Podcast Summary
Invest in quality sleep and celebrate Mother's Day with discounts: Invest in a quality sleep solution, celebrate Mother's Day with discounts on flowers and gifts, and be cautious when investing in AIM due to lack of transparency and high risk.
Quality sleep is a crucial investment for overall health and well-being, and the Sleep Number Smart Bed offers customizable comfort to help individuals and couples sleep better together. The JD Power award-winning mattresses are available for a limited-time discount. Mother's Day is approaching, and 1 800 Flowers provides an opportunity to celebrate moms with handpicked bouquets, treats, food, and unique gifts, offering up to 40% off select items. Squarespace offers a user-friendly solution for creating a beautiful website for businesses or hobbies for around £5 per month. AIM, London's junior market, has underperformed significantly over the past 20 years, with a negative annualized total return for investors. Despite this, investors continue to be drawn to the market due to its potential for investing in promising small and fast-growing companies. Professor Paul Marsh of the London Business School, an expert on AIM, explains that the reasons for its underperformance include it being an IPO market, where companies often lack transparency and financial history, as well as the high risk associated with investing in small, unproven companies. Investors need to be aware of these risks and thoroughly research potential investments before making a decision.
AIM Market: A High-Risk, High-Reward Opportunity for Experienced Investors: The AIM market offers potential for high returns but is risky and challenging for individual investors due to its status as an IPO market and growth market, with many poor performers and a need for expert stock picking
The AIM market, which is primarily composed of young and unseasoned companies that have gone public, has underperformed historically due to its status as an IPO market and a growth market. IPOs tend to underperform after they go public, and growth stocks often face overvaluation. However, some argue that AIM is a stock picker's market, where investors can make significant returns by picking the right stocks. While there are big winners, there are also many poor performers, and picking the winners is not an easy task. In fact, investors as a whole have had poor returns from the AIM market. The market is competitive, and professional fund managers are best equipped to find the next big winner. For private investors, AIM can be dangerous territory. A recent analysis by The Feet's Paul and Leroy identified the top and bottom performing shares in the history of the AIM index over the past 20 years, with ASOS coming out on top, offering a return of over £160,000 for an initial investment of £1,000. However, the challenge for individual investors is to identify the next ASOS among the many poor performers.
Regulating AIM for Transparency and Disclosure: To help new investors better understand the risks associated with AIM, regulators should consider implementing measures such as badging stocks based on their liquidity, international governance standards, and compliance with UK corporate governance codes.
As the AIM market, which was initially designed as a loosely regulated space for entrepreneurs and venture capitalists, has grown significantly over the years and attracted a larger number of outside investors, there is a need for increased transparency and disclosure to help these new investors better understand the associated risks. The current investor profile is very different from what it was when AIM started, and regulators should consider implementing measures such as badging stocks based on their liquidity, international governance standards, and compliance with UK corporate governance codes. While better regulation may not directly improve performance, addressing the inconsistencies in the quality of nomads and the companies they bring to market could help mitigate potential risks.
Tax benefits on AIM can distort market: Tax incentives on AIM can lead to overvalued stocks, reduced liquidity, and potentially misinformed investments
The tax benefits offered to investors on AIM, particularly the inheritance tax breaks, can lead to distortionary effects in the market. These tax benefits can cause some investors to pay more for stocks than they would otherwise, and they can also make investors and entrepreneurs less likely to sell their shares, reducing liquidity. Additionally, less savvy investors may be attracted to AIM companies because of these tax breaks, potentially leading them to overpay for shares or invest in companies they don't fully understand. The poor performance of AIM as a whole, even for professional fund managers, highlights the importance of careful research and analysis before investing in these companies.
AIM vs Smaller UK Companies: AIM's Performance Lags Behind: A £100 investment in AIM became £83 over 20 years with dividends reinvested, while £500 in smaller UK companies grew to £500. Professional fund managers struggle to bridge the gap through stock picking. Pension freedoms led to £1B withdrawn, with some facing challenges accessing their funds.
Investing in the AIM market has not been as profitable as investing in smaller UK companies over the last 20 years. A £100 investment would have become £83 with AIM, but £500 with smaller UK companies with dividends reinvested. Even professional fund managers find it challenging to make up this difference through stock picking. Meanwhile, the pension freedoms have seen over £1 billion withdrawn since April, which is less than expected, but some savers have faced difficulties accessing their funds due to providers making it challenging. The average withdrawal amounted to £20,000, but some have reported frustration and even threats to call center staff to release their cash. It's important to note that the advice safeguard is not mandatory for providers.
UK pension freedoms: Confusion over advice requirement: The pension freedoms have brought £1,000,000,000 into the UK economy, benefiting individuals and the government, but confusion over advice requirements is causing frustration.
The UK government requires professional advice for individuals looking to transfer pensions worth £30,000 or more due to potential safeguarded benefits. However, there is confusion regarding how this advice requirement should be applied, leading to frustration and headlines. Despite this, receiving advice is generally beneficial. In the short term, the newly freed pensions worth £1,000,000,000 have led to a cash boost for the economy, with people using their funds for various purposes like holidays, home improvements, and debt repayment. The government benefits from this as well due to the earlier tax collection. However, if the system becomes too restrictive and people can't access their cash as intended, the government might take action to ease the situation. Overall, the pension freedoms have led to a significant influx of cash into the economy, with various implications for different sectors.
Exploring Tools for Personal Growth: Squarespace, Quinn, and 1800flowers.com: Explore Squarespace for brand building, Quinn for affordable luxury style, and 1800flowers.com for perfect gifts. Utilize these resources to enhance different aspects of life.
There are various tools and resources available to help individuals enhance different aspects of their lives, from building a brand online using Squarespace, to upgrading one's style with Quinn, to finding perfect gifts for every occasion through 1800flowers.com. The Money Show team, including Kate, Josephine, and professor Paul Marsh, reminded listeners that Squarespace offers a simple yet powerful platform for creative professionals to build their brands online. Squarespace's support of the podcast was acknowledged, and listeners were encouraged to start a free trial and use the code "money" to save 10%. Danny Pellegrino from Everything Iconic introduced Quinn, a brand that offers high-quality items at affordable prices, ensuring consumers can upgrade their style without breaking the bank. Quinn prides itself on safe, ethical, and responsible manufacturing, allowing consumers to achieve a luxury vibe without the luxury price tag. Lastly, Danny emphasized his expertise as an amazing gift giver and credited Celebrations Passport from 1800flowers.com for his success. With free shipping on thousands of amazing gifts and rewards for frequent gift-givers, Celebrations Passport is a one-stop shopping site for all occasions. Overall, these discussions highlight the importance of utilizing available resources to improve various aspects of life, whether it be building a brand, upgrading one's style, or finding the perfect gift for loved ones.
