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2 top dividend stocks to buy for an ISA this year

on March 1, 2022

With the ISA deadline not far off now, I’ve been thinking about dividend stocks to buy for my Stocks and Shares ISA. Putting dividend shares in this kind of investment account can be a very effective wealth-building strategy, as all income is tax-free.

Here, I’m going to highlight two dividend stocks that strike me as great ISA buys for the 2021/22 tax year. I think these stocks could help me generate some nice tax-free passive income in the years ahead.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

Click here to claim your free copy now!

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

A renewable energy stock with a 5%+ yield

The first dividend stock I want to discuss is Renewables Infrastructure Group (LSE: TRIG). It’s a FTSE 250 investment company that owns a portfolio of wind and solar farms across Europe and the UK.

TRIG’s recent full-year results showed that the company is benefiting from the global shift to renewable energy. For the year, profit before tax amounted to £210m versus £100m in 2020. Meanwhile, earnings per ordinary share came in at 10p versus 5.9p a year earlier.

On the back of these results, the company declared a dividend of 6.76p for 2021 (2020: 6.73p), and announced a 2022 dividend target of 6.84p. At the current share price, the forecast 2022 payout equates to a prospective yield of around 5.3%, which is certainly attractive in today’s low-interest-rate environment.

Looking ahead, management was confident that the company can continue generating solid returns for investors. “The decarbonisation agenda remains central to public policy across Europe. Renewables play an essential role in providing affordable and clean electricity. This backdrop continues to ensure a bright outlook for the company,” said TRIG Chair Helen Mahy.

It’s worth pointing out that due to its investment company structure, TRIG sometimes needs to raise capital to fund growth. This can put pressure on the share price because it dilutes existing shareholders’ holdings.

I’m comfortable with this risk, however. I think that in the long run, this company is well placed to deliver attractive total returns.

Strong dividend growth

Another dividend stock I’d snap for my ISA this year is St. James’s Place (LSE: STJ). It’s a leading provider of wealth management services in the UK.

STJ’s recent full-year results for 2021 showed that the business is doing pretty well right now. For the period, underlying cash basic earnings per share amounted to 74.6p versus 49.6p a year earlier. This enabled the group to propose a final dividend of 40.41p per share, which took the full-year dividend to 51.96p versus 38.49p in 2020. At the current share price, that equates to a yield of about 4%.

Encouragingly, CEO Andrew Croft believes demand for the company’s wealth management services is likely to remain strong in the future. “Looking forward there is no doubt in my mind that the demand for face-to-face financial advice remains as strong as ever. In fact, as we emerge from the pandemic, I believe more people will be reassessing their life plans and be more likely to seek out a trusted adviser,” he said. This leads me to believe there’s potential for further dividend growth here.

The key risk with STJ, in my view, is further stock market weakness. This could impact the group’s revenues in the near term.

Overall, however, I’m quite bullish on this dividend payer. With the stock trading on a P/E ratio of about 18, I think it’s a good time to be building a position within my ISA.

Inflation Is Coming: 3 Shares To Try And Hedge Against Rising Prices

Make no mistake… inflation is coming.

Some people are running scared, but there’s one thing we believe we should avoid doing at all costs when inflation hits… and that’s doing nothing.

Money that just sits in the bank can often lose value each and every year. But to savvy savers and investors, where to consider putting their money is the million-dollar question.

That’s why we’ve put together a brand-new special report that uncovers 3 of our top UK and US share ideas to try and best hedge against inflation…

…because no matter what the economy is doing, a savvy investor will want their money working for them, inflation or not!

Best of all, we’re giving this report away completely FREE today!

Simply click here, enter your email address, and we’ll send it to you right away.

Edward Sheldon has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

2 ‘megatrend’ stocks to buy today

on March 1, 2022

As a long-term investor, I’m a big fan of ‘thematic’ investing. By identifying powerful long-term megatrends that are likely to have a huge impact on the world in the years ahead, I can position my portfolio to capitalise.

Here, I’m going to highlight two ‘megatrend’ stocks that I’m very bullish on right now. I own both of these stocks myself, and I expect them to power my portfolio higher in the years ahead.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

Click here to claim your free copy now!

Poised to benefit from ‘The Great Resignation’

First there’s Upwork (NASDAQ: UPWK), which is listed in the US. It operates the world’s largest work marketplace, connecting millions of businesses with independent talent from around the world.

The megatrend I expect Upwork to benefit from is what’s known as ‘The Great Resignation’. This is an ongoing trend in which employees are resigning from their nine-to-five jobs en masse in an effort to gain a better work/life balance and have more flexibility in their lives. According to a study by Adobe, the exodus is being driven by Millennials and Generation Z, who are more likely to be dissatisfied with their work.

This trend should play right into Upwork’s hands. Using its platform, freelancers from a broad range of industries, including software development, graphic design, accounting, writing, legal, and business consulting, can gain short-term work. It’s a win-win situation. Businesses can save on costs by hiring freelancers, while freelancers can make decent money without having to work nine to five.

Upwork’s latest results showed that the company is growing at a healthy rate at present. For the final quarter of 2021, gross services volume (GSV) was up 35% year on year to $980m. Meanwhile, revenue was up 29% year on year to $136.9m.

It’s worth noting that the firm is investing heavily for growth, so it’s unprofitable at present. Given the lack of profitability, this stock could be very volatile.

However, I’m comfortable with short-term price volatility. In the long run, I expect this company to get much bigger. I think the long-term growth potential here is enormous.

A global megatrend that has a long way to go

The second stock I want to highlight is Visa (NYSE: V), which is also listed in the US. A large-cap financial technology (FinTech) company, it operates the world’s largest electronic payments network, connecting consumers, businesses, and banks in more than 200 countries.

The megatrend I expect Visa to benefit from in the years ahead is the global shift from cash to electronic payments. In recent years, we’ve seen a huge shift in the way consumers pay for goods and services, with billions of transactions made digitally. We could still be in the early days of this trend, however. In some countries such as India and Mexico, cash is still used in more than 80% of transactions today. It’s worth noting that experts expect the global digital payment market to reach $12.5trn by 2027, up from $6.7trn in 2021. This should benefit Visa.

Of course, one risk here is new innovations in financial technology. Crypto is an example. Some people believe that crypto networks could potentially replace the credit card networks. This is certainly a risk I’m keeping a close eye on.

However, I’m very bullish on Visa. With the stock currently trading at around 30 times this year’s forecast earnings, I think it’s a great time to build my position.

Speaking of megatrends…

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The UK Government’s 10-point plan for a new “Green Industrial Revolution.”

PriceWaterhouse Coopers believes this trend will cost £400billion…

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Edward Sheldon owns shares in Upwork and Visa. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Fuel prices surge to more than £1.50 per litre! How to save money on petrol

on February 28, 2022

Image source: Getty Images

Over the weekend, Brits saw the fuel prices surge above £1.50 per litre! This is an increase of over 3.47p per litre since the beginning of the year and a huge step up since this time last year. Unfortunately, there are no signs that this cost will go down anytime soon, which could see you spending much more on the forecourt!

To help combat the impact of rising prices, here are some ways you could save money on petrol.

Make the most of loyalty cards

It is common to have loyalty cards for your favourite supermarkets. However, many people don’t realise that petrol stations also offer loyalty schemes. Companies such as BP, Shell and Esso offer schemes that give customers the chance to make great savings!

For example, schemes such as the BPme Rewards scheme allow users to collect points that they can exchange for money off fuel. The Shell Go+ scheme takes a different approach and gives users a chance to win a prize every time they spend £20 at the pumps.

If you are a regular driver, you could make some fantastic savings over time by signing up for loyalty cards!

Check your tyres

Did you know that tyre pressure can affect how much fuel you use? Low tyre pressures increase the drag on your car, which can increase your fuel consumption. If you’ve noticed that you are having to fill up more than usual, you may want to check your tyres.

Tyres should have no less than 5mm tread depth and a pressure of between 31 and 35 PSI (for passenger cars). You can check your tyre pressure at home using a pressure gauge or take your car to your local garage.

Avoid using the aircon

While no one likes sitting in a vehicle that is too hot or cold, using the aircon too much will eat up your fuel. When driving at lower speeds, you should opt for open windows over air conditioning. However, it’s important to note that at higher speeds, opening your windows may increase drag.

Making small adjustments to the way you drive can have a huge impact on fuel consumption and therefore the amount of fuel that you go through each month. To save on petrol, try to drive in the most fuel-efficient way possible!

Carpool

If the rising fuel prices are stretching your budget, consider sharing lifts with friends and family when you can. This way, you could split the cost of fuel between you and make great savings.

A rising number of people have started sharing lifts with colleagues to work. Alternatively, you could try merging journeys together to minimise the number of trips that you make each day.

Switch to electric

If you’re due a vehicle upgrade anytime soon, you may want to consider switching to an electric vehicle. While these cars can be more expensive to buy in the first place, electric vehicles are much cheaper to run than cars that use fossil fuels. 

Over the next ten years, electric car drivers could save over £5,000 on running costs. This saving could go up even further if fuel prices continue to rise.

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About the author

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Ruby Layram

Ruby is a freelance writer who enjoys writing about all things personal finance. After embarking on her own side hustle journey three years ago, Ruby is passionate about helping others to learn about the ins and outs of persona… Read More


Some offers on The Motley Fool UK site are from our partners — it’s how we make money and keep this site going. But does that impact our ratings? Nope. Our commitment is to you. If a product isn’t any good, our rating will reflect that, or we won’t list it at all. Also, while we aim to feature the best products available, we do not review every product on the market. Learn more here. The statements above are The Motley Fool’s alone and have not been provided or endorsed by bank advertisers. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended Barclays, Hargreaves Lansdown, HSBC Holdings, Lloyds Banking Group, Mastercard, and Tesco.

The 10 most-sold shares last week by investors trading in turbulent markets

on February 28, 2022

Image source: Getty Images.

With fears over a possible stock market crash, last week saw a frenzy of share trading. Over £32 billion of shares were bought and sold on the London Stock Exchange, the second-highest weekly total in a year. War in Ukraine, together with existing concerns over rising inflation and recession, spooked global stock markets.

Given the difficult trading environment, I’m going to analyse the most-sold shares last week. I’ll also explain what investors might want to consider before selling their shares in a market downturn.

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What were the top 10 most-sold shares?

According to Hargreaves Lansdown, these were the 10 shares most sold by their clients last week:

Company (and ticker)

1

Scottish Mortgage Investment Trust (SMT)

2

Lloyds Banking Group (LLOY)

3

BP (BP.)

4

Rolls Royce Holdings (RR.)

5

Eurasia Mining (EUA)

6

Synairgen (SNG)

7

International Consolidated Airlines Group (IAG)

8

Polymetal International (POLY)

9

Shell (SHEL)

10

Cloudbreak Discovery (CDL)

What does this tell us about general trends? Well, the companies covered a range of sectors from investment trusts to aviation. Three of the companies, Eurasia Mining, Polymetal and Cloudbreak, operate in the mining sector. And, unsurprisingly, BP and Shell have been impacted by concerns over disruption to supply in Russia and Ukraine.

What do we know about the top 5 shares?

1. Scottish Mortgage Trust

This flagship investment trust was the most sold share by some margin.

SMT’s focus on high-growth companies such as Tesla and Amazon delivered a stellar 110% return in 2020, according to data from Morningstar. However, it’s been hit by the recent tech sell-off, with a fall of 25% in 2022. With rising inflation hitting the valuations of high-growth companies, investors may be trading SMT shares to make gains.

2. Lloyds Banking Group

In an already jittery market, Lloyds was punished for missing its profits forecast last week. Its share price fell by 11% when its results were announced. And it’s still having to pay over £1 billion in legacy remediation costs relating to fraud at HBoS Reading.

However, Lloyds shares were trading around the 26p mark in mid-2020, and these shareholders could have doubled their money had they sold last week.

3. BP

Despite oil prices hitting $105 a barrel, BP’s shares have dropped by 8% in the last week. No doubt investors are concerned by the disruption to supply caused by the invasion of Ukraine.

BP has just announced that it will exit its stake in Russian oil business Rosneft. Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, estimates that this could cost up to $25 billion (£18.7 billion). She describes this decision as “an eye-wateringly expensive one for BP.”

4. Rolls Royce

It’s been a roller coaster for Rolls Royce shareholders, with the company making losses in five of the last six years. Its share price high of over 350p in 2018 certainly seems a distant memory.

There was some recovery in the share price towards the end of 2021, with the forecast revival in aviation. However, the share price fell again as a result of Omicron travel restrictions. And after a one-day drop of 13% last week, investors may have run out of patience.

5. Eurasia Mining

Eurasia Mining is involved in the exploration and production of gold and platinum. It’s been a good choice for intrepid longer-term investors, delivering five-year share price growth of 1,800%.

However, the company’s share price has fallen by more than 70% in the last year. As it operates mines in Russia, investors may be selling due to concerns over the impact of possible sanctions.

Should you sell your shares in falling markets?

It’s been a challenging year for share trading in 2022. Perhaps unsurprisingly, the Nasdaq has fallen by 20% after investors took profits from their gains in tech stocks. Soaring inflation and rising interest rates have put pressure on UK stock markets, followed by the war in Ukraine.

Our Foolish philosophy is to buy and hold shares in quality companies for the long term. Share trading is difficult in the short term and even seasoned professionals struggle if they try to ‘beat the market’.

What’s more, a report by IG showed that markets often recover much of their losses in the 12 months after a sudden drop. The FTSE 100 dropped by over 50% when the ‘dot-com bubble’ collapsed in 2003. Yet, it increased by 41% over the next 12 months. And, while the FTSE 100 fell by 6% last week, it still finished the week higher than it started.

We’ve created a beginner’s guide to investing in stocks that can help you establish an investment strategy before you start trading. Our experts have also researched the market to provide you with details of our top-rated share-dealing accounts.

This quote from legendary investor Warren Buffett summed up the need for a level head when trading: “You’re dealing with a lot of silly people in the marketplace; it’s like a great big casino and everyone else is boozing. If you can stick with Pepsi, you should be OK.”

Don’t leave it until the last minute: get your ISA sorted now!

stocks and shares isa icon

If you’re looking to invest in shares, ETFs or funds, then opening a Stocks and Shares ISA could be a great choice. Shelter up to £20,000 this tax year from the Taxman, there’s no UK income tax or capital gains to pay any potential profits.

Our Motley Fool experts have reviewed and ranked some of the top Stocks and Shares ISAs available, to help you pick.

Investments involve various risks, and you may get back less than you put in. Tax benefits depend on individual circumstances and tax rules, which could change.

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About the author

Avatar for Jo Groves (ACA)

Jo Groves (ACA)

Jo is a writer specialising in personal finance and investments. She is a qualified Chartered Accountant, previously working in M&A at a UK investment bank and Arthur Andersen. Jo has written on a range of subjects, from in… Read More


Some offers on The Motley Fool UK site are from our partners — it’s how we make money and keep this site going. But does that impact our ratings? Nope. Our commitment is to you. If a product isn’t any good, our rating will reflect that, or we won’t list it at all. Also, while we aim to feature the best products available, we do not review every product on the market. Learn more here. The statements above are The Motley Fool’s alone and have not been provided or endorsed by bank advertisers. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended Barclays, Hargreaves Lansdown, HSBC Holdings, Lloyds Banking Group, Mastercard, and Tesco.

Is it possible to become an ISA millionaire on minimum wage?

on February 28, 2022

Image source: Getty Images

It seems that everyone is keen to get a slice of ISA millionaire pie! However, the most popular way to achieve this seven-figure goal is to make maximum contributions to an ISA every single year. This would require savers to stash away £20,000 each year – which is more than the majority of minimum wage salaries! So, is it possible to become an ISA millionaire on minimum wage? 

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3 alternatives to maxing out your ISA allowance

If you earn minimum wage, it’s likely to be hard to max out your ISA allowance each year. The National Living Wage (the minimum amount that can be paid) for workers aged 23 and above is currently £9.50 an hour. As a result, those working a typical 40 hour week will earn roughly £18,000 per year. This is considerably less than the £20,000 ISA allowance!

Luckily, there are a number of other ways to save £1 million into your ISA over time. Here are three alternatives to maxing out your allowance that could help you become an ISA millionaire on minimum wage.

1. Make the most of dividend stocks

Those who can’t max out their ISA contributions should take advantage of re-investing any money that is earned. Some ISA stocks will pay dividends to shareholders. These can be placed into your bank account or reinvested into the market to build your investments. By choosing to reinvest, you can essentially increase the contributions that you are able to make.

If you want to become an ISA millionaire on minimum wage, try to build your portfolio around dividend stocks and reinvest your earnings into your ISA. As you add more dividend stocks to your portfolio, your earnings (and therefore your contribution potential) will increase! This is an excellent way to maximise the amount that you can invest.

2. Consider taking greater risks

When you open a stocks and shares ISA, you will be able to decide the level of risk you are willing to accept for a certain reward. Typically, higher risk levels can lead to higher rewards. However, they can also make your money vulnerable to bigger losses!

If you are only able to make small contributions each year, you may want to choose a higher level of risk. Of course, it is important that you keep a level head and conduct thorough research into an ISA before considering a higher risk level.

A good idea is to look at previous rates of return to determine whether an ISA is likely to be profitable in the long run. That said, it’s important to remember that past performance is not a guarantee of future returns.

Whilst this approach may present larger return potential, it puts your money at risk and should not be rushed into!

3. Start early

When it comes to achieving ISA millionaire status, it’s never too early to start! In fact, those who are earning minimum wage should start saving as early as possible. This is because ISAs increase in value over time. As a result, the longer you hold your ISA, the more chance you will have of becoming a millionaire!

Therefore, if you want to become a millionaire by retirement age, you should consider opening a stocks and shares ISA as soon as possible. The longer you are able to hold your ISA, the smaller your monthly contributions will need to be in order to achieve seven figures. You can open a stocks and shares ISA in the UK from the age of 18.

A final thought

If you are willing to take risks, adopt smart investment strategies and hold your ISA for a long time, it is possible to become an ISA millionaire on minimum wage. However, all readers should be aware that investing your money in a stocks and shares ISA leaves your capital vulnerable. Market movement can never be determined and any type of investment comes with its risks. Never rush an investment decision!

If you’re sure this investing strategy is right for you, our list of top-rated Stocks and Shares ISAs is a good place to start.

Don’t leave it until the last minute: get your ISA sorted now!

stocks and shares isa icon

If you’re looking to invest in shares, ETFs or funds, then opening a Stocks and Shares ISA could be a great choice. Shelter up to £20,000 this tax year from the Taxman, there’s no UK income tax or capital gains to pay any potential profits.

Our Motley Fool experts have reviewed and ranked some of the top Stocks and Shares ISAs available, to help you pick.

Investments involve various risks, and you may get back less than you put in. Tax benefits depend on individual circumstances and tax rules, which could change.

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About the author

Avatar for Ruby Layram

Ruby Layram

Ruby is a freelance writer who enjoys writing about all things personal finance. After embarking on her own side hustle journey three years ago, Ruby is passionate about helping others to learn about the ins and outs of persona… Read More


Some offers on The Motley Fool UK site are from our partners — it’s how we make money and keep this site going. But does that impact our ratings? Nope. Our commitment is to you. If a product isn’t any good, our rating will reflect that, or we won’t list it at all. Also, while we aim to feature the best products available, we do not review every product on the market. Learn more here. The statements above are The Motley Fool’s alone and have not been provided or endorsed by bank advertisers. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended Barclays, Hargreaves Lansdown, HSBC Holdings, Lloyds Banking Group, Mastercard, and Tesco.

The easyJet share price has plunged 40% in a year. Here’s what I’d do now

on February 28, 2022

In another article today, I talk about why this is might just be a great time for me to invest £10,000 in FTSE 100 shares. easyJet (LSE: EZJ) is not a part of the index, but going by recent developments it might just soon be. Where it closes tomorrow will tell. If anyone needed a bit of confidence in the low-cost airline, this might just be it. And as an investor in the stock already, I am already excited at the prospect. As you can well imagine, the now FTSE 250 stock is dragging my investment portfolio down right now after dropping 40% in the past year. 

Strong trading update

But as anyone who owns cyclical stocks in these uncertain times knows, as long-term investors we really need to cut through the noise and base our decisions on information we can hold on to. Like easyJet’s latest update. In late January, it had released some details about its performance for the quarter ending December 2021, which appeared positive. Its loss had almost halved from the year before. And while the surfacing of Omicron had dented its bookings, there was a balancing factor at play as well. The UK government had reduced all travel testing requirements, which had bumped bookings up. It also expects this summer to be a good one, with a return of its capacity to pre-pandemic levels.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

Click here to claim your free copy now!

The inflation drag for the easyJet share price

This in turn should show up in its financials as well, which of course have suffered in the recent past. Since the update, things have gotten only better with regards to the pandemic. But the Russia-Ukraine war has probably impacted easyJet’s share price, like it has with many other cyclical stocks. In particular, the easyJet share price could be affected by rising inflation. Fuel costs are an important cost for airlines and fuel prices seem to be on the up. Crude oil touched $100 per barrel last week and could remain elevated in the foreseeable future as well. In its update, easyJet says that it is 60% hedged for fuel for the current financial year, which ends on 30 September 2020. This is of course partly a relief, but it could still be impacted by higher fuel costs if oil prices continue to run up. 

What I’d do

On balance, I expect that the easyJet share price could rise from current levels, which are abysmally low compared to its prospects. Of course there is no denying that there are drags on the stock. Overall stock market uncertainty as the Russia-Ukraine war continues and rising inflation are two of them. But there is also the possibility that the geopolitical tension could be resolved quickly. Economic growth is looking quite strong for now. I do not think the stock is out of the woods yet, but if I had not bought it already, I would buy a small amount for my investment portfolio with the knowledge that it is probably a bit more risky than many other stocks. But it also has much potential.  

Inflation Is Coming: 3 Shares To Try And Hedge Against Rising Prices

Make no mistake… inflation is coming.

Some people are running scared, but there’s one thing we believe we should avoid doing at all costs when inflation hits… and that’s doing nothing.

Money that just sits in the bank can often lose value each and every year. But to savvy savers and investors, where to consider putting their money is the million-dollar question.

That’s why we’ve put together a brand-new special report that uncovers 3 of our top UK and US share ideas to try and best hedge against inflation…

…because no matter what the economy is doing, a savvy investor will want their money working for them, inflation or not!

Best of all, we’re giving this report away completely FREE today!

Simply click here, enter your email address, and we’ll send it to you right away.


Manika Premsingh owns easyJet. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

House prices to rocket? Rules limiting large mortgages set to scrapped

on February 28, 2022

Image source: Getty Images

There are fears house prices could continue to soar if existing mortgage affordability test rules are scrapped. If the lending rules are removed, more borrowers will be eligible for mortgages worth more than 4.5 times their salary.

Let’s take a look at what it all means.

House prices: what are mortgage affordability rules? 

Mortgage affordability test rules were introduced by the Financial Conduct Authority (FCA) in 2014. The rules essentially limit the number of mortgages banks can issue to borrowers that exceed 4.5 times their income.

The rules also include a Financial Policy Committee (FPC) affordability test. This requires lenders to determine the chances of a borrower being able to repay their mortgage. Importantly, lenders must also consider affordability if rates shoot up by 3% above the ‘mortgage revision rate’.

It’s widely agreed that the rules were put in place to limit the chances of people falling into negative equity, for example, following a fall in house prices or a hike in mortgage rates. The rules were also created to encourage banks to lend more sensibly.

In years gone by, banks have been accused of being overly liberal with lending. It’s thought that mortgages granted to borrowers who could not afford them contributed to the 2008 global financial crash. 

While a number of banks were bailed out for their failings in 2008, rule changes helped to curb loose lending. This is because, prior to stricter lending criteria being introduced, it was often argued that banks weren’t incentivised to ensure borrowers could truly afford to repay their mortgage, particularly if times got tough.

What will be the impact of scrapping affordability rules? 

With affordability rules on the verge of being scrapped, it’s possible that bigger mortgages will become the new normal. This could push up house prices.

Sarah Coles, senior personal finance analyst at Hargreaves Lansdown explains this fear, but also suggests that the Bank of England has done its own calculations. She says: “Letting people borrow more money looks like a risky move at a time when house prices are sky high and the outlook is uncertain. But the Bank is convinced the extra test isn’t fair anymore, and that without it, there are still enough protections in place.

“The FPC’s affordability tests have seemed increasingly draconian over time, because they refer to reversion rates – the mortgage rate you’re moved to at the end of your deal – and insist you should still be able to afford your mortgage if your rate rose to 3 percentage points above your reversion rate.

“Despite mortgage rates dropping dramatically in recent years, reversion rates have remained remarkably sticky, so in order to qualify for a cheap mortgage, buyers need to prove they can afford a really expensive one.”

Coles goes on to explain how rule changes could increase the risk of borrowers falling into negative equity. She explains: “The worry is that [affordability rule changes] could mean more people are able to borrow more money, which could make them vulnerable to over-stretching themselves to afford sky-high prices.

“Any weakness in the property market in the coming months could add the risk of negative equity for those who have borrowed much more. However, the Bank calculates that a combination of the FCA’s affordability rules and its own rule that limits the number of mortgages with a high loan-to-income will offer enough protection.”

Will house prices continue to soar in 2022?

We know that house prices have climbed by roughly £25,000 over the past 12 months or so. However, the Bank of England insists that the removal of affordability rules won’t stoke the house price inflation fire. 

Despite this, it’s difficult to understand how the invite to take out bigger mortgages won’t contribute to increased house prices. That’s because, aside from a shortage of properties, access to credit has a huge influence on house prices.

Of course, only time will tell how any rule changes will impact house prices in the real world. 

Are you looking for a mortgage? If you’re planning to buy a home, do take a look at The Motley Fool’s top-rated mortgage deals.

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About the author

Avatar for Karl Talbot

Karl Talbot

Karl is a writer specialising in investing and personal finance content. He regularly contributes articles on savings, bank accounts, mortgages, and loans. He was previously a Personal Finance Writer for MoneySavingExpert.


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How I’d build a diversified portfolio of UK stocks like Warren Buffett and Charlie Munger

on February 28, 2022

Warren Buffett and Charlie Munger agree that the key to investing is to invest only in the very best opportunities available. Having 10 investment ideas and putting money into the tenth one instead of the first or second one is a mistake. Charlie Munger puts the point like this:

Warren [Buffett] always says that if you lived in a growing town and you owned stock in three of the best enterprises in town, isn’t that diversified enough? The answer is of course it is—if they’re all wonderful places. […] The whole idea of diversification when you’re looking for excellence, is totally ridiculous. It doesn’t work. It gives you an impossible task. 

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

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The most recent 13F filing from Berkshire Hathaway, however, reveals that the company has around 46 investments in US stocks. Buffett and Munger therefore do own a diversified portfolio. So how should an investor like me think about diversification?

The answer is that I should try to build a diversified portfolio of stocks over time. And I should do this by buying whatever I think are the best stocks for me to buy at the current time. If the most attractive stock for me to buy right now is Berkshire Hathaway, then I should buy Berkshire Hathaway shares right now. But Berkshire won’t always be the most attractive investment opportunity on the market. When something else, such as Legal & General is the most attractive investment opportunity, I should add Legal & General shares to my Berkshire Hathaway holdings. The question is, what should I buy first? 

Where to start?

I have two ideas to get started. The first is Howden Joinery Group  (LSE:HWDN). The second is Rightmove (LSE:RMV). At the moment, these stocks look equally attractive to me, so I’d probably start my portfolio with investments into both of these.

Howden Joinery Group supplies UK homebuilders with kitchen and joinery products. This investment looks risky given the high price of commodities, but there are three things that attract me to this company. First, the company is in a strong financial position. The interest it pays on its loans takes up only 1.34% of its operating income. Second, the company trades at an attractive valuation. It has a market cap of just over £4.6bn and generated just over £300m in free cash flow last year. Third, the company is efficient. Its returns on invested capital are in double-digits and have been consistently over the past five years.

Rightmove is the UK’s largest online property platform. Unlike Howden Joinery, the stock is currently expensive, which presents an investment risk. But I think that the underlying business is arguably the best in the UK, which means that I would buy it today if I were building a portfolio of UK stocks. Like Howden Joinery, Rightmove is in an extremely strong financial position. The company’s current assets comfortably cover its long-term liabilities. It has also been growing fast. Retained earnings have increased from just over £11m in 2018 to just over £133.25m by the end of 2020. The company’s size also gives it a huge advantage over its competitors, making it hard to disrupt.

If I were looking to build a portfolio of UK stocks in the style of Warren Buffett and Charlie Munger, I’d start by buying shares in Rightmove and Howden Joinery Group.

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Stephen Wright owns Berkshire Hathaway (B Shares) and Legal & General. The Motley Fool UK has recommended Howden Joinery Group, Rightmove, and Tesco. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Why I’d invest £10,000 in FTSE 100 stocks for 10 years

on February 28, 2022

Last week, as Russia went to war with Ukraine, the FTSE 100 index took quite the wobble. Uncertainty can be terrifying as an investor in the stock markets, as the value of our savings plunges at such times. It might sound contrarian, but I think this is actually a great time to invest at least £10,000 in my portfolio for a decade. Here is why. 

FTSE 100 is resilient

First, consider stock market resilience. While it is true that the FTSE 100 index dipped last Thursday, it has bounced back fast. At its last close, it was just short of 7,500. And even though it is trading below these levels on this Monday afternoon, it is still possible that it could end today’s session with gains. In fact, even if greater uncertainty were to arise because of the current geopolitical situation, I am fairly confident that the markets could still recover in time. 

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Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

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As proof of that, we need to look no further than two years ago when the pandemic started. The FTSE 100 index took quite the plunge in March 2020. But almost two years later, it has fully recovered from it. And in hindsight the past two years look like they presented investors with golden investment opportunities. 

Buying at a discount

And that brings me to my next point. While a number of stocks have already recovered from last week’s plunge, investors do appear a bit diffident about some. From what I can tell, some cyclical stocks appear to be particularly impacted. Cyclicals are those stocks whose fortunes are tied with the economy. While the economy looks good for now, the war could impact it in one crucial way. That is through inflation. Oil prices are rising and gas prices are expected to rise too, considering that Russia has appreciable gas reserves. This is likely to feed into overall consumer prices, which are already high. This in turn will impact companies’ financials.

However, this becomes an unmanageable situation only if the war continues for a long time and no alternatives can be found. It is too soon to say if that will happen. And going by the global history of surviving all kinds of challenges, I think that it is more likely to be resolved than not. So it is a good time for me to focus on buying stocks that are trading at a discount right now. 

What I’d do now

One example from my own portfolio is the FTSE 100 stock Lloyds Bank, whose share price has fallen to sub-50p levels once more. It has not exactly proven itself to be a fantastic growth stock to hold even before the pandemic, but now I think it is quite low-priced even by its own past standards. I reckon that if I could load up on it and other cyclicals now, they would reap me significant gains over the next decade. And that is what I’d do now. 


Manika Premsingh has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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