Comments Off on Crypto investing is more like gambling
Cryptocurrencies like Bitcoin have been a hot topic in investing in recent years. But can crypto investing really be classed as investing at all? In this video, the financial journalist and host of BBC’s Money Box, PAUL LEWIS, explains why it actually has a lot more in common with gambling than traditional investing.
TRANSCRIPT
Robin Powell: Most of us know, or at least have read about, people who’ve made money on cryptocurrencies like Bitcoin. Cryptocurrencies are a form of money designed to work through a computer network that is not reliant on a government or a bank. Here’s the financial journalist and author Paul Lewis.
Paul Lewis: Cryptocurrency was invented to be, first of all, not centralised – there’s no central bank – secondly, it was stored in a sort of what they call a “ledger” – a blockchain ledger – so that everyone’s record is visible to everyone else, so you can see who is on there at any one time. And because it’s decentralised, and because it’s invented on a computer and not by a government, it was supposed to be an alternative way of paying for things. But it’s really been hijacked by – I suppose investors is a kind word – but hijacked by a lot of criminals, actually. A lot of gamblers, people who want to make money quickly; and of course the value of the most famous cryptocurrency, Bitcoin, has gone from a dollar to whatever it is now. So people have made a lot of money. They’ve bought them and they’ve gone up in value and they’ve sold them, if they’re lucky. The problem with it is, it’s surrounded by criminals. If it’s a gamble, criminals are all around the gambling houses like the Wild West. Or in some cases, they even run the gambling house.
RP: 2022 was a dreadful year for cryptocurrencies. Values fell sharply as confidence plummeted amid the collapse of several crypto exchanges — notably one called FTX. The value of these cryptoassets is bound to go up and down again, but the bottom line is, they’re very risky.
PL: There is a real danger that you will lose your money, and one bank told me that they had banned any movement of money from bank accounts into cryptocurrency because one in five of those movements was fraudulent, and they wanted to protect their customers. And I have to say, themselves! Because they do reimburse people, that bank, if they lose money. So it really is very dangerous, and why I say to people, “don’t ever, ever buy it.” If you’re very careful, if you understand the whole thing thoroughly, and you don’t put more money in than you can happily lose; then you might want to try it, but the safest advice is don’t do it. Or, as I say, if you want to dip a toe in cryptocurrency, make sure it’s a toe you’re willing to lose – because you may well do so.
RP: Another point to remember is that crypto is not really a proper investment at all, in that it doesn’t produce a return. For Paul Lewis, it’s essentially a gamble.
PL: So it produces no income. The only way you make money is buy selling it to someone at a future date when it’s worth more; and that’s not really how investment should work. Investment should keep your money safe and pay you a return, whether you take that and spend it or just use it to build your investment up. So, it’s not an investment – I call it gambling because you’re gambling that, when you want to sell it, there’ll be somebody foolish – or perhaps sensible – enough to buy it off you at that price. But you don’t know that’s going to happen, you’ve no idea whether that will happen.
RP: One more thing, if you are tempted to speculate on cryptocurrencies, don’t rush in. Better still, consult a financial adviser.
These videos are examples of the high-quality financial education content produced by Regis Media. If you work for a financial advice firm and would like to learn more about the content we provide for advisers around the world, email Robin Powell, who will be happy to help you.
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Comments Off on #How2Fund shortlisted for Business Book of the Year
When our book How to Fund the Life You Want was published by Bloomsbury, my co-author Jonathan Hollow and I had no great expectations for it. Writing a book, as anyone who’s done it will tell you, is largely a labour of love, and, unless you’re JK Rowling, Jamie Oliver or Morgan Housel, the financial rewards are pretty minimal.
That said, Jonathan and I are delighted with how sales of our book have been going. The reviews have been amazing. And now, I’m pleased to report that #How2Fund (as we call it for short) was last night included on a shortlist of eight for the Business Book Awards for 2023.
Thank you to everyone who’s supported us by buying or reviewing the book, or simply by giving us your encouragement.
In short, #How2Fund explains how a combination of low-cost, evidence-based investing and holistic financial planning can be truly life-changing.
Here’s what some leading commentators have been saying about it.
“There’s so much great content in this book — buy it and invest in your future self!”
Claer Barrett, Consumer Editor, Financial Times
‘”Wonderfully researched, jargon-free, thought-provoking, interactive and engages the reader from start to finish.”
Jeff Prestridge, Personal Finance Editor, Mail on Sunday
“If you’re serious about getting things right with your money – and avoiding costly mistakes – then set time aside to work through this excellent book.You will end up better off. No question.”
Paul Lewis, presenter of Money Box, BBC Radio 4
“There are many books about how to get rich fast. Their authors certainly get rich, readers less so. Much more useful and a lot rarer are books that help you to grow your money steadily and avoid losing your savings, and this book achieves this. It is very precious!”
Ludovic Phalippou, Professor of Financial Economics, University of Oxford Saïd Business School
Here are some of the reviews fro #How2Fund on Amazon:
“An incredibly comprehensive guide that will empower people to take charge of managing their financial lives!”
“I found this book so helpful in defining my goals, working through what needs to be understood, gathering all the right info and the workbook was great too. it helped me feel really excited about my future.”
“Finally, a UK focused practical and comprehensive guide to pensions and financial planning. This book is well written, evidence based and straightforward in explaining the complexities of UK pensions market. The workbooks and step-by-step approach are superb. Highly recommend it to all.”
“I’ve read several books on personal finance and investing and this is definitely the best one I’ve read so far. It covers all aspects of money management and financial life planning that I’ll need to review and enhance my financial plan. The accompanying work is an invaluable self reflection tool that effectively guides you through creating your own financial plan.”
BUY #HOW2FUND HERE
How to Fund the life You Want is available to buy on Amazon, on Bookshop.org, and in all good bookshops. There’s an eBook and an audio book version as well.
Please note, although most of it is relevant to an international audience, #How2Fund was specifically written for the UK market. There may be an international, or at least a US, version of it at some stage.
Comments Off on Paul Lewis talks trust, social media and financial education
Robin writes:
If you have quarter of an hour to spare, why not listen to my interview with Paul Lewis for the latest episode of The Investing Show?
Paul Lewis is best known as the presenter of Money Box on BBC Radio 4, and has some really interesting things to say on a wide range of issues.
Here are some of his key messages:
The financial industry is not your friend
“Most of the financial service industry is, of course, honest. But it confuses people, and I think sometimes deliberately confuses people because their job is to make money — make money out of your money. And very often they don’t make anything useful like, you know, a bookcase or a television or a car. They make money out of money, and it’s your money they make it out of. So that is their purpose in life. And of course they’ll be friendly. All the time they’re making money. So you can’t think of them as a friend. They’re not your friend. They’re a business. They’re there to make money and you have to be very aware of the things they might do to take money off you.”
Investment fees are very opaque
“There are organizations within the industry that are trying to make things better for consumers. The True and Fair Campaign wants charges, for example, to be completely clear, so when you make an investment, you know how much it’s going to cost you. There are even laws that say they should tell you, but they’re not very clear. When I look at charges on investments, they’re not clear to me. It’s very hard to work out exactly how much will be taken off your money. It’s like there’s lots of little taps at the bottom of your pot where your money is that other people have control over.”
Never act on investment tips in the media
“If you read the financial pages of the newspapers, and if you go online, you’ll find lots of tips about what to invest in. (But) they can’t be trusted because nobody knows what’s going to happen to stocks and shares. People who knew what shares were going to go up this year and what shares were going to go down would be making money; they wouldn’t be writing in a newspaper. Generally, if you want to invest, the safest way in the long term is to buy a fund that just tracks the whole market.”
Social media is a minefield
“Never, ever, ever trust financial advice you get from social media. A lot of it is written by people who don’t know what they’re talking about (or) by criminals who want to steal money off you. There is perhaps one exception to that. There are now regulated financial advisers who have a presence on social media. But make sure that you have checked them out, they’re regulated, and they know what they’re talking about.”
Parents have a key role to play in financial education
“Treat it like sex education. It’s important that children know how the world works as young as you think it’s appropriate to tell them. And you can tell them about money very young. Research by Cambridge University showed that children learn their money habits from their parents when they’re about seven or eight. They see how their parents behave about money. Children have got to know that money isn’t infinite. It’s not a tap you turn on when you want something.”
Thank you to Paul Lewis and to Timeline for sponsoring this video series.
Watch Paul Lewis on The Investing Show here:
MORE FROM THE INVESTING SHOW
If you enjoy the interview with Paul Lewis, here are some more recent episodes in the series you may want to watch:
When it comes to investing, there is a dizzying number of complex options available.
How to Fund the Life you Want by Robin Powell and Jonathan Hollow is a new book designed to provide clear, objective guidance that cuts through the jargon, giving you control over your financial future.
The authors strip away the marketing-speak, and through simple graphs, charts and diagrams, provide investment evidence that you can use again and again. They also alert you to myths and get-rich-quick schemes everyone should avoid.
The Book is published by Bloomsbury and is primarily intended for a UK audience.
You can buy the book on Amazon, on Bookshop.org, and in all good bookshops. There are eBook and audio book versions as well.
Comments Off on Paul Lewis: the financial industry is not your friend
Robin writes:
Looking back, and knowing what I do now, I’m embarrassed at how naïve I used to be about the financial industry, and how willing I was to trust the opinions of so-called experts.
I always urge consumers to start from a position of scepticism. Generally speaking, financial professionals aren’t bad people. They’re just human beings, with their own agendas and incentives, and that alone should make us very cautious about any “advice” they give us. As Warren Buffett once put it, “Never ask a barber if you need a haircut.”
Someone who shares this view with me is PAUL LEWIS. Paul has been writing and talking about personal finance for four decades. The presenter of Money Box on BBC Radio 4 and, like me, the son of two teachers, there isn’t much he doesn’t know about money.
He’s now written a book, also called Money Box, which is designed to help you live a better financial life.
In this interview, Paul discusses the issue of trust in financial services. Who can, and can’t, you trust? And is it possible to tell the difference between the two?
Paul, there’s a great quote right at the start of your book: “Treat the financial industry not like your friend, but more like a vague acquaintance you don’t really trust but have to see from time to time and who always makes you pay for the drinks.” Why do you say that?
Most of the financial industry is, of course, honest. I’m not saying anything else. But a lot of it confuses people, and I think it sometimes deliberately confuses people because their job is to make money — to make money out of your money.
Very often they don’t make anything useful like a book case or a television or a car. They make money out of money, and it’s your money they make it out of. That is their purpose in life. And of course they’ll be friendly, because they’re making money off you. So you can’t think of them as a friend. They’re a business. They’re there to make money and you have to be very aware of the things they might do to take money off you. I don’t mean illegally, though I do deal with fraud and criminals in the book, because there’s a lot of those about as well. I mean the regulated financial services industry, because it’s there to take money off you, and very often it takes too much off you.
There’ve been loads of instances where the regulators have had to step in — to stop insurers, for example, putting up your premiums every year and hoping you wouldn’t notice. That’s been stopped now. But of course, the result is that premiums have just gone up for everybody because they’ve got to make that money somewhere.
That happens a great deal in financial services. You’ve just got to be aware of the traps.
There are consumer groups that are working hard to make the financial industry more transparent and trustworthy. So are things heading in the right direction?
It’s true, there are organisations that are trying to make things better for consumers, like the True and Fair Campaign and the Transparency Task Force. But when I look at what they do, they’re fighting a losing battle because the financial industry doesn’t want you to know a lot of things.
The True and Fair Campaign wants charges, for example, to be completely clear, so that when you make an investment you know how much it’s going to cost you.
Working out all the different ways the industry takes money off you — the cost of buying and selling shares, the various fees and charges, and so on — is very hard to do. There are even laws that say fund companies should tell you all the costs, but they’re not very clear. When I look at charges on investments, they’re not clear to me. It’s as though there are lots of little taps at the bottom of your pot where your money is that other people have control over.
So I think that what these organisations are doing is good. But I don’t think it will ever make the financial industry completely clear and transparent about how much it costs you to invest.
What about the financial media? Look at any investment magazine or the money section of a national newspaper and you’ll find articles suggesting that now is a good time to invest in such-and-such a fund, country, sector or asset class. Can those sorts of tips be trusted?
That’s right, if you read the financial pages, or if you go online, you’ll find lots of tips about what to invest in, and particularly at the end of the year or the start of the year. But people who say “This is what you should do in 2023” can’t be trusted because nobody knows what’s going to happen to stocks and shares. People who knew what shares were going to go up this year and what shares were going to go down would be making money; they wouldn’t be writing in a newspaper. So no, you can’t trust those sorts of tips.
If you want to invest, the safest way in the long term is to buy a fund that just tracks the whole market. And in the long term, you will do better than anyone’s tips.
I’m not saying those people are trying to deceive you, but like astrology, treat it like a bit of fun because they cannot predict the future.
In your book, you make it very clear that social media is a very bad place to look for financial advice. Why do you feel so strongly about it?
I always say to people, and I say in the book, never, ever, ever trust financial advice you get from social media.
A lot of it is written by people who don’t know what they’re talking about. A lot of it is put on there by criminals who want to steal money off you. There are a lot of tempting offers on social media. It’s very easy for young people to become what are called money mules. People say, “I’ll put £1000 in your account, I’ll take out 990 tomorrow and you’ll keep 10.” That is illegal activity. You are money laundering, and if you are caught doing that, then you may be prosecuted, and you will certainly find it very, very hard to open a bank account in future. It will mean you can’t get a student loan, for example, and it would be harder to get a job. So it’s very damaging.
So don’t trust get-rich-quick schemes on social media. And don’t trust the advice on social media either because a lot of it is from people who don’t know what they’re talking about and are out to take money off you, not to help you with your money.
Social media is a street full of strangers, and they might be smiling, they might sound very pleasant, they might have nice photographs, but they are often out to get you. These people are very good at playing psychological games with you and leading you into things in the heat of the moment that in retrospect you think, Oh, that was a bit silly.
There is perhaps one exception to all this. There are mortgage brokers and regulated financial advisers who are also on social media. (I personally have a presence on Twitter and I hope people can trust what I say on there!) But make sure that the people you are taking advice from are regulated and that they know what they’re talking about, and aren’t just claiming to have some brilliant scheme to make money quickly.
Just be very, very cautious. The safest rule is never to trust anyone, but if you want to trust someone, check who they are, what they’ve done,and whether they’re regulated, and then look at their advice and accept it cautiously. But don’t believe everything you read because a lot of it is rubbish.
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Why did you write your new book and what do you hope it will achieve?
I wrote the book Money Box because I’ve been writing and broadcasting about personal finance for nearly 40 years, and I wanted to give people a guide, not just to the facts and the figures, but to the way the whole finance industry works. I want readers to be cautious about things and to know what traps to look out for.
It’s a guide for the whole of life, from age 0 to age 99. So it starts with the cost of babies and having children, and then it looks at teaching children about money. Then it moves on to adult things like borrowing, tax, working benefits and things like that. And finally it covers later life, making a will and what I call “dying tidily”, because I think that’s important.
So I hope that people of any age will read it and get something out of it to help them live a better financial life.
Content such as this would not be possible without the support of our strategic partners, to whom we are very grateful.
TEBI’s principal partner in the UK is Sparrows Capital. We also have a strategic partner in Ireland — Biograph Wealth Advisors, a financial planning firm in Dublin.
We are currently seeking partnerships in North America and Australasia with firms that share our evidence-based and client-focused philosophy. If you’re interested in finding out more, do get in touch.
