something called “taper relief”. In terms of years before your death, the rate at which taper relief comes into play is as follows:

PET taper relief only comes into consideration when the total amount of money gifted during the seven years preceding your death is over the £325,000 threshold.

Impact on family assets and estate planning

If you regularly make the most of your £3,000 per annum tax-free gift allocation, it’s important to fully understand the 7-year rule because it could potentially impact both the family assets and your estate planning. The more you gift, the less your estate could be worth, but on the other hand, the longer you survive such gifts, the less IHT tax will be due.

How much can you gift tax-free?

There is no general limit on how much money you can give to your children during your lifetime. But gifts that are not covered by a specific exemption may have Inheritance Tax implications if you die within seven years.

The annual exemption is currently £3,000 per tax year: this is a total allowance for the donor. If you have more than one child, you can divide the £3,000 allowance between them in whatever way you choose.

If you do not use the full £3,000 annual exemption in one tax year, you can carry the unused amount forward to the following tax year only. This means that, if you have not used your previous year’s allowance, you could potentially make gifts of up to £6,000 covered by the annual exemption in one tax year. The previous year’s unused allowance must be used after the current year’s £3,000 exemption.

What other gifts for children are tax free?

As mentioned earlier, you can bequeath your children or grandchildren up to £325,000 tax-free in your will as part of your estate. 

But, of course, your estate also covers other things. When considering gifts and inheritance tax relating to your estate, it’s not only money you can include. Other things apply too, such as property and land, personal items (antiques, furniture, jewellery, etc.), and stocks and shares listed on the LSE.

Wedding gifts- including civil partner agreements

If you are planning to give money to your child, grandchild or another family member as a wedding or civil partnership gift, the gift may be exempt from Inheritance Tax (IHT), provided it meets the relevant conditions. For the 2026–27 tax year, the wedding and civil partnership gift exemption allows you to give:

• £5,000 to your child
• £2,500 to your grandchild or great-grandchild
• £1,000 to any other person

The wedding or civil partnership gift exemption can be combined with other IHT gift exemptions, such as the £3,000 annual exemption. But it cannot be combined with the £250 small-gift exemption for the same thing. For example, if your child is getting married, you could potentially give them a £5,000 wedding gift plus up to £3,000 using your annual exemption.

Paying regular gift money to your children

You can also regularly gift money to children to help with their costs of living. There is no ceiling to this, and it’s tax-free, provided you can afford such payments and pay them out of your regular monthly income, on which of course you have already paid tax.  This “normal expenditure out of income” gift can be used to pay for the following.

Can I gift money to my children for education or housing?

Two of the biggest financial challenges any child will face in their lifetime are the cost of education and rent costs. Regular gift money can be offered to help with both, and this can come from parents and grandparents.

Providing a monthly allowance for children who become university students can be of huge benefit to the child. But because grandparents want to ensure that the money is used for the right causes and is not just frittered away, you might want to pay for specific expenses such as accommodation or monthly supermarket bills. Whatever you decide as a grandparent, it’s a good idea to have a discussion with the child’s parents first.

Gifting money into a child’s savings account

It is also possible to gift money to a child’s savings account, but it is important to choose the right type of account. Ordinary savings accounts for children and babies often offer low interest rates and risk losing value in real terms due to inflation. 

For long-term savings, you may want to consider tax-efficient options such as a Junior ISA (annual allowance of £9,000 for 2026-27) or a bare trust, which can offer better growth potential and protect returns from tax.

The amount you can give also depends on the source of the funds:

• contributions from excess income that are paid regularly: these benefit from the exemption for normal expenses charged against income and are immediately excluded from the estate for inheritance tax purposes;
• contributions from savings or capital may be subject to other IHT rules, such as the annual exemption of £3,000 or the seven-year rule.

Key differences between regular lifetime donations and inheritance

When should you start gifting money to children?

There is no single best time to start giving money to your children. Starting early can allow children to benefit from financial support or, where money is invested, from a longer investment period and the potential benefits of compound growth. But investments can fall as well as rise, so returns are not guaranteed. So, you should remember:

• Start early if possible, the earlier you begin, the more time investments have to grow, and the greater the potential benefit from compounding.
• Consider a Junior ISA (JISA): annual allowance is £9,000 for 2026–27.
• Cash JISA: lower risk, but interest rates may be modest and could be eroded by inflation.
• Stocks and Shares JISA: potentially higher returns over the long term, but carries investment risk.
• Use available exemptions and allowances: combine JISA contributions with other tax-free gift allowances (e.g., £3,000 annual exemption) where appropriate.

When investing money for a child, it is important to consider both the level of risk you are comfortable with and how long the money can remain invested. A longer investment horizon can provide more time to manage short-term market fluctuations, but investment returns are never guaranteed. How to mitigate risks:

• Diversify across different asset types.
• Invest for the long term; JISA funds are locked until the child turns 18.

If you are unsure how to invest or make the best use of allowances, consult an FCA-authorised financial adviser.

Frequently Asked Questions

The post Inheritance and Gifting: How to Gift Money to Your Children Legally appeared first on MoneyFarm Insights.

In today’s financial climate, characterised by uncertainty, inflation and often volatile markets, long-term investing is one of the most effective strategies for building, maintaining and growing your wealth. For investors in the UK, this approach allows you to better weather economic turbulence and also offers significant tax advantages and growth opportunities.

This in-depth guide aims to provide a clear, accessible and comprehensive overview of long-term investing, explaining its characteristics, benefits and best strategies, with a specific focus on the UK context.

What does long-term investing mean?

Long-term investing refers to the buying and holding of financial instruments for an extended period of time, typically longer than five years. It is an approach that favours consistency and patience over speculation, with the aim of benefiting from the overall growth of the economy over time.

Unlike speculative strategies or short-term investments, long-term investing is based on the assumption that markets, despite temporary fluctuations, tend to grow over the long term. This view allows investors to look beyond moments of crisis or market corrections and focus on long-term financial goals, such as retirement, buying a second home or building an inheritance.

Long-term investing has several important characteristics that make it different from short-term investing:

• Long investment period: long-term investments are usually held for more than five years. This gives the investment more time to grow and recover from temporary market falls.
• Patience and consistency: it requires patience. You should not react to short-term market movements but stay focused on your financial goals.
• Diversification: you can spread your money across different assets, sectors or markets. This can help reduce the risk of losing money.
• Regular investing: you can add money regularly, for example every month. This can help you build wealth gradually and reduce the impact of investing at the wrong time.
• Focus on long-term goals: the main aim is to build wealth over time for important goals, such as retirement, buying a property or leaving an inheritance.

The benefits of long-term investing

Choosing to invest with a long-term strategy offers several advantages. One of the main drivers of long-term capital growth is compound interest. This approach involves reinvesting the interest earned on an investment, which in turn generates further gains. With compounding, the longer you remain invested, the more this effect is amplified. Albert Einstein is said to have called compounding the eighth wonder of the world, and with good reason: over the years, even small investments can turn into considerable sums.

Financial markets are inherently volatile, influenced by political events, macroeconomic changes and geopolitical dynamics. However, history shows that investors who remain calm and stay invested during times of crisis tend to be rewarded in the long run. For example, the FTSE 100 index has shown an overall upward trend over the decades, despite financial crises, Brexit and pandemics.

The UK offers a number of tools that reward long-term investment, such as Individual Savings Accounts (ISAs) and Self-Invested Personal Pensions (SIPPs). ISAs allow you to invest up to £20,000 per year without paying tax on the profits. Personal pensions, on the other hand, offer significant tax advantages both during the contribution phase and when the capital grows.

A practical example of long-term investing

Here we are a practical example: imagine investing £200 a month in a diversified investment fund for 20 years. You would contribute a total of £48,000 over the period.

If the investment achieved an average annual return of 5%, your investment could grow to around £82,000 after 20 years. This means around £34,000 of the final amount would come from investment growth rather than your own contributions.

This is only an example, you should consider also that investment values can go down as well as up, and fees, taxes and inflation can affect the final amount. But the example shows how regular investing can make a significant difference over a long period.

Long term investing strategies

There are several strategies you can adopt to invest effectively for the long term. Here are the factors to consider before evaluating a long-term investment.

You should also choose the right asset allocation to match investments with your risk level and goals, considering also to build an emergency fund.

1. Portfolio diversification

One of the best-known principles in finance is: “don’t put all your eggs in one basket”. Diversification involves spreading your investments across different asset classes (equities, bonds, real estate, commodities, etc.) and economic sectors in order to reduce the overall risk of your portfolio. In the long term, a diversified portfolio tends to be more stable and resilient.

2. Regular investment (pound-cost averaging)

Investing fixed amounts on a regular basis, regardless of market performance, is a strategy known as pound-cost averaging. This method involves buying more units when prices are low and fewer when they are high, reducing the average purchase price over time. It is an effective technique for avoiding investing all your capital at unfavourable times and for disciplining your approach to investing.

3. Periodic rebalancing

Some investments in your portfolio may grow more than others over time, altering the initial balance of the portfolio and, consequently, the level of risk. Rebalancing means returning the proportions between the various asset classes to the desired levels by selling excess instruments and buying those that are lacking. This allows you to maintain consistency with your risk profile and investment objectives.

4. Keep your emotions in check

One of the most common mistakes investors make is letting their emotions guide them. Fear during market downturns and euphoria during periods of growth can lead to impulsive and damaging decisions. Long-term investors have the advantage of being able to take their time to reflect and act according to a rational strategy rather than momentary market fluctuations.

Long-term investing: which instruments to consider in the UK?

To invest for the long term in the UK, you can choose between different types of assets that lend themselves to this approach, or choose a diversified investment fund with different asset classes already included.

1. Shares and equity funds

Shares represent ownership stakes in listed companies and, historically, are among the most profitable instruments in the long term. They can be purchased individually or through mutual funds and index funds, which offer greater diversification. Investors may also consider ETFs (Exchange-Traded Funds), which combine diversification and low management costs.

2. Bonds and Gilts

Bonds are debt instruments issued by governments or companies. Gilts, in particular, are bonds issued by the British government. They offer more stable returns and lower risk than equities, so they can be a good addition to a balanced portfolio.

3. Property investments

Property is traditionally one of the most popular forms of investment in the UK. Property can generate a steady stream of rental income and appreciate in value over time. Alternatively, you can invest in the sector through REITs (Real Estate Investment Trusts), as they offer greater liquidity and accessibility.

4. Pension accounts (SIPPs and workplace pensions)

In the UK, contributing regularly to a personal or company pension is one of the smartest forms of long-term investing. Contributions are often tax-deductible, and the funds grow in a tax-advantaged environment. When you retire, you can access your capital flexibly, benefiting from additional tax advantages.

Overcoming crises with a long-term view

Many investors abandon the market in times of crisis, driven by fear of losing everything. However, history shows that markets tend to recover over time, and that crises can offer opportunities to buy at favourable prices. Maintaining a long-term view helps you weather uncertainty with greater peace of mind.

This remains particularly relevant in 2026, as financial markets continue to face geopolitical tensions, higher and volatile energy prices, inflation concerns and uncertainty around interest rates. Patience and consistency pay off.

Long-term investing is not just a financial strategy, but also a philosophy that rewards discipline, foresight and trust in market mechanisms. For UK savers, it represents a practical way to achieve long-term financial goals while benefiting from tax-efficient tools.

With proper planning, good diversification and the support of qualified advisors, long-term investing can become a pillar of your financial security. Start investing in your future today: time is your most powerful ally.

Long-term investing vs short-term investing

Long-term and short-term investing have different objectives, time horizon and levels of risk. Long-term investing generally means keeping money invested for at least five years, giving investments more time to recover from short-term market fluctuations. Short-term investing, on the other hand, focuses more on near-term opportunities and usually requires greater attention to market movements.

Long term investing for beginners

Starting to invest for the long term does not have to be complicated. The first step is to understand your financial goals, investment timeframe and attitude to risk. Beginners should focus on building a simple and diversified portfolio.

A few basic principles can help:

• Start with an affordable amount: invest only what you can comfortably set aside after covering your everyday expenses and emergency savings.
• Invest regularly: monthly contributions can help you build your portfolio gradually.
• Diversify: spreading your money across different assets and markets can help reduce risk.
• Think long term: avoid making decisions based on short-term market rises and falls.
• Review your investments: check your portfolio from time to time to make sure it still matches your goals and risk level.

For UK beginners, ISAsand pensions can also be useful tax-efficient options for long-term investing. The key is to start with a clear plan, keep costs under control and remain consistent over time. You can do this with Moneyfarm in a easy and transparent way.

Frequently Asked Questions

The post A complete guide to long-term investing for UK investors appeared first on MoneyFarm Insights.

ISAs (Individual Savings Accounts) are one of the UK’s most powerful vehicles for tax-efficient saving and investing. With generous tax advantages and a wide range of account types, they can help you build wealth over time, provided they are used wisely.

However, many savers and investors make costly ISA mistakes that can reduce returns, trigger avoidable tax, or even lose the benefit of an annual allowance.

In this Moneyfarm blog we will take a closer look at the most common ISA investing mistakes and how you can avoid them.

1. Failing to Use Your ISA Allowance Before the Deadline

Every UK resident over 18 is entitled to an annual ISA allowance of £20,000 for the 2026/27 tax year — the same amount that has applied since 2017/18.

The allowance operates on a ‘use it or lose it’ basis: if you don’t use your full allowance by 5 April, you can’t roll it over into the next year.

This is set to change, however: under ISA reforms confirmed in the Autumn Budget 2025 ISA reform factsheet (GOV.UK), from 6 April 2027 the cash component of the allowance will be capped at £12,000 for savers under 65, while the £20,000 cash limit is retained for those aged 65 and over. The overall combined ISA limit stays at £20,000 either way.

Example: Lisa, 34, planned to invest £5,000 in her Stocks & Shares ISA but missed the deadline. That unused allowance was lost permanently, along with the opportunity to protect those savings from tax.

Tip: Set a reminder for mid-March and review your finances in advance to make additional contributions where possible.

2. Selecting the Wrong ISA Type for Your Goals

ISISAs serve different purposes, and choosing the wrong type may lead to missed opportunities or unnecessary risk.

The Lifetime ISA in particular may not stay in its current form for much longer: the government has proposed replacing it with a new First-Time Buyer ISA focused solely on property purchases, removing the pension-savings option and the early-withdrawal penalty entirely. A public consultation on the First-Time Buyer ISA (GOV.UK) closed in mid-August 2026. Existing Lifetime ISAs will continue to operate as normal while the details are finalised, and current LISA holders are not expected to be able to transfer their savings into the new product.

Example: Alex, 40, kept all his long-term savings in a Cash ISA earning 1.5% interest. Over 10 years, he missed out on the compounding growth that a diversified Stocks & Shares ISA might have delivered.

Tip: Match your ISA choice to your time horizon and risk tolerance. For short-term goals, a Cash ISA may be appropriate. For long-term growth, a diversified Stocks & Shares ISA is often more suitable.

3. Overlooking Fees and Charges

While ISAs themselves are tax-free, investment platforms and fund managers may charge fees, which can significantly reduce returns over time.

Charges to look out for include:

• Platform fees
• Fund management fees (Annual Management Charges, or AMC)
• Exit charges (on transfers or withdrawals)

Example: Claire opened a Stocks & Shares ISA with a major provider but did not realise she was paying 1.2% in ongoing charges. Over 10 years, those charges reduced her returns by more than £5,000 on a £30,000 investment.

Tip: Always review the fee structure before investing. Even small differences in charges can make a substantial impact over time.

4. Not Reviewing or Rebalancing Your Investments

Many ISA investors adopt a “set and forget” approach to their portfolios. However, markets can be turbulent, and investment strategies should be reviewed and adjusted accordingly.

Example: David, 55, invested heavily in technology stocks in 2021. Following the market correction in 2022, his ISA fell by 18%. Regular portfolio reviews could have helped him reduce risk and rebalance his holdings.

Tip: Review your ISA portfolio at least annually. Rebalance where necessary to keep your investments aligned with your risk profile and long-term objectives.

5. Withdrawing Funds Without Understanding the Rules

Not all ISAs allow you to withdraw funds and replace them without affecting your annual allowance. Only Flexible ISAs permit this feature, and many ISAs are not flexible.

Example: Priya withdrew £3,000 from her ISA for an emergency expense. A month later, she attempted to replace the funds, only to discover she had already used her annual allowance and was unable to do so.

Tip: If flexibility is a priority, confirm that your ISA is designated as “flexible” before making a withdrawal.

6. Transferring ISAs Incorrectly

You can transfer ISAs between providers to obtain better rates or features, but this must be done through a formal ISA transfer rather than by withdrawing the funds directly.

From 6 April 2027, the rules around transfers will also tighten as part of the ISA reform’s anti-circumvention measures: transfers from a Stocks & Shares or Innovative Finance ISA into a Cash ISA will no longer be permitted, though transfers in the other direction will remain possible (Source: GOV.UK). This restriction will not apply to savers aged 65 and over.

Example: Tom wanted to switch providers, so he withdrew £20,000 from his ISA and opened a new account. As he had not requested a formal transfer, the new deposit counted towards his annual allowance, preventing him from making further contributions that year.

Tip: Always initiate ISA transfers through your new provider, who will manage the process while preserving your tax-free status.

7. Keeping All Savings in Cash Long-Term

Cash ISAs provide security and easy access, but over long periods their returns may fail to keep pace with inflation. This means that while your balance grows, the real value of your money could decline.

Example: Emma, 38, kept £15,000 in a Cash ISA for over a decade. With interest averaging 1%, her savings grew slowly, while inflation rose by more than 2% each year. In real terms, her purchasing power fell.

Tip: Use Cash ISAs for short-term savings or emergency funds, but consider Stocks & Shares ISAs for long-term goals where growth potential is important.

8. Ignoring Inheritance Tax Treatment

Although ISAs are tax-efficient during your lifetime, they usually form part of your estate for Inheritance Tax (IHT) purposes. This means they may be taxable on death, which can come as a surprise to many investors. The main exception is the Additional Permitted Subscription (APS), which allows a surviving spouse or civil partner to inherit the ISA allowance.

As things stand, the standard Inheritance Tax nil-rate band is £325,000, rising to as much as £500,000 when the additional residence nil-rate band applies to a main home left to children or grandchildren (Source: GOV.UK). Estates above this threshold are generally taxed at 40% on the excess, and ISA holdings count towards that total.

Example: After Mark passed away, his £50,000 ISA was included in his estate and counted towards IHT. His wife, however, was able to use the Additional Permitted Subscription rules to continue sheltering the funds in her own ISA.

Tip: If estate planning is a priority, factor in how your ISA will be treated on death and consider professional financial advice to explore available allowances.

Practical example: preparing for the 2027 cash ISA reform

Suppose a saver under 65 currently puts their full £20,000 annual allowance into a Cash ISA. From 6 April 2027, only £12,000 of that allowance can go into cash — here is how their options change:

This is a simplified illustration based on the rules confirmed in the Autumn Budget 2025 and is not financial advice. Savers who rely on the full £20,000 cash allowance may want to start thinking, well ahead of April 2027, about how much of their new savings they are comfortable moving into stocks and shares.

Making the Most of Your ISA

Avoiding common mistakes can make a substantial difference to the long-term growth of your savings. Whether you are preparing for retirement, saving towards a first home, or aiming to make your money work more efficiently, using your ISA appropriately is essential.

Tax-efficient growth is a valuable benefit, but it only delivers its full potential when combined with fully informed decisions and a disciplined approach.

If you are uncertain whether your current ISA arrangements align with your objectives, consider seeking guidance from a regulated financial adviser who will help ensure that your strategy remains effective and well-suited to your circumstances.

Key Takeaways

• Use your ISA allowance before the 5 April deadline — it cannot be rolled over.
• Select an ISA type that suits your savings goal, whether short-term security or long-term growth.
• From 6 April 2027, only £12,000 of the £20,000 allowance can go into a Cash ISA if you’re under 65 — plan ahead for where the rest will go (Source: GOV.UK).
• The Lifetime ISA may be replaced by a new First-Time Buyer ISA; existing LISAs continue as normal for now.
• Be aware of all charges, even small percentage fees compound into large sums over time.
• Review your portfolio annually and rebalance to stay on track with your risk profile.
• Confirm whether your ISA is flexible before withdrawing funds.
• Always transfer ISAs through the new provider to avoid losing tax benefits.
• ISAs do not usually avoid Inheritance Tax, except through spousal Additional Permitted Subscriptions.

Frequently Asked Questions

What is the ISA allowance for 2026/27?

The overall ISA allowance for the 2026/27 tax year is £20,000, unchanged from previous years. From 6 April 2027, however, the cash portion of this allowance will be capped at £12,000 for savers under 65, following reforms confirmed in the Autumn Budget 2025.

Is the Lifetime ISA being scrapped?

Not immediately. The government has proposed replacing it with a new First-Time Buyer ISA focused on property purchases, and closed a public consultation on the plan in mid-August 2026. Existing Lifetime ISAs continue to operate under the current rules while the details are worked out.

Do ISAs form part of my estate for Inheritance Tax?

Yes. ISAs are generally included in your estate for Inheritance Tax purposes and are taxed at 40% above the standard nil-rate band of £325,000 (up to £500,000 with the residence nil-rate band), except where a surviving spouse or civil partner uses the Additional Permitted Subscription to inherit the ISA allowance.

Can I pay into more than one ISA of the same type in a tax year?

Yes. Since 6 April 2024, savers have been able to open and pay into multiple ISAs of the same type in a single tax year, as long as the combined contributions stay within the overall £20,000 allowance (Source: legislation.gov.uk).

What happens if I transfer my ISA incorrectly?

If you withdraw funds and deposit them into a new ISA yourself, rather than requesting a formal transfer through your new provider, the deposit counts as a new contribution against your annual allowance and you lose the continuity of your tax-free status.

The post 8 ISA Investing Mistakes to Avoid: A Practical Guide to Smarter Tax-Free Savings appeared first on MoneyFarm Insights.

Having a balanced portfolio is an effective way to manage risk and support long-term growth, whether you’re just starting your investment journey or managing your long-term savings.

But what exactly is a portfolio, and what does “balanced” really mean in the context of your financial life?

In this Moneyfarm blog we’ll explore the answers by using practical examples, age-specific strategies, and straightforward tips to help you build a healthier investment mix.

At a Glance

• A balanced portfolio spreads risk across asset classes.
• The right mix depends on age, goals, and risk tolerance.
• Regular reviews and rebalancing help keep portfolios aligned.
• Capital at risk. Returns are not guaranteed.

What Is a Portfolio?

In simple terms, your investment portfolio is the total collection of assets you own, such as:

• Cash holdings
• Shares or investment funds
• Bonds or Gilts
• Property funds
• Commodities (i.e. gold or oil)

Your portfolio shows how your assets are allocated and the level of risk and potential return you are exposed to.

What Does “Balanced Portfolio” Mean?

A balanced portfolio spreads investments across different asset classes to help reduce overall risk and improve long-term stability.

By combining higher-risk assets (such as equities) with lower-risk ones (such as bonds or cash savings), a balanced approach can help manage volatility and support more stable long-term outcomes. However, returns are not guaranteed.

For example, Anna, aged 35, holds 70% of her investments in equities and 30% in gilts. When equity markets fall, her gilt allocation helps to mitigate losses and supports her long-term objectives.

Why Is Portfolio Balance So Important?

An unbalanced portfolio can expose you to excessive risk, or limit your potential for long-term growth.

If your portfolio is too aggressive, you may experience significant losses during market downturns. If it is too conservative, inflation may erode the real value of your returns, reducing your purchasing power in retirement (e.g. £1,000 today being worth £740 in 20 years at 2% inflation). This is not just a theoretical risk: according to the Office for National Statistics, UK CPI inflation stood at 2.9% in the 12 months to July 2026 — above the 2% illustration used here, which would erode purchasing power even faster.

A balanced portfolio can help you:

• Manage volatility
• Align risk with your financial objectives and investment horizon
• Reduce the risk of emotional decision-making
• Remain invested through periods of market uncertainty

ISAs and Pensions in a Balanced Portfolio

When building a balanced portfolio, it is not only the mix of assets that matters but also the tax wrapper in which you invest.

A Stocks & Shares ISA offers tax-free growth and withdrawals, with an allowance of £20,000 per year (2026/27). From 6 April 2027, confirmed reforms will cap the cash component of this allowance at £12,000 for savers under 65 (Source: GOV.UK), though the £20,000 combined limit and Stocks & Shares ISAs themselves are unaffected. It is flexible, but contributions do not receive tax relief.

Pensions, including workplace schemes and SIPPs, provide tax relief on contributions and often benefit from employer top-ups. Most people can contribute up to the standard £60,000 annual allowance each tax year and still receive tax relief (Source: MoneyHelper), though this tapers down for higher earners and is restricted to £10,000 for anyone who has already flexibly withdrawn from a defined contribution pension. They are designed for long-term saving and usually cannot be accessed until at least age 55 (rising to 57 in 2028). SIPPs also give more control over investment choices but require greater involvement.

In short, ISAs provide flexibility, while pensions and SIPPs deliver powerful tax advantages for retirement — and using the right wrapper can be as important as the asset mix itself.

Here is how the two compare at a glance:

How Your Portfolio Should Evolve With Age

Your investment strategy should reflect your stage of life as well as market conditions.

In Your 20s–30s: Building for Growth

• With a long investment horizon, you can usually take on more risk.
• A higher allocation to equities (up to 70–80%) may support long-term growth, balanced by bonds or other defensive assets.
• Short-term volatility is less important than long-term compounding.

Example: Marc, a 27-year-old investor, contributes monthly to a global equity tracker through a Stocks & Shares ISA. 

In Your 40s–50s: Diversifying for Stability

• Life goals become clearer (property, children, retirement planning).
• A more balanced mix, such as 60% equities and 40% bonds or other lower-risk assets, may help reduce risk while maintaining growth potential.
• Equity income funds or gilts can add income and stability.

Example: Jack, a 48-year-old investor, holds a diversified mix of equity funds, UK gilts, and property exposure via a REIT. 

In Your 60s and Beyond: Preserving Capital

• The focus shifts to protecting accumulated wealth and generating reliable income.
• Lower-risk allocations (for example, 40% equities and 60% bonds or cash savings) can help reduce volatility.
• Income drawdown, annuities, or equity income funds may provide more predictable returns.

Example: Louise, a 63-year-old investor, reduces equity exposure and reallocates part of her ISA into short-term bonds and equity income funds. 

Portfolio Evolution by Age (Illustrative Table)

Important: These allocations are for illustrative purposes only and do not constitute financial advice. The right mix depends on your personal circumstances, goals, and risk tolerance.

The Risk of Neglecting Portfolio Reviews

Even a well-constructed portfolio will not remain balanced indefinitely. Markets change, circumstances evolve, and objectives shift. 

If you do not review your portfolio periodically:

• Asset allocations may drift, leaving you overexposed to one sector.
• Risk levels can increase without you realising.
• Your investments may no longer match your time horizon or retirement needs. 

Example: an investor built a balanced portfolio at age 45. Ten years later, without rebalancing, equities now account for 85% of holdings. A market downturn close to retirement could significantly reduce future income. 

It is advisable to review your portfolio at least annually, and after major life events such as a new job, inheritance, or approaching retirement.

Practical example: portfolio drift without rebalancing

An investor built a balanced portfolio at age 45, targeting the 60% equities / 40% bonds mix typical for that stage of life. Ten years later, having never rebalanced, strong equity market performance has pushed the split far from the original target:

A market downturn shortly before retirement could hit this portfolio far harder than the investor originally intended — a risk that a simple annual review and rebalance could have avoided. This is a simplified illustration and not a recommendation for any specific allocation.

5 Tips to Rebuild and Maintain a Balanced Portfolio

If your portfolio no longer reflects your objectives, or you have never actively reviewed it, here are five steps to consider:

1. Check your current asset allocation
   Use your investment platform or ask your provider for a breakdown of your holdings.
2. Reassess your goals and investment horizon
   Shorter time horizons usually require a lower-risk approach. Longer-term goals may allow for a greater allocation to growth assets.
3. Diversify across asset classes and regions
   Avoid concentrating solely in UK equities. Consider adding global funds, bonds, or property exposure to spread risk.
4. Automate where appropriate
   Many platforms offer ready-made portfolios or robo-advisers that align with different risk levels.
5. Rebalance annually
   Over time, some assets will grow faster than others. Rebalancing helps bring your portfolio back in line with your target mix, keeping risk and return aligned with your long-term plan.

Key Takeaways

• A balanced portfolio spreads risk across asset classes and should reflect your stage of life.
• Your allocation typically shifts over time, moving from a growth focus to capital preservation.
• Regular reviews are essential to ensure your portfolio continues to align with your objectives.
• Rebalancing helps manage concentration risk and keeps your investments on target.
• If uncertain, consider seeking regulated financial advice — small adjustments today can improve your long-term financial position. Since 6 April 2026, firms can also offer “targeted support” under new FCA rules — ready-made suggestions for people with similar circumstances to yours — which can be a lower-cost way to get pointed in the right direction without full regulated advice.
  

Capital at risk. Returns are not guaranteed. Tax rules can change and their effects depend on your circumstances.

FAQ

The post Balanced Portfolio: What It Is and Why It Matters for Your Financial Future appeared first on MoneyFarm Insights.

⏳ Reading Time: 3 minutesA few different things have caught our attention this week. First, there’s the ongoing debate around the decision of the US Treasury to increase its purchases of long-dated government bonds. Second, there’s the announcement of a US$16.7 billion settlement between Meta and various US states on the question of social media harm. Finally, Bill Gates has released an essay highlighting the significant potential risks and opportunities from Artificial Intelligence – highlighting the need, in his view, for significant adjustments to tax regimes around the world. We wanted to explore how these various points might be related and what they could mean for portfolios.

We think there are a few points worth highlighting. First, the fiscal picture in Europe and the US is generally quite challenging. Debt to GDP is generally rising, notably in the US, and societies are ageing. As we discussed last week, that might be part of the reason why long-dated yields in the US have been drifting higher – prompting some intervention from the Treasury. The current consensus view is that intervening in the Treasury market isn’t a long-term solution for rising rates. Most investors would argue that having a lower fiscal deficit is the correct answer. But there’s currently little political will to achieve that, in the US and elsewhere.

Rising bond yields provide an important context for the ongoing debate about the future of work in the age of AI. Many believe that AI will usher in an age of sustainably higher unemployment – potentially reducing tax revenues and increasing costs. By way of background, in the UK income tax accounts for around 28% of total government tax revenue. National insurance (another tax on labour) accounts for a further 18%. Value-added-tax (VAT) – call it a tax on how people spend the money they earn – accounts for another 17%. That’s a pretty big percentage coming from labour, one way or another. If employment, and possibly household spending, is going to be structurally lower (and it’s still a big if), governments will need to find some alternative sources of revenue. Hiking taxes on households and employers even further probably won’t do the trick.

That brings us to the settlement between Meta and the US states. Whatever the merits of the case against Meta may be, these days, if you’re looking for money, you can find it in large US corporates, particularly in tech. Or you could before they started to spend all of it on data centres and chips. US corporate profits as a percentage of GDP are at a seventy year high, while wages and salaries as a percentage of GDP – starting at a much higher level than corporate profits – have steadily drifted lower since the 1970s.

What does all this mean for markets and portfolios? We’d make a few points. It highlights again the complexities of the current environment – as businesses, governments and workers try to make sense of the potential changes from AI. These questions won’t get resolved in a month or a quarter. These are long-term considerations.

If AI does damage employment, then that could have a significant impact on the tax base for many governments. In that sense, AI isn’t just about equities, private markets or even private credit. It can have an impact on government bond markets as well and that could increase the focus on the potential winners from the AI revolution. As we saw bank levies in the wake of the Global Financial Crisis, we could eventually see more targeted levies on the beneficiaries of AI efficiency – not just tech businesses. That’s not necessarily a bad outcome for investors – it would likely reflect a scenario where AI has helped drive stronger productivity growth. We think we’re in a period of great potential but also considerable uncertainty, and that argues for maintaining a well-diversified portfolio.

The post AI, taxes and markets: three signals worth watching appeared first on MoneyFarm Insights.

Today, almost everything can be done from a smartphone, including buying and selling financial assets. Finding the best trading app can make a big difference for anyone who wants to start investing or trading online. A good trading app allows users to access markets and manage investments.

But you should consider that not every app offers the same services. Some are designed for experienced traders, while others are the best choice for beginners. Choosing the right app is important to have a platform that is safe and easy to use.

The ideal trading app should simplify the trading process without hiding important information. It helps users understand the markets, reduce mistakes, and make investing more accessible. Before downloading any app, it’s important to know which features really matter.

Why it is important to choose the right Trading App

Choosing the right trading app is important because it directly affects the investing experience. If you want to learn more about the difference between trading and investing, you can read this article. A reliable app should provide a user-friendly interface, similar to desktop trading platforms. Security is a key factor when selecting a trading app. The right trading app should also offer useful tools and resources, such as market analysis, educational content, price alerts and portfolio tracking.

Choosing a trading app that matches your investment goals and trading style can make trading more efficient. Whether you are a long-term investor or an active trader, selecting a platform with competitive fees, responsive customer support and the right range of assets can help you achieve your financial objectives more effectively.

Trading App vs Desktop Trading Platform

Trading with a mobile app and using a desktop trading platform both allow you to buy and sell financial assets, but they offer different experiences. Mobile apps are ideal for trading anywhere, while desktop platforms usually provide more advanced tools for market analysis and professional trading.

Best Trading App: key characteristics

When choosing a trading app or platform, it is important to look at the main features that can make your trading safe. A good platform should match your experience level and provide the right tools to help you make better trading decisions. Here are some important characteristics that you should consider.

1.     Simple navigation

One of the most important features of a good trading app is easy navigation. The app should offer a clear interface and simple steps, even when used on a smartphone. Traders should be able to move easily between different sections of the app, have a clear view of their investment portfolio, and quickly access useful data and charts for online trading.

The design and features should be well organised, allowing you to find the options you need quickly without wasting time. A simple and efficient layout can make the trading experience easier and more effective.

2.     Account types

When choosing an investment app in the UK, it is important to check which types of accounts are available. The best investment apps often provide different account options designed to help users manage their money more efficiently and reduce tax costs. The main account types to consider are:

• Stocks and Shares ISA: allows people to buy shares, ETFs and other assets while protecting investment gains and income from UK tax, within the annual allowance limit.
• Lifetime ISA (LISA): designed for people saving for their first home or retirement. You can contribute up to the annual limit and receive a 25% government bonus on eligible contributions.
• SIPP (Self-Invested Personal Pension): a retirement account that allows you to choose your own investments and benefit from tax relief on contributions, making it suitable for long-term pension planning.
• General Investment Account (GIA): offers more flexibility because there is no annual contribution limit. But investment gains and income may be subject to tax rules.
• Junior ISA: allows parents or guardians to invest money for children, helping them build savings for the future.

Before choosing a trading or investment app, you should check which account types are available and select the option that best matches your financial objectives and investment strategy.

3.     Fast performance

Speed matters when trading: markets can change within seconds, and delays may affect the outcome of a trade. A reliable trading app should load quickly, update prices and process orders without unnecessary waiting. Stable performance is especially important during periods of high market activity.

The app should also work across different devices, allowing users to continue managing their investments whether they use a smartphone or a tablet.

4.     Strong security

Security should never be overlooked: a good trading app protects personal information and financial assets. Many modern apps include features such as two-factor authentication, biometric login using fingerprint, secure passwords, and encrypted data transmission. Users should also have access to account notifications so they can quickly identify any unusual activity.

It is important to remember that choosing the broker behind the app is the first step. You should always choose platforms that are regulated by UK authorities, such as the FCA, and that follow transparency rules and requirements.

5.     Real-time market information

Accurate information helps you to make better decisions. A quality trading app should provide live market prices, interactive charts and updates throughout the trading day. The ability to monitor price movements in real time allows you to react more quickly to market conditions.

You also need to know economic calendars, dividend calendars, company announcements and financial news to invest more effectively.

6.     Easy order management

An efficient trading app should allow you to buy or sell assets at any time during market hours. You should be able to check your investments, make changes when needed, and monitor your profits and potential losses. A trading app should also give all the essential tools for buying and selling.

7.     Educational resources

Especially for beginners who are starting to trade online, it is very important to have access to educational resources that can help make better investments. Informative content can include:

• Tutorials
• Articles
• Videos
• Practical guides

These tools are sometimes available directly inside trading apps and can be accessible from a smartphone. Anyone looking for a good trading app with no previous experience should also consider these features. Trading apps often also include AI support tools.

8.     Customisable watchlists

Every investor follows different markets and assets. A useful trading app should allow you to create personalised watchlists that include the financial products you want to monitor most closely. This feature saves time because you can immediately see price movements without searching for each asset individually.

9.     Alerts and notifications

Price alerts are another helpful feature. Instead of constantly checking the app, you can receive notifications when an asset reaches your chosen price level or when important market events occur. This helps you stay informed while managing your daily activities.

10.  Customer support

Even the best apps sometimes require assistance: good customer support can help solve technical problems, understand account features, or answer general questions. Fast and accessible support improves confidence, especially for beginners who may need extra guidance.

Trading App Fees: what are the costs?

Before choosing a trading app, it is important to understand the costs involved. A platform with low fees can help you keep more of your returns, especially if you trade regularly. Anyway, the cheapest app is not always the best choice.

Trading apps can include different types of charges depending on the services they offer. Some platforms advertise commission-free trading, but you should always check the full fee structure, including hidden costs such as currency exchange fees or charges related to specific services. Understanding these costs helps you choose an app that matches your investment style and avoid unexpected expenses.

Best Trading App for beginners

Beginners often feel overwhelmed by financial markets because of new terminology and the large amount of available information. The best trading app for beginners should reduce this complexity instead of adding to it. A beginner-friendly app should explain financial concepts using simple language and provide step-by-step guidance for common actions such as:

• Opening an account
• Placing a trade
• Monitoring investments
• Searching for financial assets
• Understanding market prices and charts
• Setting price alerts
• Checking profits and losses
• Managing a portfolio

Educational content is particularly valuable to understand the basics before making important financial decisions. A clear dashboard is another important advantage. Many beginners also appreciate the possibility of practising with virtual funds before investing real money. Simple risk management tools can also make a difference. If you are a beginner, you can start trading with Moneyfarm, opening a trading account.

Best Trading App for global investing

Today many traders choose to invest in global markets, for example by selecting foreign markets or specific sectors. With some assets, such as ETFs, it is possible to invest in fast-growing areas in 2026, including technology, artificial intelligence, and ESG-related sectors.

Investing in foreign markets can be useful for diversifying a portfolio. For this reason, anyone who wants to expand their investment opportunities should choose a trading app that offers a wide range of assets and takes different currencies into account.

If you are interested in international investments, you should look for a trading app that supports global buying and selling, with clear information about exchange rates, currency values and related risks.

Best Trading Apps in the UK: trends for 2026

To choose the best app for making money through trading, it is important to first have a clear investment strategy, for example with the support of an experienced financial adviser. An effective trading app in 2026 should allow users to follow some of the most important investment trends of the moment, as shown in the table below.

In particular, AI Trading is becoming increasingly popular. This means the use of artificial intelligence tools in online trading. These tools can analyse large amounts of data, help understand market movements, and support investment decisions. In addition, the number of AI-related investment opportunities is growing, including AI ETFs and individual shares linked to technology companies.

Frequently Asked Questions

The post Best Trading App: how to choose the right one appeared first on MoneyFarm Insights.

Are you looking for a way to make your savings work better? If you have money you don’t need to access immediately, you may be considering putting it into a fixed-rate bond or an ISA. But what’s the difference between the two, and which option could be right for you?

In this article, we’ll explain how ISAs and bonds work, compare their key features and look at the pros and cons of Premium Bonds and ISAs. We will also talk about the term “ISA bond.” Please read on to find out more. Here is a more detailed overview of Stocks and Shares ISAs.

What is the difference between an ISA and a bond?

The term “ISA bond” is something of a misnomer. ISAs and bonds are not the same thing. They are similar in some ways, but they are different products. The difference between an ISA and a bond is that with an ISA, you have access to your savings, whereas with a bond, you do not. Also, an ISA is an investment account, while a bond is an investment security.

When you compare fixed-rate ISAs together with fixed-rate bonds, at least you have the peace of mind of knowing how much your investment could be worth upon maturity. But what about the stocks and bonds ISA, also known as an investment ISA?

About fixed-rate bonds

What is a bond? Is a fixed-rate bond an ISA? No, it is not. A fixed-rate bond is a type of savings account. This kind of account has a specific date at which you will be able to access the money you’ve invested: this is known as the maturity date.

You can initially put any amount of money into the account, subject to the product provider’s terms. You will be advised exactly how much money your account will have accumulated at the end of the term. However, you will not be able to access this money before the said maturity date.

The benefits of fixed-rate bonds

Fixed-rate bonds can be a good option if you want to save money for a set period and know in advance how much interest you could earn. The interest rate is fixed for the agreed term, so you are protected from changes in savings rates during that period. They can also help you plan ahead, as you know when your money will become available and how much you could have at maturity. You should check the terms carefully, as you may not be able to access your money before the bond matures.

For example, if you invest £10,000 in a fixed-rate bond paying 4.5% interest for two years, you could earn £450 in interest each year, giving you a total of £900 in interest over the two-year term. At maturity, you would receive your original £10,000 plus the interest earned, giving you £10,900 in total.

About fixed-rate ISAs

A fixed-rate ISA is a savings account that allows you to save up to a specific amount of money every year. For the 2026/2027 tax year, this amount is capped at £20,000. As with a fixed-rate bond, a fixed-rate ISA will run for an agreed period of time. Any interest earned in the ISA will be tax-free.

For fixed-rate products, the main difference is that you may not be able to access your money before a fixed-rate bond matures. With a fixed-rate ISA, you can usually withdraw your money early, but you may have to pay an early withdrawal charge. The same may apply if you close the account or transfer it to another provider before the end of the fixed term.

The benefits of fixed-rate ISAs

Fixed-rate ISAs, being a type of savings account, offer additional benefits beyond those previously mentioned. In total, they can be summarised as:

• Being able to make tax-free withdrawals
• Having a wider range of investment options
• Portability
• No wrapper charges
• No extra charges
• Any income from an ISA doesn’t affect your age-related personal allowance
• There are no upper-age limitations
• Savings can be passed on to a deceased investor’s spouse via an inherited ISA allowance.

There are several different types of ISAs, each aimed at a specific type of investor, with different annual allowances. These include:

From 6 April 2027, the annual Cash ISA allowance will be reduced to £12,000 for people under 65. The overall ISA allowance will remain at £20,000, so you can still save or invest up to £20,000 across your ISAs each tax year. For people aged 65 and over, the Cash ISA allowance will remain at £20,000 a year.

Stocks and Shares ISAs can contain an ISA bond or two (or more). The reason that they include an ISA bond is to even out the risk element. Discover the benefits of a Stocks and Shares ISA in this article.

What are Income Bonds?

Income bonds are another type of investment vehicle that pays regular interest to the investor. You can invest anywhere from £500 up to a maximum of £1 million, spread across any number of different income bond accounts.

One big advantage of this type of savings account is that you have continual access to your funds at any time (no prior notice period is required) and without any financial penalty. Any interest earned on your account (variable interest rate) is transferred directly to your bank account or Building Society account. You pay income tax on the gross interest.

Here the main characteristics according to NS&I (National Savings and Investments).

What about Premium Bonds?

Premium bonds can be purchased by anyone over the age of 16. Premium bonds for children are also available. For anyone under 16, their parents, legal guardians, or grandparents are able to invest on their behalf. Each bond has a financial value of £1. The minimum investment is £25, and the maximum holding is £50,000.

Rather than paying interest, premium bonds get entered into a monthly prize draw. The cash prizes that bondholders can win every month are:

The thing to understand when debating Premium Bonds vs ISAs is that people who invest in premium bonds do so as a gamble, as there are chances of winning big in the monthly prize draw. But bonds are only ever worth their face value, so if you don’t win a premium bond prize, your investment doesn’t grow. In real terms, it diminishes in value. Nonetheless, this is the UK’s most popular form of investment, with over 23 million people investing a total of more than £100 million.

For example, if you have £10,000 in Premium Bonds, all your bonds are entered into the monthly prize draw. If one of your Bonds wins, you could receive a prize of £25, £50, £100 or more, depending on the prize.

Premium Bonds vs ISA: Which is better?

When it comes to the question between ISA vs Premium Bonds, which way should you lean?

Premium bonds are nothing more than a savings account that serves as a lottery whereby Ernie, short for “Electronic Random Number Indicator Equipment”, selects random numbers that get compared to the serial numbers of bonds in the pool. The interest is swapped with the chance to win a tax-free prize, which you may never win. ISA is a tax-efficient investment account where you can save or invest money without paying taxes on the returns or interests.

The fact remains that, over time, when you compare a cash ISA or premium bond, money invested in premium bonds erodes in real terms, but less so than with a Cash ISA. So, you are probably best advised to spread your savings across various options by creating a well-diversified investment portfolio. Read this article to discover which is the Best ISA for you.

ISA bonds

Some people may refer to an ‘ISA bond’ when talking about Stocks and Shares ISAs, also known as investment ISAs. These products are interesting because, whereas the interest on fixed-rate cash ISAs and bonds is relatively low, you can earn a much higher interest rate with an investment ISA. But what it all boils down to is your attitude towards risk.

A Stocks and Shares ISA can offer a higher interest rate, but it’s dependent on the ups and downs of the stock markets, and there is no guarantee that you will recoup your investment in full when your policy matures. You can, however, opt for different risk options; high, low, or medium and the thing that helps to facilitate these options is the ISA bond element. In theory, the more bonds included, the less the risk.

The more diversified your investment portfolio, the less risky it could be. It’s one reason why many people are now looking at ETFs (Exchange Traded Funds), particularly bond ETFs and ETF ISAs.

Premium Bonds vs ISA: how to choose

Is a bond the same as an ISA? Having read through this blog, you will now appreciate the difference between a bond and an ISA, and the choice you make will depend on your individual circumstances and personal savings goals. You will also have an understanding of the ISA bond element and its impact.

Many factors should be taken into account when evaluating the advantages and disadvantages of investment bonds and ISAs to make an informed decision. You may also want to consider opening a general investment account.

You can build and manage your own bond portfolio with Moneyfarm. You have access to a range of bonds in one place, choose investments that match your goals and take greater control of how you invest. Whether you’re looking to generate income, diversify your portfolio or invest for the longer term, Moneyfarm gives you the flexibility to make your own investment choices.

Frequently Asked Questions

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Accessing your pension before the age of 55 is subject to strict rules in the UK. For most people, you cannot normally access your pension until you reach the minimum pension age, but there are some exceptions that may allow you to take your money earlier.

Withdrawing money from your pension before you are ready to retire can also have important tax implications and may affect your long-term retirement income. In this article, we explain the current rules around accessing your pension early, the circumstances in which you may be able to withdraw money before the normal minimum pension age, and how pension withdrawals are taxed.

Please note that Moneyfarm does not offer this service. While we strive to provide comprehensive retirement planning services, facilitating early withdrawals from pensions is outside the scope of our services.

Is it possible to take your pension before 55?

The earliest you can take money from your private or workplace pension is 55 (due to change to 57 from 2028) unless there are specific exceptional circumstances.

Pensions are specifically created as a long term investment vehicle, allowing you to save towards retirement, with additional top-up contributions from the government, meaning your investments are boosted by 25% (or more if you pay a higher rate of tax). These tax-efficient wrappers mean you will have more than just the state pension to live on when you choose to stop working. 

The State Pension is not available until you reach State Pension age, which is currently 66 but will rise to 67 in 2028. Modern private pensions allow you to access your money from the age of 55 allowing you to retire earlier should you wish to. If you like the idea of an early retirement, read our article to find out how to retire at 55.

The caveat here is that there are still older pensions that may have specific guarantees or benefits that apply from a specific point in time, and defined benefit schemes (also known as final salary schemes) which have their own specific rules.

When can you access your pension?

The age at which you can access your pension depends on the type of pension you have. The table below gives a simple overview based on your year of birth.

Can you take money out of your pension before 55 if it’s a private scheme? – In a nutshell, no. There are exceptional circumstances where you may be able to access your pension before you’re 55, due to very ill health, or when life expectancy is under 12 months, but these are exceptions and it will still be up to the pension provider to approve any requests. 

Withdrawing from your pension pot before 55 isn’t illegal, but you will have to pay tax of up to 55% on the amount you take out. You may see or be contacted by unregulated companies that will offer to help you access your pension before the age of 55. These companies are most likely to be pension scams and you risk losing all or most of your pension savings rather than getting hold of your money early. Remember, if it sounds too good to be true it most likely is. A regulated pension provider will not allow you to withdraw your pension before you reach the set age.

When can you access your pension before 55?

There are only two exceptions that allow early access to your pension before the age of 55:

1. Ill health

You may be able to access your pension early if you’re seriously ill and unable to work, or if you’re under 55 and have a terminal illness with less than a year to live.

2. Protected Retirement Age (PRA)

A Protected Retirement Age typically applies to certain professions where early retirement is the norm, such as professional athletes or members of the armed forces. To qualify, the PRA must have been granted before 6 April 2006.

Keep in mind that if you transfer a pension with a PRA to a new provider, the protection might no longer apply. If you don’t have a PRA, you’ll need to wait until the normal minimum pension age — currently 55, increasing to 57 in 2028 — to access your funds.

These exceptions are also explained by the UK Government in its guidance on early retirement and personal and workplace pensions. Here the main circumstances:

Can I cash frozen pensions from old employers?

If you have changed jobs several times, you may have built up several workplace pension pots with different employers.

Under the UK’s Automatic Enrolment rules, introduced under the Pensions Act 2008, eligible employees are normally enrolled into a workplace pension by their employer. The main characteristics are:

• Age: you are normally eligible if you are aged between 22 and State Pension age.
• Earnings: you must currently earn at least £10,000 a year.
• Employer contributions: your employer must contribute to your workplace pension. You can also contribute.
• When you leave your job: your pension normally remains invested in the scheme and you cannot usually cash it in straight away.
• Accessing the pension: you can normally access your pension from age 55, rising to 57 from 6 April 2028, unless an exception applies.

Transferring a pension

The more pensions you have, the more difficult it is to keep track of them, so you might want to think about a pension transfer. So you should find all your pension accounts.If you have lost track of any of your pensions, you can try using the government’s pension tracing service. If you can find what you’re looking for, check whether the pension in question is a defined benefit or contribution pension before attempting to transfer anything.

• If it is a defined contribution scheme, it may have unique benefits, so do your research before you act or seek professional financial advice.
• If you are going to transfer pensions to consolidate your pensions, you’ll find some helpful advice on the Gov.UK

If you have several old pension pots, Moneyfarm’s pension consolidation service can help you bring them together in one place, making it easier to keep track of your savings, fees and investment performance. Moneyfarm can handle the transfer process and contact your existing providers for you.

But remember that before asking yourself about withdrawing money from your pension, you need to review your retirement planning. Taking money out of pension funds early will significantly affect the amount you will be due when you retire.

Withdrawing money from your pension at 55

Once you reach the normal minimum pension age, you can usually start taking money from your private or workplace pension. In most cases, you can take up to 25% of your pension pot tax-free, subject to the relevant rules and allowances. You should consider that in 2026 the standard Lump Sum Allowance is £268,275 across all your pension schemes.

You can also choose to take more than 25%, but the remaining amount will generally be subject to Income Tax. The amount you pay depends on your total taxable income and your applicable tax band. If you decide to access your pension, you should contact your pension provider first. They can explain the options available to you and provide the forms or information you need to make a withdrawal.

If you are ready to access your pension, there are a few key steps to follow:

• Check that you can access your pension: make sure you have reached the normal minimum pension age or qualify for an exception.
• Check your pension options: contact your pension provider to find out how much you have saved and what withdrawal options are available.
• Decide how much you want to take: you can usually take up to 25% of your pension as a tax-free lump sum, subject to the applicable allowances. The rest will normally be subject to Income Tax.
• Ask your provider: the pension provider will explain the process.
• Review your remaining pension: taking money out earlier can leave you with less to fund your retirement, so consider how the withdrawal may affect your long-term income.

Continuing to work while drawing your pension

Taking 25% of your personal pension as cash from your pension when you turn 55 is only an option, it is not obligatory. If you are reasonably well off, you can defer the age you receive a private pension, and some people do. The choices open to you are:

• Withdraw a part lump sum and leave the balance where it is.
• Turn your pension savings into an annuity
• Continue to work and leave your pension untouched

So you can continue to work while drawing your pension fund? Is it even possible? The answer is, yes, you can. It is wholly possible, and many people do so. There is no longer a defined default date when you are expected to retire. It is down to the individual, the companies and their business ethics and practices. So you can continue to work after you’ve reached the state pension age if you wish and your company agrees.

You can cash out a pension or receive your state and private pension while you continue to work, but there are advantages and disadvantages.

Dealing with a pension deficit

What to do if you have a pension deficit? As far as your state pension is concerned, in order to receive your full pension, you must have paid sufficient National Insurance contributions. You might have a pension shortfall if there are gaps in your contributions over the years. You can check your state pension status by using the government NI record checker

You can make up the shortfall if you so wish and the government NI checker will tell you how much shortfall you owe for each year that is not full. Be aware though, there are limits as to how far back you can go to top up. Knowing how much you will need in your pension for your retirement years is difficult to predict, but plenty of helpful advice is available. You can read this article on 5 practical ways to take control of your pension.

How taking your pension early could affect your retirement

It’s important to consider the long-term implications: while it may seem appealing in the short term, early pension withdrawal can significantly reduce your pension amount in the future, potentially leaving you with insufficient funds to live on during retirement.

The early withdrawal of pension funds, often referred to as a pension drawdown, means you start dipping into your pension pot before retirement. It’s like opening the oven before your cake is fully baked, and the result is a lot less appetising. The more money you take out of your pension pot now, the less you will have when you retire. Compound interest plays a crucial role here – the longer your money is invested, the more opportunity it has to grow.

Another point to note is that if you’re considering cashing in small pension pots this could drain your pension resources quicker than you expect. These small pots might seem insignificant now, but they can add up to a considerable sum by the time you hit your retirement age. You may want to consider different options, like consolidating these small pots into a single pension pot to maximise the benefits.

You can find comprehensive insights into how to retire early in the UK. Finally, it is crucial to familiarise oneself with the rules and regulations governing pensions in the UK. For more information, please visit the UK government’s pension page or check the Wikipedia page on pensions in the United Kingdom. Remember, taking the step to withdraw your pension before 55 is a significant decision:

• Consider all the facts, seek advice, and make a choice that ensures your financial security in the long run.
• Making sure you have enough money to draw on in your retirement years is critical. You need to be aware of your pension optionsand seek professional financial advice.

If you’d like to find out more about pensions, the pension guide on the Moneyfarm website provides excellent additional information.

Frequently Asked Questions

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Saving for your first home or simply building a rainy-day fund? Two of the UK’s most popular tax-efficient wrappers, Cash ISAs and Lifetime ISAs, can both be good choices. A Cash ISA can be a good option if you want to keep your savings in cash while benefiting from tax-free interest.

A Lifetime ISA, on the other hand, is designed specifically to help you save for your first home or for retirement. The right choice will depend on what you are saving for, when you need the money and how much flexibility you want. In some cases, you should use both, depending on your circumstances and goals.

In this guide, we explain how Cash ISAs and Lifetime ISAs work, including their main benefits, limits and risks. This can help you understand the key differences and decide which option may be right for you.

Cash ISA vs Lifetime ISA at a Glance

The table below summarises the main differences between the two types of ISA for the 2026/27 tax year.

Remember that for the 2026/27 tax year, the Cash ISA allowance is £20,000, but from 6 April 2027, the Cash ISA limit will fall to £12,000 for people under 65, as announced by the Government.

How a Cash ISA Works

A Cash ISA generally carries less investment risk than other ISAs, like a Stocks and Shares ISA or some Lifetime ISAs, because your money is held as cash rather than invested in assets such as shares or funds. This can make it a suitable option if you want to protect your savings from market fluctuations and have greater certainty about the value of your money.

A Cash ISA is one of the simplest types of ISA. You can deposit up to £20,000 in the 2026/27 tax year and earn interest on your savings without paying UK tax on the interest. The amount of interest you receive will depend on the account and if you choose a variable or fixed interest rate. You should consider that:

• some Cash ISAs allow you to access your money whenever you need it
• other Cash ISAs may offer a higher rate in exchange for locking your money away for a set period or limiting withdrawals

This makes Cash ISAs particularly suitable for short- to medium-term savings goals, such as building an emergency fund, saving for a holiday, wedding or a future purchase. But if the interest rate you earn is lower than inflation, the real value of your money may gradually decrease.

How a Lifetime ISA Works

A Lifetime ISA was introduced in 2017 to encourage two life milestones:

1. Buying your first home (property price ≤ £450,000, UK-based, purchase completed within 90 days of withdrawal)
2. Retirement (access funds penalty-free from age 60)

You can open the account any time between your 18th and 40th birthdays, pay in up to £4,000 a year until turning 50, and HMRC tops it up with a 25% bonus of up to £1,000 annually. Contributions count toward your overall £20k ISA allowance.

So, if you want to buy your first home in UK, a Lifetime ISA can be particularly useful because the Government bonus can provide a significant boost to a house deposit. But there are important conditions, according to the UK Government:

• The property you are buying must cost £450,000 or less.
• The amount you withdraw from your Lifetime ISA must be less than the purchase price of the property.
• You must expect to complete the purchase within 90 days of withdrawing the funds from your Lifetime ISA.
• You must live in the property as your main residence.
• You must buy the property with a mortgage or another loan secured against the property. A Buy to Let mortgage is not allowed.
• At least 12 months must have passed since you made your first payment into your Lifetime ISA when you make the withdrawal.

For this reason, a Lifetime ISA is generally better suited to money you are confident you will not need for other purposes in the short term. As with other ISAs, you do not pay UK tax on interest, income or capital gains generated within a Lifetime ISA.

Lifetime ISA Withdrawal Rules

A Lifetime ISA is designed for two main purposes: helping you buy your first home or saving for retirement. Because of this, there are specific rules about when you can access your money without paying a withdrawal charge.

The 25% charge applies to the amount withdrawn, including the Government bonus. So you may receive back less than you originally paid into your Lifetime ISA. For example, if you contribute £800 and receive a £200 Government bonus, your LISA would contain £1,000 before any growth or interest. If you then make an unauthorised withdrawal of the full £1,000, a 25% charge of £250 would apply, leaving you with £750.

For this reason, a Lifetime ISA is generally most suitable for money you are confident you can leave untouched until you either use it towards an eligible first-home purchase or reach age 60.

Should I pick a Cash ISA, a Lifetime ISA or both?

The right ISA depends on what you are saving for, when you will need the money and how much flexibility you want. A Cash ISA can offer easier access to your savings, while a Lifetime ISA can provide a valuable Government bonus if you meet the eligibility and withdrawal rules. In some cases, using both can make sense.

Choose a Cash ISA if you:

• Need a liquid emergency fund you can tap instantly.
• Are likely to exceed your Personal Savings Allowance (£1,000 basic, £500 higher-rate).
• Want certainty: no penalties, simple interest.

Choose a Lifetime ISA if you:

• Are a first-time buyer targeting a home within the next few years.
• Want a Government “boost” that beats even top cash rates.
• Can leave the money untouched until you meet the qualifying criteria.

Blend the two when:

• You’re saving more than £4,000 a year—use the LISA for the first tranche, then overflow into a Cash ISA.
• You need short-term liquidity and a long-term home-buying or retirement pot.

Anyway, having both a Cash ISA and a Lifetime ISA can make sense if you have different savings goals. For example, you could use a Lifetime ISA to build savings for your first home, while keeping some money in a Cash ISA for emergencies or shorter-term needs. This can give you a balance between long-term savings and easier access to your money.

Can You Transfer Between a Cash ISA and Lifetime ISA?

You can move money between a Cash ISA and a Lifetime ISA, but the rules are different depending on the direction of the transfer. It is important to use the correct ISA transfer process rather than simply withdrawing the money and paying it into another account, as this can affect your ISA allowance and, in the case of a Lifetime ISA, potentially modify a withdrawal charge.

1.     Cash ISA to Lifetime ISA

You can transfer money from a Cash ISA to a Lifetime ISA, provided you are eligible to open and contribute to a LISA. But the amount transferred will count towards your £4,000 annual Lifetime ISA contribution limit. It will also count towards your overall annual ISA allowance. This could be useful if you have already built up savings in a Cash ISA and later decide that a Lifetime ISA is more suitable for your goal, such as buying your first home. Moving money into a LISA can also make it eligible for the 25% Government bonus, subject to the LISA rules and annual contribution limit.

For example, if you transfer £3,000 from a Cash ISA into a Lifetime ISA, this would use £3,000 of your £4,000 LISA allowance for that tax year. You could then receive a £750 Government bonus on the contribution.

2.     Lifetime ISA to Cash ISA

Moving money from a Lifetime ISA into a Cash ISA is more restrictive. You cannot simply transfer the money out of a LISA without considering the Lifetime ISA withdrawal rules. Unless the withdrawal is for an eligible first-home purchase, you are aged 60 or over, or you meet the rules for terminal illness, a 25% withdrawal charge will normally apply.

This means that moving money from a LISA to a Cash ISA may leave you with less money than you originally contributed. For this reason, a LISA is generally best used for money that you are confident you can keep there until you meet one of the permitted withdrawal conditions.

If you are considering moving money between ISAs, it is therefore important to check the provider’s transfer process and the current ISA rules before making a withdrawal.

So, can you transfer between a Cash ISA and Lifetime ISA?

• Cash ISA → Lifetime ISA: yes, counts toward this year’s £4k LISA limit. Doing so makes sense if you decide a first-home purchase is on the horizon and you’ve yet to reach the LISA contribution cap
• Lifetime ISA → Cash ISA: allowed, but treated as a withdrawal and may incur the 25% penalty if you’re under 60 and not buying your first home.

Frequently Asked Questions

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Want a safe and tax-free way to grow your savings without paying a single penny in tax? A Fixed Rate Cash ISA could be the right solution for you: no guesswork, no tax, no stress. A fixed-rate ISA gives you the certainty of a guaranteed interest rate for a set period, making it easier to know exactly what your savings could earn.

Let’s see what a fixed rate cash ISA is, how it works, how much you can really earn and what your options are when your ISA matures.

What Is a Fixed Rate Cash ISA and How Does It Work?

A Fixed Rate Cash ISA is a tax-free vault for your savings in which you put in a lump sum, lock it in for a set period and earn a guaranteed rate of interest.

Unlike standard savings accounts, where your interest might get taxed once you exceed your Personal Savings Allowance, a Fixed Rate Cash ISA lets you keep every penny of the interest you earn up to your annual ISA limit (£20,000 for 2026/27).

You’ll know upfront exactly how much you’ll get at the end of the term, which makes planning easier, especially if you’re saving for something big, like a wedding, a home deposit or a rainy-day fund.

Example 1 – The Lump Sum Saver

You’ve just received a £10,000 work bonus, and you don’t need to spend it right away. So, you decide to lock it in a 3-year Fixed Rate Cash ISA at, say, 4.2% AER. When it matures, you’ll have earned over £1,300 — completely tax-free.

Example 2 – First-Time ISA User

You want to make the most of your £20,000 ISA allowance this year. You put £5,000 into a 2-year Fixed Rate Cash ISA to secure a good return, and keep the remaining £15,000 in an easy-access ISA. This gives you both a solid interest rate and the flexibility to dip into your savings if needed.

So, remember the characteristics of a Fixed Rate Cash ISA:

• Tax-free earnings
• Fixed returns
• £20,000 ISA allowance for tax year 2026/27
• No early withdrawals (unless you are prepared to lose money on interest)

How Fixed Rate Cash ISAs Work at a Glance

A Fixed Rate Cash ISA isn’t for everyone, but if you’ve got a lump sum you won’t need to touch, it’s one of the most predictable and tax-efficient ways to grow your savings.

You should consider that from 6 April 2027, the rules for Cash ISAs will change. If you are under 65, you will be able to save up to £12,000 a year in Cash ISAs, down from the current £20,000 limit. Consider that the overall ISA allowance will remain £20,000 per tax year, so you can still save the remaining £8,000 in other types of ISAs, such as a Stocks and Shares ISA. If you are 65 or over, the Cash ISA limit will remain £20,000.

How to Open a Fixed Rate Cash ISA

When you decide to open a Fixed Rate Cash ISA, you do not necessarily have to use a traditional bank. You can also open an ISA through a financial platform or investment provider, depending on the type of Cash ISA they offer. The important thing is to understand how the account works, where your money is held and what protection applies before you choose a provider.

A bank will normally offer a Cash ISA as a savings product. Your money is held as a bank deposit and you receive interest according to the terms of the account. With a Fixed Rate Cash ISA, the interest rate is fixed for a set period, giving you greater certainty about how much you could earn.

A broker or investment platform may also offer a Cash ISA, but the structure can be different. Remember the differences:

The FSCS protection is particularly important. With a bank deposit, eligible deposits are protected in 2026 up to £120,000 per person, per authorised institution if the bank fails. The protection that applies to money held through an investment platform can be different, so you should check the provider’s terms.

If you prefer flexibility rather than locking your money away for a fixed period, you may want to consider the Moneyfarm Cash ISA. It is different from a Fixed Rate Cash ISA because its interest rate is variable, meaning it can change over time. The service has the security of FSCS protection up to £120,000.

Managing a Fixed Rate Cash ISA

Once you’ve opened a Fixed Rate Cash ISA, you generally cannot add more money to it as these accounts are designed for lump sum deposits only. Most providers allow you to fund the account within a limited window after opening, usually between 10 and 30 days, depending on the provider.

Management options vary by provider, but in general, you can view or manage your ISA through:

• Online banking (some accounts are view-only)
• Mobile banking apps
• Telephone banking
• In person, by visiting a branch

Always check the specific terms and restrictions with your provider — including whether you can make changes or just monitor your balance.

In many cases, you can not add more money once the initial funding period has ended. Some providers require the full deposit when you open the account, while others give you a short period in which to add money. The rules vary, so it is important to check the terms before opening the account. You can normally check your interest through your provider’s online banking service or mobile app.

You should know that you usually do not need to actively manage the account during the fixed term. The bank or platform will normally calculate and add the interest automatically.

Can I Withdraw My Money Early?

Depending on the provider, you may be able to withdraw your money, transfer it to another ISA or move it into a new fixed-rate product. Some providers may automatically reinvest your money into another ISA if you do not give them instructions, while others may move it into an easy-access or variable-rate ISA. Withdrawal will cost you. These accounts come with early withdrawal penalties — usually a set number of days’ interest depending on the term, for example:

• 1-year term: 90 days’ interest
• 2-year term: 180 days
• 3-year term: 240–270 days
• 5-year term: 360 days

Example: If you invested £5,000 in a 3-year ISA at 4% AER and decide to withdraw after 18 months, you could lose over £140 (this is up to 270 days of interest).

In some cases, withdrawing early might leave you with less than you originally deposited.

Transferring an ISA to Another Provider

If you want to move your ISA to a different provider while preserving its tax-free status, you must request a formal ISA transfer through your new provider.

Never withdraw the funds yourself and then try to reinvest them into a new ISA. Doing so will result in loss of the tax advantages, as HMRC no longer considers it an ISA transfer. But as a standard withdrawal, so even if you reinvest it later, it will count toward your new ISA allowance.

Can I Hold More Than One Fixed Rate ISA?

According to UK law, you can. From April 2024, you’re allowed to open and contribute to multiple Fixed Rate Cash ISAs in the same tax year, as long as you stay within the overall £20,000 ISA limit. This is your total allowance across the different types of ISA you use, not £20,000 for each account.

For example, you could put £10,000 into one Fixed Rate Cash ISA and £5,000 into another Fixed Rate Cash ISA, then use the remaining £5,000 in a Stocks and Shares ISA. You could also split your money between several Cash ISAs with different providers, as long as your total new ISA subscriptions do not exceed £20,000 during the tax year.

What’s the ISA Allowance for Tax Year 2026/27?

For the 2026/27 tax year, you can invest up to £20,000 across all types of ISAs. Having more than one account can be useful if you do not want all your savings locked away for the same length of time. You should also consider other ISA allowances:

 How Much Can You Earn with a Fixed Rate Cash ISA?

How much you earn depends on the amount you deposit, the interest rate and the length of the fixed term. For example, if you deposit £10,000 at 4% AER, you could earn around £400 over one year. Because the interest earned inside an ISA is tax-free, you do not normally pay UK Income Tax on that interest.

The benefit becomes more noticeable when you keep your money in the account for several years and interest is added to your balance. Remember that a higher rate is not the only thing to consider. You should also look at the fixed term, minimum deposit, early withdrawal rules and what happens when the account matures.

With the AER (Annual Equivalent Rate) you can compare savings products by showing the annual rate while taking the effect of interest payments into account.

Fixed Rate Cash ISA vs Flexible Rate Cash ISA

The main difference is certainty vs flexibility. A Fixed Rate Cash ISA gives you a guaranteed interest rate for a set period, while a Flexible Rate Cash ISA has an interest rate that can go up or down over time. Both can offer tax-free interest, but they may suit different types of savers. So, the right choice depends on how long you can leave your money untouched and how important flexibility is to you.

What Happens When a Fixed Rate ISA Matures?

Usually your provider will contact you a few weeks before your Fixed Rate ISA term ends in order to let you know what you can do next.

You usually have 3 options:

• Reinvest into a new Fixed Rate ISA with the same provider, as many of them offer special “maturity” rates for existing customers.
• Transfer to another provider with better rates, but make sure you request a formal ISA transfer (see “Transferring an ISA to Another Provider”).
• Withdraw your funds.

If you don’t take action when your ISA comes to an end, the majority of providers will automatically move your money into a default easy-access ISA, often with a much lower interest rate. To avoid missing out on higher returns, always remember to review your options in advance.

Frequently Asked Questions

The post What Is a Fixed Rate Cash ISA? A Simple Guide to Tax-Free Saving appeared first on MoneyFarm Insights.

Government bond yields have moved relentlessly higher this year, and the striking feature of that move is how little it seems to care about the economic backdrop. Whatever the data, whatever the signal on growth, the direction of travel has remained remarkably consistent. Last week captured that paradox perfectly: encouraging inflation data, with a softer-than-expected Consumer Price Index (CPI) followed by a subdued Producer Price Index (PPI), gave US Treasuries a strong week of gains, only for those gains to reverse on Friday after weaker activity data. It was a telling sequence. With markets now firmly anchored in their view of monetary policy, even a run of favourable economic data struggled to sustain the rally.

The forces behind higher yields are multiple and deeply interconnected: inflation, central banks, fiscal policy and, increasingly, Artificial Intelligence (AI). Viewed from one angle, rising bond yields are simply another expression of the broader AI investment story.

Where are yields?

To understand today’s market, it helps to step back. The reopening of the global economy after Covid, followed by the war in Ukraine, marked a genuine regime change for interest rates, pulling bond yields out of the low-rate environment that had defined the decade after the Global Financial Crisis. For a while, it seemed yields had found a new equilibrium. Then the conflict in Iran and the resulting energy shock pushed them higher once again.

More interestingly, however, 2026 has proved more nuanced than it first appears. While inflation concerns have undoubtedly returned, the rise in yields has been driven overwhelmingly by a repricing of real interest rates, rather than higher inflation expectations. We typically break government bond yields into two components: expected inflation and the real yield, which reflects monetary policy, economic growth and the underlying cost of capital.

As the chart below shows, almost all of this year’s increase has come from the real component. That tells us a great deal about the environment investors are navigating. Long-dated US real yields now stand close to 3%, their highest level in nearly twenty years, even though inflation breakeven rates have remained relatively contained despite the rise in energy prices.

Central banks are maintaining a hawkish stance

Part of this reflects the tone adopted by central banks. The conflict with Iran has not translated directly into higher inflation expectations, but it has affected bond yields through the policy channel. Central banks remain determined to prevent inflation from becoming entrenched, and markets have priced in that vigilance. 

Using machine learning techniques, we monitor the language used by central banks around the world. As the chart below illustrates, their communication has become noticeably more hawkish since late 2025.

Interestingly, this closely mirrors economic surprise indices – in other words, whether inflation and labour market data have come in stronger or weaker than economists expected. Inflation surprises remained consistently positive during the first half of 2026, although they have moderated more recently. That may begin to support a more constructive outlook, both for central bank rhetoric and, eventually, for the path of bond yields.

It is also worth recognising that higher yields partly reflect stronger underlying growth, particularly through the AI investment cycle. Investment linked to Artificial Intelligence is now making a meaningful contribution to both the level and the growth rate of Gross Domestic Product (GDP). Stronger growth has historically been associated with higher real interest rates, and today’s bond market appears no different.

Is the government being crowded out?

One of the most fascinating developments this year is whether the extraordinary wave of AI-related corporate borrowing – led by the hyperscalers, but certainly not limited to them – is beginning to compete directly with governments for investor capital. The evidence is becoming increasingly compelling.

Traditionally, crowding out describes a situation in which excessive government borrowing absorbs savings that would otherwise finance the private sector, pushing borrowing costs higher across the economy. Today’s dynamic looks almost reversed. Massive corporate debt issuance, particularly from the technology sector, is contributing to higher borrowing costs for governments themselves.

The same pension funds and insurance companies that finance sovereign deficits are now being asked to absorb an unprecedented supply of long-dated corporate bonds. As that supply grows, investors naturally demand higher yields. Bank of America estimates that corporate and mortgage issuance together have added around 0.3 percentage points to the US 10-year Treasury yield this year alone.

The scale of issuance is remarkable. By early July, Amazon, Alphabet, Meta and Oracle had issued around $194 billion of bonds, roughly 80% more than during the whole of 2025. Goldman Sachs expects the five largest hyperscalers – including Microsoft – to issue around $250 billion this year, rising towards $400 billion by 2027. For context, these companies issued an average of just $28 billion annually during the five years preceding 2025.

Nor is this purely a technology story. Issuance of investment-grade corporate debt has reached exceptionally high levels across the wider corporate sector. The chart below shows quarterly issuance of US dollar-denominated investment-grade and high yield bonds. The first half of 2026 has already broken previous records, with total issuance on course to approach $2.5 trillion for the year. That represents an enormous volume of high-quality debt competing for the same pool of investor capital – and increasingly competing directly with US Treasuries.

Fiscal pressure

The final piece of the puzzle is the fiscal position of developed economies. Since Covid, government finances have become noticeably more fragile. Budget deficits have widened across much of the developed world, including countries that were once viewed as models of fiscal discipline.

Germany has loosened fiscal policy to finance higher defence and infrastructure spending, pushing Bund yields back to levels last seen in 2011. In the United States, the federal deficit is approaching $2 trillion, an extraordinary figure outside periods of crisis. In the United Kingdom, thirty-year gilt yields have moved towards 6%, their highest level since the late 1990s, as investors focus on the sustainability of public finances ahead of the autumn Budget. France faces similar pressure, with long-dated yields at their highest since 2008 amid persistent political difficulties in delivering fiscal consolidation.

Against the backdrop of an exceptionally capital-intensive AI investment cycle, this fiscal deterioration matters even more. Investors are simultaneously being asked to finance record levels of corporate investment and increasingly indebted governments, while many of the traditional buyers of long-duration bonds – from the Federal Reserve to Japanese institutions – have become less active. It is the combination of these structural forces, rather than any single factor, that explains why long-dated bond yields have continued to rise despite mixed economic data.

The pressure on governments is undeniable, and it is in this light that we should read the US Treasury’s recent announcement that it will step up its buybacks of long-dated bonds in an effort to contain the cost of its own borrowing.

Staying conscious of the tide

Where does this leave investors? Above all, it calls for humility. There will undoubtedly be periods when bonds appear oversold, and economic data may occasionally justify a tactical decline in yields, as last week’s inflation and employment figures briefly suggested. Yet throughout 2026, buying long-duration bonds has largely meant swimming against a powerful structural tide.

The recent moderation in both inflation and labour market data may strengthen the case for lower yields over time, and we are watching closely for signs that the improving tone of central bank communication begins to translate into the bond market itself. We will continue to monitor these drivers carefully – particularly the stance of central banks – and adjust portfolios accordingly.

Ultimately, identifying the turning point, if and when it arrives, is likely to be one of the defining challenges for fixed income investors in the years ahead.

The post The structural forces behind higher bond yields appeared first on MoneyFarm Insights.

Moneyfarm launched in the UK in 2016 and has grown steadily since, now managing over £7bn in assets. Along the way, we’ve strengthened our position through strategic partnerships and investment from major institutions such as M&G and Allianz.

Our purpose is to help more people improve their financial well-being by making personal investing simple and accessible through technology. Historically, this type of service was only available to people with substantial wealth, and it came at a high cost. Advisors often justified these fees by relying on jargon that could confuse and impress, rather than genuinely inform.

However, by combining technology with a human touch, we’ve removed many of these barriers. Our simple, intuitive app and web platform make it easier than ever to understand how your money is being managed – whether you’re using a Stocks and Shares ISA or exploring our wider range of products, such as pensions, Junior ISAs, General Investment Accounts, Cash ISAs, or even execution-only investing. Having easy and transparent access all in one place is a key part of our beliefs as we move closer to being a total wealth partner to our clients.

Over the past years, we’ve continued to expand and refine our offering. The latest step in our mission to make finance simple and accessible is the launch of Bastian, our Artificial Intelligence (AI) agent designed to enhance the entire investment experience across our platform. Bastian represents an evolution in how clients interact with their investments andreflects our commitment to combining technology and expertise in a way that enhances, not complicates, your investment journey (discover more about Bastian AI here).

All these developments are part of our broader ambition to become a true wealth partner – a place where people can manage all of their financial needs in one home. So if there’s anything more we can help with, please don’t hesitate to contact our friendly team.

We are also happy to have been accredited with a few awards over the years, which has given us a sense of justification of the mission that we are on.

2023

• Best Digital Investment Provider at the Moneyfacts Consumer Awards 2023
• Best Buy ISA and Best for Low-cost Pension at the Boring Money Best Buy Awards 2023
• Best Investment ISA Medium Portfolio at YourMoney.com Investment Awards 2023
• CNBC & Statista – World’s Top Fintech Companies 2023

2024

• Best Investment ISA Medium Portfolio at YourMoney.com Investment Awards 2024
• Best Buy ISA, Best Buy Pension, Best Buy JISA, Value for Money at the Boring Money Best Buy Awards 2024
• Best Private Pension at the Good Money Guide Awards 2024
• Digital Wealth Management Provider of the Year at the Moneyfacts Consumer Awards 2024
• Platform of the Year, SIPP Provider of the Year, ISA Provider of the Year, App of the Year at the Celebration of Investment Awards 2024 by the Financial Times and Investors’ Chronicle
• FT1000 as one of Europe’s Fastest Growing Companies for 2024 by The Financial Times and Statista

2025

• Best Investment ISA and Best Mobile Investment Platform at the Yourmoney.com Investment Awards 2025
• Best Buy SIPP, Best App, and Best for Low-Cost ISA Funds and Shares at Boring Money Best Buys 2025
• Selective SIPP Provider, Selective ISA Provider, Selective Platform, App  at the Celebration of Investment Awards 2025 by the Financial Times and Investors’ Chronicle
• CNBC World’s Top Fintech Companies 2025
• FT1000 as one of Europe’s Fastest Growing Companies for 2025 by The Financial Times and Statista

2026

• CNBC World’s Top Fintech Companies 2026
• FT1000 as one of Europe’s Fastest Growing Companies for 2026 by The Financial Times and Statista 
• Digital Wealth Management Provider of the Year at the Moneyfactscompare.co.uk Awards 2026 
• Best for Low-cost Advice, Low-cost ISA Funds & Shares, Ready-made Solutions at Boring Money Best Buys 2026
• YourMoney.com Investment Awards – Best ESG Investment Platform and Best Investment ISA (medium portfolio)

And while we’re able to offer lower fees than traditional providers, we certainly don’t compromise on quality. Below, you can see how our portfolios have performed compared with the wider industry peer group (ARC).

Moneyfarm’s track record speaks for itself. With a broad and carefully designed range of solutions, we’re confident we can support every type of investor, whether you’re just getting started or looking for a trusted place to consolidate and grow your wealth over time.

Guidance+

We’ve also introduced Guidance+, which offers cashflow forecasting to help you understand whether you’re on track to meet your financial goals, and what steps you could take to strengthen your position. In addition, we provide external portfolio reviews to assess how well your investments are diversified, offering in-depth analysis of exposure, diversification and the level of volatility within your holdings.

At Moneyfarm, we’re proud to offer continuous support and guidance throughout your financial journey. Thank you for choosing us as your wealth partner. We’d love for you to get in touch with our Investment Consultant team so we can learn more about your goals and how we can best assist you. And of course, if you ever have any questions, we’re always here to help.

The post Inside our mission to make finance simple and accessible appeared first on MoneyFarm Insights.

There are a handful of topics dominating financial markets at present and inflation is one of them. With the conflict in the Middle East pushing oil prices higher, investors and central bankers have been paying close attention to how consumer prices are reacting. 

So far, we’ve seen a bit of a jump in headline inflation, but when you exclude food and energy, so-called core inflation looks fairly well behaved. Yes, inflation is above central bank targets and that has prompted the European Central Bank (ECB), at least, to raise its policy rate. But given the shock to energy prices, we’d still argue that inflation has so far been better than we might have feared. If that trend continues, central bankers might be able to get through 2026 without hiking rates, even if it’s still a close call.

Just to dig into the data a bit more; on Wednesday we saw the latest US inflation release, for July. The figures were very much in line with expectations. Headline inflation rose 3.4% year on year, while core inflation (excluding food and energy prices) rose 2.5%. These numbers are still above where the US central bank would like them to be, but given the oil shock from the Middle East and some fairly robust spending on Artificial Intelligence (AI), we think this is a better outcome than we might have feared at the end of March. 

Turning to the UK we see a broadly similar picture. The chart below shows annual inflation for goods, services and the overall consumer basket. Again, headline inflation is above the Bank of England’s 2% target, but if we just looked at this data, we might not guess that the oil price had jumped 50% from February to June.

What’s behind this relatively subdued response? We think there are a couple of reasons. First, while the oil price has risen, it’s gone up by much less than many had feared. As we’ve discussed before, we think that a sharp drop in Chinese oil imports has helped to protect the global economy, at least for now, from the supply disruption in the Strait of Hormuz. 

Second, we think that labour markets have softened a bit. US job creation has been pretty muted in recent months, as shown in the non-farm payrolls chart below – which tracks the number of salaried workers in the US economy, excluding agricultural workers, private household employees, and non-profit organisation staff.

In the UK, we see that the number of vacancies per unemployed worker has fallen steadily over the past three years.

Finally, we also think that Chinese businesses have ramped up their exports, possibly reflecting fairly weak domestic demand (see the chart below). We think Chinese trade could have helped cap inflation of goods in Europe and the US, even considering the impact of higher tariffs.

So, where does this leave us? 

We think inflation will remain a key focus of attention for investors and central bankers. Inflation in Europe and the US is running above target, and central bankers won’t be keen to repeat the 2022 experience, when inflation spiked and they were, with hindsight, slow to raise rates in response. 

At the same time, inflation has been better behaved than many feared, under the circumstances. The latest figures from the US give some grounds for optimism, particularly once you exclude food and energy. If we do see oil supply normalise (and we’ve written about it quite often over the past few months), then we could see inflation decelerate. That might not be enough for central bankers to bring down policy rates in the next few months, but it could give them enough reason to leave rates where they are. 

What does it mean for portfolios? 

We’ve had a number of interesting debates on this point in recent weeks. Yields have risen, both nominal and inflation-adjusted. At the same time, inflation swaps (which forecast future inflation) have stayed fairly low – suggesting that investors already expect inflation to normalise over the next twelve months. If inflation does decelerate, then there should be limited scope for higher policy rates, and that should be broadly supportive of equities. 

Then we have the question of government deficits in Europe and the US. Governments will certainly be selling more bonds in the future. Given that context, we remain a bit wary of buying longer-dated government bonds, even if we could see inflation decelerate. For now, on balance we continue to prefer shorter-dated bonds, where we think yields remain attractive.  

The post Reassuring signals from the latest inflation data appeared first on MoneyFarm Insights.

With inflation remaining persistent, we believe clients deserve a solution that helps their money work harder – delivering growth even over shorter time horizons without requiring excessive risk.

Traditional savings solutions may no longer offer the same level of protection or return in real terms. At the same time, moving too far up the risk spectrum is not always appropriate, especially for short-term goals.

This is exactly the gap that Enhanced Yield is designed to address.

A different approach to short-term investing

Enhanced Yield is a discretionary portfolio designed as an alternative to traditional savings accounts. Its objective is simple: to deliver returns above cash, while keeping risk at a controlled level.

Specifically, the strategy targets returns 1% above the Bank of England base rate, which currently translates to a gross annualised target return of 5.02%*, based on the weighted average of the gross returns regularly published by the underlying instruments. 

Rather than relying on static allocations, the portfolio is managed through an optimiser that dynamically selects the most efficient mix of assets to pursue this objective while minimising risk.

This makes Enhanced Yield particularly suited for:

• short-term investment horizons (1–3 years)
  
• investors looking to reduce exposure to market volatility
  
• those seeking an alternative to cash without sacrificing growth potential
  

Why consider Enhanced Yield?

By choosing Enhanced Yield, you can benefit from:

Consistent and stable returns – Targeting a steady return of 1% above the Bank of England base rate, currently 5.02% (gross of Moneyfarm fees).

Low risk – Built to reduce volatility and maximum drawdowns relative to comparable fixed income strategies.

Active management and continuous monitoring – Systematically managed through an optimiser designed to maintain the most efficient allocation over time.

Low and transparent costs – 0.3% all-in annual Moneyfarm fee plus an average underlying instrument costs of 0.27%.

No lock-ins – Designed for a 1-3 year horizon, but with no minimum holding period. You can invest and withdraw at any time, with settlement generally within three business days. The advertised rate applies to all clients – not just new customers or those benefiting from temporary ‘boost’ offers.

This is not a deposit account nor a pure money market fund, and invested capital is subject to risk. Unlike a bank account, returns vary over time depending on different factors and are sensitive to changes in interest rates: a decline in rates may result in a reduction in expected returns. The current return is gross of Moneyfarm fees and net of TER of the underlying instruments.

How the strategy works

The objective of Enhanced Yield is to preserve capital and generate returns aligned with short-term interest rate trends, aiming for higher outcomes compared to traditional cash holdings.

The solution may invest mainly through institutional funds or Exchange Traded Funds (ETFs), across money market instruments, short-term government bonds, corporate bonds, and selected exposures (like high yield bonds) to broaden diversification while seeking better potential return opportunities at the same time.

This approach aims to capture potentially higher returns than a traditional money market fund, while maintaining a limited risk profile.

Understanding the risk

Below, we review the historical performance of the Enhanced Yield strategy and how it has behaved across different market environments – including more challenging periods such as 2020 and 2022^*. We also compare it with cash and other bond investments.

Over the period shown, Enhanced Yield delivered stronger cumulative returns than short-term bonds, with lower volatility and more limited drawdowns. Compared to cash, it involves some market risk – for example, during the bond market stress of 2022, it experienced a maximum drawdown of 4%.

*Please note that this portfolio didn’t exist over this period, this is a simulation of the strategy over the period. This can be affected by institutional funds or ETFs availability and starting point taken for the start of the simulation. This also doesn’t factor in any liquidity risk that may arise in future bond market downturns – although it factors in the risk that was present in 2022 and 2020.

Capital is at risk. The value of the investment may fall as well as rise and you may receive back less than you invested. Return projections are not a reliable indicator of future performance. It is important to consider your risk tolerance and investment objectives before proceeding.

The post Enhanced Yield: make your money work harder for you appeared first on MoneyFarm Insights.

Summer is a chance to slow down, but the world doesn’t stop moving. Markets, geopolitics, technology and the global economy continue to evolve, making it harder than ever to keep up with the stories that matter. That’s why we’ve selected 10 podcasts that explore these themes from different perspectives, offering insights, analysis and fresh ways of thinking. Here are the podcasts our team recommends for your summer listening.

A Matter of Interest

Moneyfarm’s podcast is your reality check on global markets. Every two weeks, join Richard Flax (our Chief Investment Officer) and Jack Amy (our Quantitative Trading Analyst), as they cut through the noise to serve up fresh market trends, data-driven insights, and strategic takeaways, minus the textbook jargon. It’s definitive finance, made down-to-earth.

Trends with Friends

Investor Howard Lindzon and his guests discuss the latest trends in technology, markets and entrepreneurship. Blending data, investing and personal insights, the podcast focuses on the long-term themes shaping innovation and capital markets.

The a16z Show

Produced by Andreessen Horowitz, one of Silicon Valley’s leading venture capital firms, the a16z Podcast explores the technologies and ideas defining the future. Covering AI, crypto, healthcare, software and venture investing, it features conversations with founders, investors and industry experts at the forefront of innovation.

Odd Lots

Hosted by Bloomberg’s Joe Weisenthal and Tracy Alloway, Odd Lots takes a deep dive into the ideas, people and trends driving global markets. From central banking and commodities to financial history and emerging technologies, each episode combines expert interviews with accessible analysis.

Money Talks 

The Economist‘s weekly podcast examines the stories behind the global economy, from inflation and trade to innovation and public policy. Combining expert reporting with sharp analysis, it helps listeners understand the forces shaping business and financial markets.

Acquired

One of the most popular business podcasts, Acquired tells the stories behind some of the world’s most successful companies. Through in-depth episodes, the hosts explore how businesses such as Apple, NVIDIA and Costco were built, uncovering the strategic decisions that shaped their growth.

Monetary Matters

Hosted by financial journalist Jack Farley, Monetary Matters features in-depth conversations with some of the world’s leading investors, economists and market experts. Covering macroeconomics, monetary policy, fixed income and global markets, each episode goes beyond the headlines to explore the forces driving the financial system. 

Hard Fork 

Technology journalists Kevin Roose and Casey Newton unpack the biggest stories in AI, Silicon Valley and the digital economy. Blending analysis with humour, the podcast by The New York Times explores how technological innovation is reshaping business, politics and everyday life.

The Prof G Pod

Professor Scott Galloway combines market analysis, business strategy and social commentary to explain the trends transforming the global economy. Featuring interviews with leading entrepreneurs, investors and policymakers, the podcast offers thought-provoking perspectives on business and investing.

More than the Score

More than the Score goes beyond match results to explore the stories shaping the world of sport. Through interviews with athletes, coaches, journalists and industry experts, the podcast examines the cultural, economic and social forces behind major sporting events, from football and Formula One to athletics and tennis. It’s an engaging listen for anyone interested in the bigger picture behind the headlines.

The post 10 podcasts to tune into this summer appeared first on MoneyFarm Insights.

Investors aren’t bad at investing; they’re often overwhelmed and exhausted by too many decisions. Our special contributor and Daily Telegraph columnist David Stevenson explores why poor financial behaviours are often driven by decision fatigue rather than lack of skill, and explains how greater discipline can help improve long-term outcomes.

Over 100 years ago, a statistician called Francis Galton attended a county fair in Plymouth where visitors were competing to estimate the slaughtered and dressed weight of an ox. Galton collected and analysed hundreds of eligible entries from the competition, including butchers and farmers who were highly expert in judging cattle, as well as many ordinary visitors guided only by their hunch. The middlemost (median) estimate was 1,207 pounds for the crowd. The actual dressed weight of the ox was 1,198 pounds – meaning the crowd was accurate to within 0.8% of the true value.

Roughly a hundred years later, another academic, this time a psychology and political science professor at the University of Pennsylvania, called Philip Tetlock, decided to tackle the wisdom of the crowd and the power of experts.

To test his theory, Tetlock pulled together 284 highly credentialed experts (economists, intelligence analysts, political scientists) and then tracked the performance of their individual predictions about the future. It won’t come as a surprise to learn that these experts were highly confident in their insights and largely dismissed the opinions of the crowd, aka the common person. Over two decades, Tetlock tracked 82,361 individual predictions they made about the future.

The US academic famously concluded that the average expert was roughly as accurate as a “dart-throwing chimpanzee.” The highly credentialed experts were routinely outperformed by simple statistical algorithms, and more importantly, by the aggregated guesses of well-informed laypeople. Tetlock found an inverse correlation between an expert’s fame/confidence and their actual accuracy.

This detour into the world of crowd psychology is meant as an opening insight into the war that is constantly waged against private investors, who, as many investment professionals see them, are repeat losers who need all the expert advice they can get (and pay for). To be fair to the experts, as we will discover, there is a mountain of evidence that suggests most, though not all, private investors ‘underperform’ their professional peers, but that’s largely a function of a series of behavioural biases that can be corrected, modified and managed.

So, before we look at the evidence for the ‘expert’ prosecution, let’s start with the good news: private investors, as a crowd, can be very successful. The UK online trading platform Interactive Investor regularly tracks its investors (via the Private Investor Performance Index) and finds they frequently outperform professional fund managers and portfolio asset allocators. Some academics have also rallied behind the idea that investors can beat the professional experts, notably a paper from 2003 and revised in 2018 (Coval, Hirshleifer and Shumway – Can Individual Investors Beat the Market?, 2021) which used individual US brokerage account data. This study documented persistent superior trading performance among a subset of individual investors, especially those skilful individual investors who can exploit market inefficiencies to earn abnormal profits above and beyond any gains available from well-known strategies. 

But I’d also be lying to you if I said that the great weight of academic and industry research backs up the wisdom of the crowds. Sadly, the evidence suggests that, on average, private investors do ‘underperform’. I’ll quickly spin through the evidence before pondering what this data tells us.

Amongst the highlights/lowlights, depending on your point of view, in research, there’s the definitive study by Barber and Odean (2000), published in the Journal of Finance. This found that the most active traders among 66,465 US brokerage households earned an annual return of just 11.4%, against a market return of 17.9%. The least active investors, by contrast, earned 18.5% net of costs – a gap of more than seven percentage points. The culprit, the authors argued, was overconfidence: investors systematically overstated the quality of their information and traded on it at their own expense.

Another Barber and Odean study, this time from 2001, called “Boys Will Be Boys,” analysed common stock investments of more than 35,000 households from February 1991 to January 1997. Men traded 45% more than women and earned annual risk-adjusted net returns that were 1.4 percentage points lower. Between single men and single women, the gap was starker still: single men traded 67% more and underperformed by 2.3 percentage points annually.

Many experts point to a brilliant paper based on Swedish household data (Calvet, Campbell and Sodini, 2007), which identified two reasons for underperformance, namely under diversification and non-participation in risky asset markets. The authors found that financially sophisticated households invested more efficiently, but also more aggressively, and on net incurred higher return losses from underdiversification.

In terms of industry research, Morningstar regularly measures the difference between a fund’s reported total return and the actual returns earned by the fund’s investors. Recent estimates put this global annual behaviour gap at roughly 1.15% to 1.22% per year over a 10-year period. This implies that retail investors forgo approximately 15% of their potential returns simply by trying to time the market, rather than holding their positions steadily as institutional asset managers do.

The industry gold standard is a report by an American organisation called Dalbar inc. Its last annual report (Quantitative Analysis of Investor Behavior report) from 2025 found that the average equity investor earned just 16.54% in 2024, compared to the 25.02% return of the S&P 500 (the market index tracking the stock performance of the 500 leading US companies). The 848-basis-point lag represented the second-largest investor performance gap of the past decade. The report found that this contrast in performance “reflects differences in how investors respond to market conditions across asset classes – and how behavioural factors shape outcomes in more ways than one”.

A legion of behavioural biases

The point of many of these studies is not to say that private investors are always wrong, or that they can’t outperform or even that they are stupid. Rather, study after study has shown that the ‘average’ investor exhibits a series of biases, identified in mass psychology research, that undermine their returns. Amongst the biases that study after study have shown are:

• Overconfidence: overestimating skill and information precision, leading to excessive trading.
• Disposition effect: selling winners too quickly, holding losers too long.
• Loss aversion and narrow framing: focusing on short‑term losses more than long‑term distribution of outcomes.
• Herding and social influence: trading with the crowd, trend‑chasing.
• Home bias and familiarity bias: overweighting domestic and familiar assets.
• Mental accounting: segregating pots of money and risks in non‑optimal ways.
• Anchoring: fixating on purchase prices, past peaks, or salient round numbers.

Empirical work across countries finds these biases more pronounced among private than institutional investors, though institutions are not immune. A recent mixed‑methods study on retail investors, for example, found overconfidence, herding, mental accounting, anchoring, and loss aversion all significantly associated with mistakes in investment decision‑making.

It’s worth digging a little deeper into these biases, starting with the first academic study I mentioned by Barber and Odean. They analysed trading records for those US brokerage accounts and found that investors demonstrated a clear bias towards realising gains rather than losses. The stocks investors sold for a gain went on to outperform the stocks they held for a loss by around 3.4% over the following year – a finding that underscores just how costly the bias is in practice.

Another problem identified by US academics is that individual investors face a vast stock-selection problem, and, as a result, many rely on decision shortcuts. Rather than searching systematically, many investors consider only stocks that first catch their attention – those in the news or with large price moves.

This has been backed up by research in the UK by the regulators, the Financial Conduct Authority (FCA), which found that non-advised UK investors used rules of thumb and cognitive shortcuts. The research identified three broad consumer types:confident self-starters, eager learners and hesitant hopefuls – and found that as investors gained experience, they generally adopted more considered approaches, though this was not universal.

Another core problem is home bias, especially among US and UK investors, who hold portfolios heavily tilted toward domestic equities. Familiarity reduces perceived risk, encouraging concentrated exposures in local markets or industries even when global diversification would improve risk‑adjusted returns. This leads to over‑exposure to domestic macro- and policy-related risks and under‑exposure to international diversification benefits.

I’d also draw attention to a cracking study by Clare and Motson (Bayes Business School / City, University of London), which looked at the UK mutual fund industry and quantified the exact cost of poor timing decisions. They found that, on average, UK retail investors lost performance equivalent to roughly 1.2% per year due to sub-optimal, wealth-reducing timing. Crucially, when Clare and Motson analyzed institutional fund flows, they found the performance gap was virtually 0.00% per year. The wealth destruction caused by buying high and selling low was entirely isolated to the retail sector. In simple terms, too many of us poorly time our investment decisions.

The experts are flawed too

OK, so I think you get the message, but before we discuss what you can do about these behaviour-based biases, I think it is important to add one crucial caveat: the experts get it wrong as well, all too frequently. Active fund managers, for instance, consistently underperform their benchmarks. For instance, the SPIVA Scorecard, from S&P Dow Jones, is the industry standard for the active-versus-passive debate. In various reports, it has been found that over the 20-year period from 2005 to 2024, 94.1% of all US domestic funds underperformed the S&P 1500 Composite Index. On a risk-adjusted basis, the performance was even worse, with 97.3% of domestic funds underperforming. Less than half of domestic funds even survived the full 20-year period.

This finding has been echoed in another UK study (Cuthbertson, Nitzsche and O’Sullivan – Journal of Empirical Finance, 2008) which looked at UK based funds, unit trusts, and found around 0 to 5% of top-performing UK and US equity mutual funds have truly positive alpha performance after fees, and around 20% of funds have truly poor alpha performance, with roughly 75% of active funds which are effectively zero-alpha funds. Key drivers of relative performance are fees, expenses and turnover. There is little evidence of successful market timing.

Another more focused insight is that the average fund manager runs a portfolio that probably amounts to between £500m and £1 billion. If they make a big change to their portfolio, it can be ‘awkward’ to manage the resulting market liquidity, distort the trading price, or even slow down a trade altogether. Also, because of their fund size, these professional managers tend to avoid a huge swathe of the market represented by smaller market-cap or value companies, simply because they can’t get enough liquidity to make the trade. Private investors face none of these challenges.

Become a better investor

It’s hard not to conclude from the mountain of research that private investors, in aggregate, underperform, primarily because of excessive trading, poor timing and concentrated, poorly diversified portfolios i.e poorly managed behaviour that can be overcome with some simple rules.

But professional fund managers also underperform the market in aggregate – by smaller margins, but still reliably so, and almost entirely because of fees and costs. Genuine persistent skill exists in both populations, but it is rare.

So, how might private investors think about investing differently? I’d suggest five simple rules:

1)    Don’t be overconfident, and do not completely rely on mental shortcuts. Do your own research (DYODD – do your own due diligence), be well read, informed and always think through what could go wrong with your investment decisions. Also be incredibly careful about what you read, who you listen to and who you respect in terms of guidance, perhaps starting with social media which is full of pratfalls and dangers. If that all seems like too much of an ask, then get advice and get a professional to do it all for you.

2)    Do less, not more, and don’t spend much time trying to time markets. It’s usually a fool’s errand to constantly overtrade, and over time, market swings: even the professionals struggle with this challenge. If you have a long enough time frame for investing, stay invested and make regular, steady contributions. If you do feel the need to be more speculative, split your portfolio into a core portfolio, which you leave alone, and a satellite portfolio in which you are more tactical.

3)    Make sure you are properly diversified and don’t fall for the home bias trap. That also means you might be super careful about being too exposed to dominant market narratives i.e the US, Artificial Intelligence and technology. Sensible diversification is always about managing the downside risk as much as it is about the upside.

4)    Be supremely aware of cost and how excessive fees destroy your long-term returns. Cut costs by using cheaper funds and don’t fall for the siren call of expensive alpha fund management – it usually doesn’t deliver, and if I’m honest, most of the really consistently successful hedge fund managers, for instance, are not open to private investors anyway!

5)    If you are a more active investor, be aware of your limitations, have a fixed set of rules you stick to and crucially don’t make the common mistake of sitting tight on your losses and cutting your winners too quickly.

Discover our managed portfolios

Our managed portfolios are at the heart of what we offer. Our Asset Allocation team has been successfully managing globally diversified, multi-asset portfolios for over a decade. Carefully tailored to suit varying levels of risk, we ensure that our portfolios are in tune with what you want to achieve.

Our investment consultants are here to support you every step of the way. With our easy-to-use app, you can monitor your investments 24/7, giving you complete peace of mind.

Please remember that when investing, your capital is at risk. The value of your portfolio with Moneyfarm can go down as well as up and you may get back less than you invest. Past performance is not a reliable indicator of future performance. The views expressed here should not be taken as a recommendation, advice or forecast. Investing is usually for the long term, but it depends on the circumstances of each individual. If you are unsure investing is the right choice for you, please seek financial advice.

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Culture, specialist expertise and a robust structure are key to building and managing our portfolios, and these principles come to life through the work of our Asset Allocation Team, which applies its technical know‑how every day to the complex processes that shape our investment strategy.

Yet behind the technique, equally important, lies our investment philosophy. Our founding principles guide the rigorous, research‑driven work of our experts in building portfolios designed to help each client achieve their goals and feel confident, even in uncertain times.

Here are the five pillars that guide our approach.

1. Focus on asset allocation

According to a study in the Financial Analysts Journal, nearly 90% of a portfolio’s long‑term performance variability is driven by asset allocation and diversification, while market timing plays a minor role.  

We share this view: asset allocation – the balance of asset classes such as equities, bonds, and commodities – is, in our belief, the primary driver for the potential of long‑term returns.

That’s why we prioritise broad market segments, analysed within the global macroeconomic context, rather than individual stocks or companies. This approach is more resilient, less affected by short‑term noise, and better positioned to create lasting value even though we understand that this can’t always be the case.

If you’d like to learn more about how our asset allocation process works, you can read our story here.

2. Risk management

We don’t aim to “beat the market”; our focus is on creating portfolios that stand strong through the most challenging times.

There is no return without risk, but risks can – and must – be understood, measured and managed. That’s why we constantly monitor volatility, carry out scenario analyses, assess correlations between assets, and ensure every portfolio remains aligned with the investor’s profile to help manage some risks.

3. Long‑term horizon

Financial markets can be unpredictable in the short term. News, macro data and political events often generate fluctuations that risk distracting investors.

We believe staying the course is the best possible competitive advantage. Remaining invested over time, with discipline, allows you to benefit from market growth and the compounding effect, whilst understanding that the capital is at risk. That’s why we design portfolios to support clients throughout their entire journey – even during difficult times.

4. Low costs

Over time, even a few tenths of a percentage point can make a big difference. That’s why one of our fundamental principles is to keep costs low, without compromising on quality.
We use efficient instruments such as ETFs and ETCs, selected through a rigorous process, and adopt a long‑term approach to avoid unnecessary and costly transactions. In a climate where future returns may be lower than in the past, every pound saved on costs is a pound that stays working for the client. In this framework, portfolio rebalancing plays a crucial role.

To learn more about how we select instruments to optimise costs, you can read our detailed article.

5. Focus on investor goals

Every Moneyfarm portfolio is designed to help investors reach their goals – whether it’s boosting a pension, saving for children’s university fees, or protecting their wealth.
Our process begins with a thorough assessment of the investor’s profile: risk tolerance, loss capacity, time horizon and financial experience. 

Alongside this comes the support of a consultant, ready to step in at key moments to prevent impulsive decisions and ensure the strategy remains aligned with real needs.

Investing with Moneyfarm means relying on a structured, transparent, long‑term strategy. It is not the markets that set the course, but the goals of those who entrust us with their savings – and it’s on those goals that we build stability and value over time.

Investments in financial instruments are subject to market fluctuations and may result in the partial or total loss of the capital initially invested.  Past performances aren’t an indicator of future returns.

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This week we wanted to talk about interest rates and how the Federal Reserve (Fed) communicates its interest rate policy. At a time when everyone believes that “more is better” when it comes to information, the new Chair of the Fed, Kevin Warsh, and others favour a different approach.

Over the past twenty years or so, the US Federal Reserve has communicated quite extensively with investors – in speeches, press conferences and regular economic forecasts. This so-called policy of “forward guidance” was intended to give investors a pretty clear idea of what the Fed intended to do in the future. The idea was that this would help to anchor expectations for interest rate policy.

In recent years, there’s been some pushback – most notably from the new chair of the Fed. In fairness, Warsh has been sceptical about the approach for some time. The argument is that telling everyone what you’re going to do in the future makes it harder for you to change your mind, even when you should.

Critics of forward guidance typically refer to the period of 2021-2023 to support their case. Inflation spiked following the post-Covid re-opening and the Russian invasion of Ukraine. Critics argue that the Fed moved too slowly to change its stance and hike interest rates – in part because it had initially argued that inflation would prove transitory. Critics believe the decision to keep rates lower for longer kept inflation higher than it would otherwise have been and damaged the credibility of the Central bank. Some say that the policy meant that investors spent too much time trying to understand how the Fed would interpret data, rather than thinking about how the economy was behaving. Warsh wants investors to “play the ball, not the referee”.

So much for the debate – where are we now? At its latest meeting US central bankers left their policy rate unchanged, but with three members of the committee wanting to raise rates. That’s an unusually high level of disagreement. At the press conference, Chair Warsh said relatively little about his thinking on the economy, while reiterating firmly his commitment to bring down inflation towards the 2% target.  

That approach brought a mixed reaction from investors. The immediate reaction from the bond market saw short-term yields fall, while longer-term yields rose. Warsh argued that the bond market was doing the Fed’s work for it. Higher long-dated yields could mean that the central bank wouldn’t need to raise its policy rate to impact the economy. That might be true, but it’s reasonable to ask if that improves or damages the Fed’s credibility.

At this point, it’s worth asking what “credibility” really means. We could say that it comes back to the question of where inflation really comes from. There are a range of views around that, but one view says that expectations about future inflation are important. So if businesses and households believe inflation will be low, then that helps make it a self-fulfilling prophecy. If you don’t have credibility, and inflation is higher, that likely means that bond yields will be higher too.

So, where does this get us? For now, we should expect to see less information from the Fed. That should mean that investors spend more time thinking about macro data, but also it might mean that investor expectations become more important. If investors signal that they expect a rate hike, that might impact the Fed’s thinking rather than the other way around. With less guidance about future policy from the Central Bank we could also expect to see bond yields that are, for now, a bit higher than they might have been and with more volatility. In the long term, that might create a better outcome for monetary policy, if inflation falls back to target faster. But in the short term it might create some headwinds for businesses and households in terms of borrowing costs. 

Ultimately, a world with less forward guidance might reward disciplined investing over short-term forecasting. Rather than trying to anticipate every policy decision, we believe the focus should remain on building resilient portfolios that can adapt to a wide range of economic outcomes.

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Welcome to a new episode of A Matter of Interest podcast, your fortnightly reality check on global markets, hosted by Moneyfarm. Every two weeks, Richard Flax (our Chief Investment Officer) and Jack Amy (our Quantitative Trading Analyst) cut through the noise to serve up fresh market trends, data-driven insights, and strategic takeaways, minus the textbook jargon.

This week, we unpack a shifting market landscape driven by changing central bank playbooks and the rising cost of massive tech investments.

Specifically, we examine what the Federal Reserve’s shift away from forward guidance means for bond yields, why Big Tech’s record AI spending is raising tricky questions about actual returns, and what South Korea’s recent market turbulence reveals about the broader tech supply chain. Tune in as we make sense of it all.

Key takeaways

• Markets’ reaction to the Fed meeting – from 0:32
• A bumpy month for Tech stocks – from 13:07

You can also listen to the episode on Apple Podcast and YouTube.

The post New playbooks, heavy pays and volatile days appeared first on MoneyFarm Insights.

Summer is the ideal time to enjoy one of life’s rarest luxuries: the chance to slow down with a good book. Fewer meetings, fewer distractions and, hopefully, a break from the constant stream of notifications. That’s why our team has selected 10 books worth taking on holiday or keeping by your bedside: novels, non-fiction and fresh ideas that might broaden your perspective – or simply make for a great summer read. If you’re looking for your next book, you may well find it on this list.

Power and Prediction: the disruptive economics of Artificial Intelligence (Ajay Agrawal, 2022)

Artificial intelligence is transforming far more than technology – it is reshaping the economics of decision-making. Ajay Agrawal, Joshua Gans and Avi Goldfarb explain how AI lowers the cost of prediction and what this means for businesses, markets and society. A thought-provoking read for anyone interested in the long-term economic impact of AI.

Broken Money: why our financial system is failing us and how we can make it better (Lyn Alden, 2023)

Lyn Alden traces the evolution of money, from early monetary systems to today’s digital assets, to explain the strengths and weaknesses of modern finance. Blending history, economics and monetary theory, she explores topics such as inflation, debt and financial innovation. An insightful read for investors looking to better understand the foundations of the global financial system.

AI Engineering: building applications with foundation models (Chip Huyen, 2024)

As generative AI moves from experimentation to real-world deployment, Chip Huyen offers a practical guide to building applications with foundation models. Covering everything from model selection to deployment and evaluation, the book bridges technical concepts with business applications. Essential reading for anyone interested in the future of AI-powered products and services.

When Genius Failed: the rise and fall of long-term capital management (Roger Lowenstein, 2001)

This classic account tells the extraordinary story of Long-Term Capital Management, the hedge fund run by some of the brightest minds in finance before its spectacular collapse. Roger Lowenstein explores how excessive leverage, overconfidence and unexpected market events combined to threaten the global financial system. A timeless reminder of the importance of risk management.

The Signal and the Noise (Nate Silver, 2012)

Why do some forecasts succeed while so many others fail? Nate Silver explores how to separate meaningful information from the overwhelming amount of noise surrounding us, drawing on examples from finance, politics, science and sport. A fascinating introduction to probability, uncertainty and better decision-making.

Culpability (Bruce Holsinger, 2026)

A fast-paced thriller that explores the intersection of technology, social media and justice. Bruce Holsinger examines how reputation, truth and accountability are shaped in a world where information spreads instantly and public opinion can change overnight. An engaging novel that raises timely questions about trust in the digital age.

The Psychology of Money (Morgan Housel, 2020)

Morgan Housel argues that successful investing depends less on intelligence than on behaviour. Through a series of engaging stories, he shows how emotions, habits and personal experiences shape financial decisions. A modern classic that offers practical lessons for building wealth and making better long-term investment choices.

Atlas of AI (Kate Crawford, 2021)

Kate Crawford looks beyond the hype surrounding Artificial Intelligence to examine the environmental, social and political systems that make it possible. From data collection to labour, natural resources and power, she explores the hidden costs of AI. A compelling perspective on one of the defining technologies of our time.

Chip War (Chris Miller, 2022)

Semiconductors have become one of the world’s most strategic resources, shaping everything from smartphones to military technology. Chris Miller explains how the global race to control chip production has become central to geopolitics, innovation and economic growth. An essential guide to understanding one of today’s most important industries.

The New Map (Daniel Yergin, 2020)

Pulitzer Prize-winning author Daniel Yergin explores how energy is reshaping the global balance of power. Covering oil, natural gas, renewables and geopolitics, he explains how the transition to new energy sources is influencing international relations and economic strategy. A comprehensive overview of the forces driving today’s energy landscape.

The post 10 books for your summer reading list appeared first on MoneyFarm Insights.

Asking “which ISA is best for me?” is really about matching the ISA type to your goal, time horizon and tolerance for risk. You can choose from five main types of ISAs, each with different rules, allowances and risks.

In the UK, there are different types of ISAs, each with different characteristics, allowances, benefits and levels of risk. Understanding how each one works can help you decide if one ISA is right for you, or if a combination of different ISAs could better suit your needs.

Below we explain how ISAs work, what has changed for 2026/27, and how to decide which ISA or mix of ISAs suits you.

Although the ISA system can appear complex, with five different types available, the principle is straightforward. An ISA is simply a savings or investment account that allows your money to grow free from UK income tax, dividend tax and capital gains tax.

Outside an ISA, profits above the annual capital gains allowance and income above the dividend allowance are taxable. By holding investments within an ISA, these charges do not apply.

For the 2026/27 tax year, ISA allowance is £20,000 in total, spread across any combination of ISAs. Each ISA type is designed to be tax-efficient, but it is important to note that ISA balances are normally included in your estate for inheritance tax purposes. Only transfers to a spouse or civil partner via the Additional Permitted Subscription rules are exempt.

INVEST IN A STOCKS AND SHARES ISA WITH MONEYFARM

What types of ISAs are there?

Each ISA account can play a part in reliable financial planning according to your individual circumstances and financial goals, but to apply for any of the types of ISA, you must be a UK resident. The table below summarises the main characteristics of each ISA type.

1.     Cash ISA

Cash ISAs are tax-free savings accounts, and they are an attractive choice for savers looking to save for short-term needs and emergencies. Here are the key features:

• Tax-free interest: savings interest is free from UK income tax.
• Low risk: it is one of the safest ISA options, suitable for cautious savers.
• Best for emergency funds, short-term savings and protecting cash.
• Lower growth potential: returns are usually lower than investment-based ISAs and may be affected by inflation.
• Easy access or fixed rate: choose between flexible access or higher fixed rates with money locked away for a set period.
• Flexible withdrawals: some flexible Cash ISAs allow you to withdraw and replace money without affecting your ISA allowance.
• Multiple providers: you can open more than one ISA of the same type and transfer funds between providers.
• Compare rates: interest rates vary, so choosing a competitive provider can improve returns.

If you are saving for your child’s education, the best ISA to choose would be the tax-free Junior cash ISA account. Cash ISAs are among the best ISA accounts for people with low-risk tolerance. Different cash ISA providers offer different interest rates. Finding providers with the best ISA rates is essential if you want to open a cash ISA account.

2.     Stocks and shares ISA

Stocks and shares ISAs are tax-efficient accounts that act as wrappers for your investments. You can invest in companies directly or through managed funds. Managed funds are pooled arrangements run by professionals who manage money for other people. This type of investment ISA puts your money in stocks, bonds, funds, and other assets. As a result, it is one of the best ISA options as it can be used to diversify investments. Here are the key features:

• Tax-free investing: no UK income tax on interest, no tax on dividends and no Capital Gains Tax on investment gains within the ISA.
• Higher growth potential: offers the opportunity for higher returns than Cash ISAs, but with greater risk due to market fluctuations.
• Best for long-term goals such as retirement planning or building wealth over time.
• Investment choice: you can invest in shares, funds, bonds and other eligible investments.
• Annual allowance: up to £20,000 per tax year (shared across all adult ISAs).
• Multiple ISAs allowed: since April 2024, you can contribute to more than one Stocks & Shares ISA in the same tax year, within the overall allowance.
• Long-term approach recommended: a longer investment horizon can help manage market volatility and give investments more time to grow.
• Not ideal for short-term goals: for money needed within the next few years, a Cash ISA may be more suitable due to lower risk.

As usual, before starting to invest, you should pay off any expensive debt, have three months of outgoings saved up in case of an emergency, and have a longer time horizon in mind, but once you begin, you can begin planning for the future with a degree of confidence.

3.     Lifetime ISA

A Lifetime ISA could be the best type of ISA if you are saving for a deposit to buy your first home. It can also be used to save for later life, with funds accessible from age 60.  Here are the key features:

• Available to adults (age 18-39) who open a LISA before their 40th birthday.
• The Government adds a 25% bonus on contributions, up to £1,000 per year.
• Annual allowance: you can contribute up to £4,000 per tax year, which counts towards the overall £20,000 ISA allowance.
• Withdrawals are tax-free when used to buy a first home (up to £450,000) or after age 60.
• Two options available: you can choose between a Cash LISA or a Stocks & Shares LISA depending on your goals and risk tolerance.
• Best for first-time buyers or long-term retirement savings.
• Early withdrawal penalty: taking money out for reasons other than an eligible first home purchase, retirement after age 60, or certain exceptions usually involves a withdrawal charge.
• Long-term focus: a Stocks & Shares LISA may be more suitable for long-term goals, while a Cash LISA may suit those who prefer lower risk.

4.     Junior ISA

A Junior ISA is a long-term savings or investment account for children under the age of 18. It carries the same tax advantages as other ISAs, with all interest, dividends and capital gains sheltered from tax.

From the age of 16 the young person can manage the account, although funds remain locked until they reach 18. At that point, the Junior ISA automatically converts into an adult ISA in their name.

There are two types of Junior ISA:

• Cash Junior ISA, that pays tax-free interest and offers a secure way to save;
• Stocks and Shares Junior ISA invests in funds, equities or bonds, with the potential for higher long-term growth but with investment risk.

The allowance for the 2026/27 tax year is £9,000 per child. This limit is separate from the adult ISA allowance, so it does not reduce the £20,000 that parents may contribute to their own ISAs. Junior ISAs are intended to help families build a financial foundation for a child’s future, whether that is university, a first home or another significant milestone.

5.     Innovative Finance ISA

Innovative Finance ISAs are a great way to invest in peer-to-peer lending or crowdfunding using your tax-free ISA allowance. There is a £20,000 ISA limit on an innovative finance ISA, but remember, if there are other ISAs in your name, they all contribute to this amount.

Returns can be higher than cash savings, but they depend on borrowers meeting repayments, and investments are not protected by the FSCS financial compensation schemes. Even the strongest platforms involve higher risk compared with Cash or Stocks and Shares ISAs.

Understanding ISA risk levels

When choosing an ISA, it is important to consider not only the tax benefits but also the level of risk involved and how long you plan to keep your money invested. The table below compares the main ISA types based on their typical risk level, suggested timeframe and potential return.

Five factors to consider for an effective ISA account comparison

To help with the best ISA account comparison, here are the five things you should look for to find the best ISA for you.

1.     Get Professional Investment Advice

Stocks and Shares ISAs can be managed independently, giving you full control over your investments. But this also means taking responsibility for your strategy, asset allocation, and research. For those who don’t have the time, confidence, or expertise to manage their investments alone, professional advice can help make smarter decisions and create a portfolio aligned with their goals, risk appetite, and financial circumstances.

Thanks to innovation in financial services, expert investment advice is now more accessible than ever, available digitally, anytime and anywhere, at a lower cost than traditional options. At Moneyfarm, our technology combines expert investment advice with ongoing suitability checks, helping ensure your ISA continues to support your long-term financial goals.

2.     ISA portfolios fully managed by specialists

Choosing the right investments for your Stocks and Shares ISA can be challenging. Beyond deciding your asset allocation, you also need the time and discipline to monitor and adjust your portfolio over time. While some investors enjoy managing their own investments, others prefer to rely on experts who can make informed decisions on their behalf, allowing them to focus on their wider financial goals.

At Moneyfarm, our investment strategy is guided by a dedicated asset allocation team that takes a long-term view of market trends. We combine strategic planning with tactical adjustments, helping portfolios adapt to changing market conditions and capture new opportunities as they arise.

3.      Don’t let fees eat into your returns

Traditionally, professional investment management has come with high fees, meaning your investments need to grow more before you can see meaningful returns. Complex pricing structures have also made it difficult for investors to understand the true cost of managing their money.

Everyone should have access to transparent, cost-effective investment advice and professional portfolio management that helps them work towards their financial goals. At Moneyfarm, we believe in simplicity and transparency. We charge a single fee across all investments, which decreases as your portfolio grows, helping you keep more of your returns over time.

4.      Free transfers

People often transfer their ISAs to a new provider to benefit from lower fees and manage their investments more efficiently. When you want to move your money from one ISA provider – whether it be a bank, an asset manager or an investment platform – to another provider, it’s important you transfer your money correctly. You don’t want to take your money out of your ISA wrappers because you will lose the tax-free benefits you’ve accrued over the years unless you transfer it to another top ISA using the right transfer process.

ISA transfers have become hassle-free and straightforward for investors looking to make their money work harder for them. However, it’s important you understand whether you’ll be charged anything to move providers, as this could impact your decision.

Whether hidden or not, costs like transfer fees can eat into an investor’s return. At Moneyfarm, we believe investors should be able to transfer in and out for free, and you can. One of our founding philosophies was to be transparent over costs, which is why we don’t have any hidden charges.

5.     Invest Regularly

Adding regular contributions to a lump sum investment can help you grow your ISA over time and reduce the impact of market fluctuations.

Regular investing allows you to stay invested consistently, without the need to time the market.
At Moneyfarm, setting up regular deposits is simple and comes with no additional costs, helping you keep more of your money invested and benefit from long-term growth potential.

Which ISA to choose?

It depends on various factors. A short while ago, we performed a 10-year study comparing the performance of a hypothetical investment ISA vs that of a cash ISA. Against the backdrop of a low-interest environment, it’s clear to us that a well-diversified and actively managed Stocks and Shares ISA is the best ISA to use to help customers beat inflation and protect and grow their wealth for the long term.

You don’t need to be an expert to invest in stock markets and stocks and shares, and you certainly don’t need hundreds of thousands of pounds to do it. Digital technology has democratised the industry to such a degree that almost anyone can consider supplementing their future with a well-thought-out investment plan. So, you’ll want to choose an ISA provider and a wealth manager that utilises technology to make the process as frictionless and transparent as possible.

How to switch ISA provider

As we have discussed, people switch ISA providers for several reasons. Whether their current provider isn’t giving them the returns they need or they want to have all their investments in one, easy-to-manage place, choosing the best ISA for you may involve transferring—indeed, transferring an ISA is more common than you might think.

If you’re unsure whether it’s time to move your ISA, here’s a simple checklist.

• Is the return on your ISA lower than inflation? The purchasing power of your savings could be shrinking over time. You might want to think about switching to our best investment ISA – our Stocks and Shares ISA.
• Not finding the time to manage your money? You could be missing out on the important things in life because it’s taking you hours to manage your savings or investments. A provider like Moneyfarm does it all for you.
• Are fees eating into your returns? Your ISA could be costing you a small fortune, or you might not even be sure what you’re paying. Fees should be simple and low-cost.

You can transfer your existing ISA to Moneyfarm’s Stocks and Shares ISA or Cash ISA for a tailored investment experience. You can now transfer all or part of your ISA, including contributions from the current tax year and previous years, while keeping your existing tax benefits.

Transfers typically take up to 30 days, and Moneyfarm doesn’t charge any transfer fees (although your current provider may). Our investment advisory team can guide you through the process, handling the administration and helping you choose the ISA that best suits your goals.

Frequently Asked Questions

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Before we get into which UK REIT ETFs to invest in, let’s make sure we’re all on the same page when it comes to what is an ETF. Exchange-traded funds (ETFs), are a kind of security that follows an asset, whether that asset is a commodity, a sector, or something else that can be bought and sold on a stock exchange, in a similar way to that of a regular stock or share.  When it comes to ETFs vs Index Funds, both are worthy investment vehicles for investors, the differences between the two can make each product more or less suitable for a given investor.

What about REITs?  An REIT, or Real Estate Investment Trust, is a form of investment fund, similar to a mutual fund, whose portfolios are comprised of real estate holdings of private residences, commercial real estate like offices or retail locations. Real estate investment trusts companies own and manage real estate properties to generate income. The three main types of REITs are Equity REITs, mortgage REITs, and hybrid REITs.

Different types of REITs

REITs can be classified into different types depending on how they generate income and where they invest. Each type offers different levels of risk, income potential, and exposure to the real estate market. The table below summarises the main REIT categories and the situations they are most suitable for.

1.     Equity REITs

Equity REITs account for the vast majority of REITs, owning or directly investing in income-producing real estate properties. The revenue that these REITs generate comes directly from rental income generated by the properties. The types of properties that are usually included in REITs range from shopping malls, apartment and condominium buildings, corporate office spaces, nursing homes, and even storage facilities.

2.     Mortgage REITs

As opposed to equity REITs, mortgage REITs invest in real estate mortgages, buying either residential or commercial mortgage-backed securities (MBS) or others directly purchasing or originating mortgages for borrowers and homeowners. Mortgage REITs generate a profit from the interest earned from price appreciation in the value of the MBS or the interest earned from mortgage loans.

3.     Hybrid REITs

While they only make up a small percentage of the REIT industry, hybrid REITs combine the approaches of equity and mortgage-backed REITs. They make direct investments in both real estate and mortgage loans. Investors can profit from both equity and mortgage REITs in one asset by investing in hybrid REITs. Despite the fact that they may invest in both physical real estate and mortgages/MBSs, they normally favor one over the other. Investing in hybrid REITs has a low risk profile and provides consistent income from property appreciation and dividend payouts.

REITs themselves are also traded on major stock exchanges, where investors may purchase shares directly in an REIT, representing ownership of the individual company, just like regular stocks. In comparison, REIT ETFs primarily invest in equity REIT securities as well as other derivatives, tracking real estate indices with low expense ratios. As a result, investors have greater exposure to the larger real estate sector with less risk, since REIT indices include many different types of REITs.

Are REIT ETFs worth it?

Investing in real estate investment trusts in general can be a great addition to investment portfolios for risk-averse investors looking for consistent dividends as a way of generating steady income that is protected from inflation. In a certain sense, that is the true benefit to investing in real estate in general. As for owning REIT ETFs specifically, on the other hand, this type of investment can be a more solid choice for investors who are looking for real estate investments in the UK that provide for greater flexibility and diversification than investing in brick and mortar.

REIT ETFs represent a more accessible means for investing in real estate, since not all investors have the capital required to invest in brick and mortar, while there are usually no or low minimum investments for buying REIT ETF shares. REIT ETFs track a variety of REIT holdings which also generate strong, steady returns, however, REIT ETFs and ETFs in general are not without their drawbacks.

REIT ETFs offer several advantages for investors who want to access the real estate market in a simple, flexible and diversified way. The main benefits:

• Diversification: REIT ETFs invest in a wide range of real estate companies, reducing the risk compared with investing in a single property or REIT.
• Low initial investment: you can access the real estate market without needing a large amount of capital to buy physical properties.
• Regular income: REIT ETFs can provide a steady income through dividends generated by rental income and other real estate activities.
• Easy to buy and sell: unlike physical properties, REIT ETF shares can be traded easily on stock exchanges, offering greater liquidity.
• Inflation protection: real estate investments can help protect income from inflation, as property values and rental prices may increase over time.

One of the main criticisms of ETFs is that relative to other investment vehicles, they do not provide as high returns, and are subject to greater tracking error than other investment vehicles. Investors who are looking for price appreciation rather than steady income should consider investing in another investment vehicle.

What is the biggest REIT ETF?

The Vanguard Real Estate ETF (VNQ) is one of the largest and most popular REIT ETFs in the world. It provides investors with exposure to the real estate sector by investing mainly in equity REITs. It offers diversification by investing in many different REIT companies and can provide regular income through dividends generated by rental activities.

This ETF is mainly focused on the US real estate market, so its performance depends on factors such as property values, interest rates, and economic conditions in the United States. For investors looking for long-term exposure to real estate with low costs and easy access, VNQ can be a suitable investment option.

In 2026, it manages around £25 billion in assets, making it one of the biggest funds dedicated to the real estate sector.

Which REIT ETF is best?

The best UK property ETFs are those that match an investor’s risk appetite, with a low expense ratio while providing steady dividends. While not all UK REIT ETFs are ISA compatible, for those that are, you can invest through your general investment account. The following are some UK REIT ETF investment options that, according to analysts of BuyShares.co.uk, have presented low expenses and consistent performance in the past. If you want to check the real-time ETF prices, you can visit the dedicated webpage by Moneyfarm.

1.     iShares UK Property UCITS ETF (ticker: IUKP)

It is a UK-focused property ETF that provides exposure to listed real estate companies and REITs. The fund tracks the FTSE EPRA/NAREIT United Kingdom Index, which includes UK real estate investment trusts and property companies. It is one of the main ETFs focused on UK real estate. The fund was launched on 16 March 2007 and is domiciled in Ireland.

The ETF has a total expense ratio (TER) of 0.40% per year and uses full physical replication, meaning that it directly holds the securities included in the index. It follows a distribution policy and pays dividends to investors on a quarterly basis. The ETF has generated a one-year return of around +18.90% and has a current dividend yield of approximately 3.85%.

2.     iShares MSCI Target UK Real Estate ETF (UKRE)

This fund tracks the MSCI UK IMI Liquid Real Estate Index, with access to physical real estate while reducing the impact of REIT leverage and market volatility through the inclusion of UK inflation-linked government bonds. The fund was launched on 16 March 2015. It is domiciled in Ireland and is listed on the London Stock Exchange.

The ETF has a Total Expense Ratio (TER) of 0.40% per year and uses full physical replication, meaning that it directly holds the securities included in the index. It follows a distributing policy and pays dividends to investors on a quarterly basis.

3.     X FTSE EUROPE REAL ESTATE

The Xtrackers FTSE Developed Europe Real Estate UCITS ETF is an ETF focused on the European market, offering exposure to the real estate sector across Europe. The fund tracks the FTSE EPRA/NAREIT Developed Europe Index. The ETF invests mainly in the real estate sector and includes around 103 holdings, with exposure to countries such as the United Kingdom, France, Switzerland, Sweden, and other European markets.

The fund was launched in March 2010 and has a size of around £594.2 million in assets. It uses physical replication, meaning that it directly holds the securities included in the index. This ETF is suitable for people looking for long-term exposure to the European real estate sector and who want diversification across different countries and property markets.

You can check the ETF price on our dedicated Moneyfarm page.

What are the highest paying REIT ETFs?

If you are looking for high-paying REIT ETFs, the main factor to consider is the dividend yield, but you should consider that higher yields often come with higher risks, especially when interest rates are high. Here some informations for the year 2026.

1.     iShares US Property Yield UCITS ETF

This ETF is a US-focused real estate ETF that provides exposure to the US property market through investments in listed real estate companies and Real Estate Investment Trusts (REITs). The ETF invests mainly in the US real estate sector, with companies operating in areas such as logistics, data centres, shopping centres, residential properties, and healthcare real estate.

The fund was launched in November 2006 and has a size of around 516£ million. It uses physical replication, meaning that it directly holds the securities included in the index. The ETF has a Total Expense Ratio (TER) of 0.40% per year.

2.     iShares Asia Property Yield UCITS ETF

The iShares Asia Property Yield UCITS ETF is an ETF focused on the Asian real estate market. The fund tracks the FTSE EPRA Nareit Developed Asia Dividend+ NET Index. The ETF invests in a diversified portfolio of Asian real estate companies, with exposure to markets such as Japan, Singapore, Hong Kong, and Australia.

The fund was launched in October 2006 and has assets under management of around approximately £155 million. The ETF has a Total Expense Ratio (TER) of 0.59% per year and uses physical replication. This ETF is suitable for people looking for diversification outside Europe and the US, with exposure to the growing Asian real estate market and regular dividend income.

3.     VanEck Global Real Estate UCITS ETF

This is a global real estate ETF that provides exposure to the property sector worldwide. The fund invests in listed real estate companies and Real Estate Investment Trusts (REITs) across different countries, giving people access to the global property market. The ETF follows the GPR Global 100 Index, which includes the largest and most liquid real estate companies globally.

The fund is diversified across different real estate sectors, including residential properties, offices, industrial properties, hotels, healthcare, and retail. The ETF was launched in April 2011 and has assets under management of around £340 million. The fund has a Total Expense Ratio (TER) of 0.25% per year and follows a distributing policy.

4.     iShares European Property Yield UCITS ETF

This fund tracks the FTSE EPRA Nareit Developed Europe ex UK Dividend Net Index, which includes real estate companies from developed European countries, excluding the United Kingdom. The ETF invests in a diversified portfolio of European real estate companies across different markets, including countries such as Germany, France, Switzerland, Sweden, and the Netherlands.

The fund was launched in November 2005 and has assets under management of around £740 million. It uses physical replication, meaning that it directly holds the securities included in the index. The ETF has a Total Expense Ratio (TER) of 0.40% per year. The current dividend yield is around 2.9%.

5.     Amundi FTSE EPRA NAREIT Global UCITS ETF Dist

This is a global real estate ETF that provides exposure to the worldwide property market. The ETF tracks the FTSE EPRA/NAREIT Developed Index, which includes large and liquid real estate companies from different countries.

The ETF offers broad diversification across global real estate markets, with investments mainly in countries such as the United States, Japan, Australia, the UK, Singapore, and European markets. The portfolio includes companies operating in different property segments, including residential, commercial, industrial, and specialised real estate. This diversification helps reduce the risk of relying on a single country or property market.

The fund was launched in 2017 and has assets under management of around £55.68 million. The ETF has a Total Expense Ratio (TER) of 0.24% per year and follows a distributing policy.

6.     JPMorgan BetaBuilders MSCI U.S. REIT ETF (BBRE)

BBRE is a low-cost tracker of the MSCI U.S. REIT Custom Capped Index. Diversified and healthcare landlords lead the portfolio, with Prologis (8.3 %), Welltower (6.9 %) and Equinix (6.2 %) at the top. The fund manages about £750 million and has a Total Expense Ratio (TER) of 0.11% per year, making it one of the lower-cost options among US REIT ETFs.

If you’re interested in adding any of these to a UK portfolio, remember that all five trade on U.S. exchanges, so you’ll need a broker that offers U.S.-listed ETFs and you may face withholding tax on dividends. UK-listed alternatives such as HSBC’s HPRD or iShares’ IUKP can be held inside a Stocks and Shares ISA to keep the income entirely tax-free.

Frequently Asked Questions

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The Junior ISA allowance for the 2026-27 tax year is £9,000. This means that up to £9,000 can be paid into a child’s Junior ISA during the tax year. A Junior ISA (Junior Individual Savings Account) is a tax-free savings or investment account for children under 18 in the UK. Parents or guardians can open this account, and family members or friends can contribute money to it.

The money grows free from UK income tax and capital gains tax, and the child can access it when they turn 18. You should remember that any unused allowance can’t be carried forward to the next tax year.

How the Junior ISA allowance has changed over time

The Junior ISA, or JISA for short, was first launched in November 2011. It was brought in to replace Child Trust Funds (CTFs). The Child Trust Fund was a tax-free savings vehicle for kids born during the period between the 1^st of September 2002 and the 2^nd of January 2011.

Low-income families that opened CTFs were given £250 by the government when the child was born and another £250 when the child turned 7.

The government decided to scrap CTFs in favour of the Child’s Junior ISA, and the CTF was taken off the market. However, according to Times Money Mentor, 6.3 million CTFs still remain in place.

While new accounts can no longer be opened, parents or guardians, or anyone for that matter, can still contribute up to £9,000 per annum to previously opened CTFs. Alternatively, they can be transferred into a Junior ISA without affecting the current Junior ISA allowance for 2026-27.

The main reason that CTFs were scrapped was as part of the austerity measures introduced by the UK government to save £320 million in 2010-11 and £520 million in 2011-12 in the wake of the 2007/08 global financial crisis. Prior to the current JISA limit of £9,000, the table below shows how the Junior ISA annual allowance has progressed.

As you can see, the annual allowance for the current 2026-2027 tax year is £9,000 and has been for the past six tax years. For the avoidance of doubt, the tax year commences on the 6^th of April and ends on the 5^th of April of the following year.

Understanding Junior ISA contribution limits for 2025-26

There are two variants of Junior ISA – the Cash Junior ISA and Junior Stocks and Shares ISA. So how does the Junior ISA allowance 2025/26 work?

The current Junior ISA Allowance 2026/27 is the maximum that can be contributed across both types of Junior ISA savings accounts. So, if you contributed £9,000 into a Cash JISA, you couldn’t contribute anything to a Stocks and Shares JISA in the same tax year, but you could split the £9,000 JISA limit between the two, in whatever proportion you decide.

If, as part of your parental responsibility, you decide to open both types of JISA, you cannot do so in the same tax year. You can open one type of JISA this tax year (2026-27) but must then wait until the tax year runs out on the 5^th of April before you’re allowed to open the other type of JISA the next tax year (2027-28), commencing 6^th April 2027.

Remember that Junior ISAs are only one type of ISA available in the UK. There are other ISA products designed for adults, such as Cash ISAs and Stocks and Shares ISAs, which have different annual contribution limits. For example, the standard adult ISA allowance is currently £20,000 per tax year. This means that eligible adults can save or invest up to £20,000 across their ISA accounts while continuing to benefit from tax-efficient growth and income.

A key advantage of ISA products is that they provide a tax-efficient way to save and invest, helping individuals and families make the most of their money over the short and long term.

The two types of Junior ISA

Having just mentioned the two types of JISA, a little clarification of the differences between the two might help if you’re thinking of investing in a JISA but are not sure which option to go for.

When you open a Junior ISA, the Junior ISA allowance for 2026-27 is the same for both types, and the money saved or invested belongs only to the child. The other thing that remains the same is that nothing can be withdrawn until the child reaches 18.

The big differences between the two types of accounts lie in the level of risk and the likely return:

• Cash Junior ISA: is more similar to a bank savings account. The money is safe from a risk point of view and is protected from HMRC in terms of capital gains and income tax. But like a bank savings account, the interest offered is low, which means that inflation erodes the savings in real terms.
• Stocks and Shares Junior ISA: as the name suggests, invests in stocks and shares, not cash. It means there is a greater potential for significantly bigger returns, but a risk element must be considered.

While the rules for the Junior ISA options available are different – for example, whereas the current Junior ISA maximum contribution is £9,000, the adult ISA allowance is £20,000 – the mechanics of how they work, however, are the same. To help with decision-making, an article entitled “How to choose the best ISA” makes for informative reading.

What happens if you contribute more than the Junior ISA allowance

Junior ISAs work as tax wrappers. Capital growth and withdrawals are safe from the taxman as long as annual contributions stay within the JISA limit, which, as you know, for the 2026-27 tax year is £9,000. Any contributions above £9,000 will be taxable.

If contributions exceed the £9,000 annual allowance, the excess amount will not receive the same tax advantages as a Junior ISA contribution. The money paid above the limit may need to be removed from the account or dealt with according to HMRC rules.

The Junior ISA provider is responsible for monitoring contributions and reporting any excess payments to HMRC. If too much money is paid into a Junior ISA, the provider may contact the parent or guardian to arrange the correction.

You should remember that the Junior ISA allowance applies across all Junior ISA accounts held by the same child. For example, if a child has both a Cash Junior ISA and a Stocks and Shares Junior ISA, the combined contributions to both accounts cannot exceed £9,000 in the same tax year.

Any unused Junior ISA allowance cannot be carried forward to future tax years. Therefore, it is important to check contributions carefully throughout the year to make sure they remain within the annual limit and continue to benefit from the tax advantages of a Junior ISA.

How much can you save into a Junior ISA each month?

The Junior ISA allowance for 2026/27 is £9,000 for the whole tax year. This means that, if you want to spread contributions, you could pay around £750 per month into a Junior ISA.

Remember that you can pay money into a Junior ISA whenever you choose, as long as the total contributions do not exceed the annual limit.

Top tips for maximising your child’s Junior ISA allowance

The Junior ISA allowance for the 2026-27 tax year or any tax year cannot be rolled over in part or full, so if you don’t use it, you lose it.

You can make sure to optimise the maximum Junior ISA allowance by making a note that the last day to invest in any ISA in any tax year is the 5^th of April. You don’t want to leave it to the last minute, just in case the processing time takes longer than anticipated, and you unintentionally miss out. Making a timely, monthly, or yearly standing order ensures the deadline doesn’t pass you by.

If your child has both types of JISA and you want to amalgamate them to maximise performance, an ISA transfer is easy to arrange.

Example: how much could a Junior ISA grow over 18 years?

A Junior ISA can become a valuable way of saving for a child’s future, especially when contributions are made regularly over a long period. For example, if a parent contributes £200 per month from the child’s birth until they reach the age of 18, the total amount paid into the account would be £43,200. If the money was invested and achieved an average annual return of 5% after charges, the Junior ISA could grow to around £70,000–£75,000 by the time the child turns 18.

Remember that the final value would depend on how the money is saved or invested and how the investments perform over time. A Cash Junior ISA may provide more certainty but usually offers lower growth potential, while a Stocks and Shares Junior ISA could achieve higher returns over the long term, although the value can rise and fall and returns are not guaranteed.

You should know the potential benefit of starting early and allowing compound growth to work over many years. Even relatively small monthly contributions can build into a significant amount by the time a child becomes an adult.

A great way to start investing

If you know how much to invest in an ISA and make the most of the Junior ISA allowance 2026/27 and every other year going forward, compound interest will ensure the fund grows well. If you do decide to save money for a JISA, you will be potentially giving your child the best financial start in life, plus you might also influence them into adopting the saving or investing habit.

When a child turns 18, the JISA automatically turns into an adult ISA, and the child gains complete access and can withdraw some or all of the money or continue to invest. In fact, many adult Stocks and Shares ISAs start as Junior ISAs.

Frequently Asked Questions

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