Yikes. I’m convinced UK investors haven’t got the message yet.
I use the word, Yikes, as the headline in the FT is “Why investors are not likely to cry out ‘yikes’ over UK debt”
Here’s the background “Interest rates are negative on bonds up to maturities of six years, meaning investors are willing to pay the UK to borrow for more than half a decade. The Treasury’s debt managers can borrow money for 30 years for less than 0.9 per cent.”
Imagine you are a 60/40 investor. Your portfolio of pensions, ISAs etc is valued at £500,000. That means £200,000 invested in bonds. The average retail investor costs are often more than 2% each year. If the gross return on Bonds is below 2%, and the cost of managing bonds is more than 2%…the maths is stark. Yikes!
So how does your portfolio make money this way? Its time for a change.