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A FTSE 100 dividend stock with a yield near 5% and new growth potential

on February 18, 2022

Over many years, the FTSE 100‘s National Grid (LSE: NG) has been a consistent payer of shareholder dividends. But this well-placed utility company could be about to ramp up its own growth prospects.

The company is known for owning and operating the electricity transmission system in England and Wales. And it also owns and operates Great Britain’s national gas transmission system. And neither of those two systems take energy all the way to households and businesses.

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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…

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But since 2000, National Grid has been acquiring and operating energy assets in the US as well. And its gas and electricity businesses in America do supply energy directly to customers.

Growth from the US portfolio

Operations in the US have been a growth area for National Grid. And in the trading year to March 2021, the American business delivered around 45% of the company’s overall operating profit. So it looks like the US expansion programme has been a success so far. And it’s certainly been a big contributor to that stream of shareholder dividends.

Part of the success in the US arose because National Grid owns both transmission and distribution systems. And recently, the company has been making deals in the UK that seem to mirror the set-up in the US.

For example, on 14 June 2021, the company completed its acquisition of Western Power Distribution (WPD). In March that year, the directors described WPD as the UK’s largest electricity distribution business. And that means National Grid is taking on local networks of smaller pylons and cables running at lower voltages to supply homes and businesses. Indeed, WPD serves around 8m customers in the Midlands, South Wales, and the South West.

Last year, the directors also unveiled plans to sell National Grid’s majority stake in National Grid Gas plc, the owner of the national gas transmission system. And the idea behind these moves is to “pivot National Grid’s UK portfolio towards electricity”.

 Strengthening the long-term outlook

Around 70% of overall assets look set to be in electricity. And the directors said last year the strategy will strengthen the long-term growth outlook. And it seems to me the future is looking increasingly electric when it comes to how the UK uses energy. So, the way National Grid has been positioning itself is exciting. And it looks like new growth potential is beginning to emerge in the company.

But there’s no certainty the firm’s growth expectations will be realised. All businesses face operational challenges from time to time. And my hopes for growth and dividends from this stock could be dashed if things fail to develop smoothly.

However, with the share price near 1,078p, the forward-looking dividend yield is just below 4.9% for the trading year to March 2023. And that’s attractive to me regardless of whether growth materialises in the years ahead or not.

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Kevin Godbold 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.

My best growth stocks to buy now with £5k

on February 18, 2022

I am looking to invest a lump sum of £5,000. I believe the best stocks to buy now are fast-growing businesses that could have the potential to capitalise on the economic recovery over the next few years. With that in mind, here are the top growth shares I would buy right now. 

Stocks to buy for international growth

The first company on my list is a bit controversial. Indivior (LSE: INDV) develops and sells medications to treat opiate addictions. 

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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…

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This corporation used to be highly profitable. Unfortunately, a string of lawsuits over the past couple of years has threatened its very survival. 

It now seems to be past the worst of these challenges, although I would not rule out further litigation in the future. Nevertheless, management is investing heavily in new growth initiatives, including the injectable drug Sublocade.

The lifting of pandemic restrictions has also helped the company return to growth. The group’s pre-tax profit for the final quarter of 2021 was $39m, compared with a loss of $14m for the same period a year before.

City analysts now believe the company’s net profit can hit $160m in 2022, putting the stock on a forward price-to-earnings (P/E) multiple of 15.8.

Even though the corporation may continue to face challenges such as potential lawsuits and competition from peers, I would buy the stock for my portfolio of growth shares as the business moves back into growth territory. 

Unique opportunity

I would invest £2,500 of my £5,000 lump sum in Indivior. The rest I would deploy in the Seraphim Space Investment Trust (LSE: SSIT). 

This is a unique opportunity and one of the best stocks to buy now, I feel. The objective of the investment trust is to generate capital growth by investing in a diversified portfolio of firms focused on the final frontier — space and its impact on our lives here on earth.

Space is set to become big business over the next few decades as private companies deploy billions into the market. However, it is also a highly speculative sector. I think most of the enterprises trying to make money from space today will not survive the next few years. The capital requirements are just too large, and the market is becoming incredibly competitive. 

Considering these risks, while I want exposure to the sector, I would rather own a diversified trust. Seraphim’s offering is not immune from these risks, but the diversification will help spread the risk. 

Seraphim also provides exposure to assets individual investors like myself may not be able to buy directly. The company recently announced that it had made a new $25m investment into private firm ICEYE Oy, the global leader in synthetic aperture radar (SAR) satellite imaging technology.

Despite the risks of getting involved in the space industry, I think this investment trust is one of the best growth stocks to buy now for my portfolio. It is one of the few ways I can build exposure to the rapidly expanding space technology industry. 

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In 2019, it returned £150million to shareholders through buybacks and dividends.

We believe its financial position is about as solid as anything we’ve seen.

  • Since 2016, annual revenues increased 31%
  • In March 2020, one of its senior directors LOADED UP on 25,000 shares – a position worth £90,259
  • Operating cash flow is up 47%. (Even its operating margins are rising every year!)

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Rupert Hargreaves 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.

This FTSE 100 share has crashed 42% in a year. Should I buy now?

on February 18, 2022

The past 12 months have been pretty good to the FTSE 100 index. Over the past year, the UK’s blue-chip index has gained 12.2%. Adding in dividends of, say, 4% takes the Footsie’s total return to roughly 16.2%. Not bad at all. What’s more, this often unloved and overlooked London market has actually beaten the S&P 500 over 12 months.

As I write, the main US market index has gained 12.6% in 12 months. Adding in much lower dividends of, say, 1.4% raises this return to 14%. Whoever would have imagined this unexpected result? Actually, I’ve been predicting this outcome for some while. Throughout the second half of 2021, I repeatedly argued that US stocks were too expensive and UK shares too cheap. But not all FTSE 100 shares have down well in 2021-22. Here’s one beaten-down stock that has performed terribly over the last 12 months.

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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…

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FTSE 100 flops

Of the 100 shares in the FTSE 100, 61 have risen in value over the past 12 months. These gains range from a handsome 88.9% to a modest 0.7%. The average rise across all 61 winners is a tidy 21%. At the other end of the scale lie 39 losers. Declines among these losers range from just 0.9% to a gruesome 49.6%. Across all 39 losers, the average loss is 14.6%. (For the record, this well-known FTSE 100 stock is in very last place, having crashed by 49.6% over 12 months. Yikes.)

This stock has imploded

The next-worst performer is Evraz (LSE: EVR) in 99th place. Evraz stock is down a whopping 42.3% in the last 12 months. No doubt about it, this FTSE 100 stock has taken a brutal beating lately. Here’s how it has performed over five time periods: One day: -7% | One month: -44.9% | Six months: -45.2% | One year: -42.3% | Five years: +34.1%. As you can see, though Evraz shares have risen more than a third over five years, they have imploded in recent months. Why? Because this FTSE 100 company is heavily exposed to Russia and its economy.

Evraz is a highly risky stock

One reason why Evraz shares have tanked in 2022 is this global steelmaker and miner has operations in Russia, North America, and Canada. Its main products include steel, iron ore, coal, and vanadium. Founded in Moscow in 1992, the group’s biggest shareholder is billionaire Roman Abramovich (owner of Premier League team Chelsea FC). Hence, with tensions rising between Russia and Ukraine, this FTSE 100 stock has recently seen a wave of risk-off selling.

As I write, Evraz shares trade at 306.7p, down 23p (-7%) today. At this price, Evraz’s market value is below £4.5bn. Right now, this FTSE 100 share trades on a price-to-earnings ratio under four and an earnings yield of 25.2%. Because of the collapse in its share price, Evraz’s dividend yield has exploded to 26.7% — the highest in the FTSE 100 by miles. To me, this cash yield simply isn’t sustainable. Today, I see Evraz is a binary bet. If there is no Russia-Ukraine war, then these shares could soar. But if there is war, then shareholders will be sore. I don’t own this FTSE 100 stock today and I’d buy it only as a speculative punt. I see this highly risky and volatile stock as unsuitable for widows, orphans, and other risk-averse investors!

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Cliffdarcy 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 ‘nearly’ penny stocks I’d buy to hold for 10 years!

on February 18, 2022

I’m searching for the best low-cost stocks to buy for my investment portfolio. I think these two ‘nearly’ penny stocks could deliver excellent earnings growth over the next decade. Each trades just above the penny stock limit of £1.

The Restaurant Group (trades at 102p)

Leisure shares like The Restaurant Group (LSE: RTN) face some significant near-term challenges. Rocketing inflation is putting consumer spending under massive stress. The cost of ingredients and staffing is also rising sharply. The prospect of further coronavirus lockdowns can’t be ruled out either as Covid-19 endures.

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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 a long-term investor though, there are some good reasons why I’d still buy The Restaurant Group. The business has made huge strides in turning around its flagging chains such as Frankie & Benny’s and Chiquito in recent years. It also owns the massively-popular Wagamama brand, the success of which has been boosted by a positive reception to ongoing expansion of its vegan menus.

I also like The Restaurant Group because of changing priorities among UK consumers. Spending on material goods as a proportion of income has been steadily falling as the ratio on leisure pursuits has been rising. It’s a theme which this ‘almost’ penny stock, with its 400-odd restaurants across the country, is well-placed to exploit.

Everyman Media Group (trades at 127p)

Like The Restaurant Group, I think cinema operator Everyman Media Group (LSE: EMAN) should also benefit from rising leisure spending in the UK. Cinema attendances have bounced back strongly following Covid-19-related theatres closures. And I’m tipping them to continue increasing at an impressive rate, propelled by Hollywood’s conveyor belt of popular sequels, prequels and reboots.

But I wouldn’t invest in Cineworld to capitalise on this huge investment opportunity. I’d rather buy Everyman because of its considerably healthier balance sheet and its more sophisticated offering.

Everyman prides itself on its screening of independent and foreign movies, giving it a wider audience than mainstream operators. Its sites also incorporate bars and restaurants which give it extra ways to part people from their cash on a night out.

Its unique offering is particularly important given the growing popularity of streaming platforms from Netflix, Disney and Amazon. The huge investment these US media giants are dedicating to programming and technology poses a significant threat to cinema operators. Disney alone plans to spend $33bn on content just in 2022.

That said, trading numbers from Everyman give me cause to be optimistic. Business has been so strong at Everyman that last month the business hiked its full-year forecasts for 2021. Revenues more than doubled last year and, equally impressively, total sales came in at 75% of 2019’s record levels.

I think this ‘nearly’ penny stock has a winning formula and am encouraged by its plans to aggressively expand. It wants to have 41 new cinemas open by the end of 2022, five more than its current crop.

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And the performance of this company really is stunning.

In 2019, it returned £150million to shareholders through buybacks and dividends.

We believe its financial position is about as solid as anything we’ve seen.

  • Since 2016, annual revenues increased 31%
  • In March 2020, one of its senior directors LOADED UP on 25,000 shares – a position worth £90,259
  • Operating cash flow is up 47%. (Even its operating margins are rising every year!)

Quite simply, we believe it’s a fantastic Foolish growth pick.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Amazon. 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.

Is the Boohoo share price just too cheap to ignore?

on February 18, 2022

It’s been a pretty miserable 12 months for Boohoo (LSE: BOO) shareholders. The Boohoo share price has fallen by almost 75% since February 2021 and is now trading under 100p. That’s a level I didn’t expect to see again.

I’m not one of Boohoo’s target customers, but I do like a bargain. Broker forecasts suggest the group’s profits will bounce back as supply chain issues ease. If that happens, I think Boohoo shares could be cheap when measured against future earnings. Should I buy BOO for my portfolio?

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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.

Click here to claim your free copy now!

Why has Boohoo’s share price crashed?

City analysts covering Boohoo shares still seem optimistic. I can see that view too. But if I’m honest, I can also see plenty of things to worry about.

Its latest trading update revealed a sharp slowdown in sales growth and a fall in profit margins. Much of this is due to problems with international sales. At the moment, all of Boohoo’s overseas sales are sent out by air freight from its UK warehouses.

This has caused problems over the last year. Costs have risen and a shortage of freight capacity has caused delivery times to rise. Fast fashion has become slower. As a result, sales to countries outside the UK fell by almost 15% during the three months to 30 November, compared to the same period one year earlier.

Trends can change fast in fashion, especially at the youth end of the market. My worry is that by the time Boohoo has sorted out its supply chain problems, its customers may have moved on to newer brands.

There’s still a big opportunity

Boohoo chief executive John Lyttle is keen to remind investors that the firm gained market share during the pandemic. He believes the current problems are temporary and should soon start to ease.

Mr Lyttle points to the UK market, where sales growth stayed strong at 32% during the most recent quarter. He’s also keen to remind investors that Boohoo is building a warehouse in the US, to support long-term growth.

City analysts seem to accept this story. Their forecasts show Boohoo’s earnings per share rising by 14% in 2022/23 and by a massive 46% in 2023/24 — when the US warehouse is expected to be operational.

If these estimates are correct, then Boohoo shares are priced at just 16 times 2022/23 forecast earnings, falling to 10 times earnings in 2023/24.

In my view, that would be much too cheap for a business delivering that kind of growth.  

Boohoo share price: too cheap to ignore?

Although I agree that Boohoo should be able to sort out its logistics problems, I’m concerned about the company’s loss of momentum. In my view, this could be hard to get back.

I’m also unsure about the true quality of Boohoo brands such as Nasty Gal and PrettyLittleThing. Do they have what it takes to deliver lasting success, or will they just peak and fade away?

I’ve decided not to buy Boohoo shares for now. Although I think the stock might be cheap, I think there’s an equal risk that the group’s problems could rumble on for some time. In a worst-case scenario, I think Boohoo shares could still have further to fall.

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Are you on the lookout for UK growth stocks?

If so, get this FREE no-strings report now.

While it’s available: you’ll discover what we think is a top growth stock for the decade ahead.

And the performance of this company really is stunning.

In 2019, it returned £150million to shareholders through buybacks and dividends.

We believe its financial position is about as solid as anything we’ve seen.

  • Since 2016, annual revenues increased 31%
  • In March 2020, one of its senior directors LOADED UP on 25,000 shares – a position worth £90,259
  • Operating cash flow is up 47%. (Even its operating margins are rising every year!)

Quite simply, we believe it’s a fantastic Foolish growth pick.

What’s more, it deserves your attention today.

So please don’t wait another moment.

Get the full details on this £5 stock now – while your report is free.


Roland Head has no position in any of the shares mentioned. The Motley Fool UK has recommended boohoo group. 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.

4 ways to protect your funds from pension scams

on February 18, 2022

4 ways to protect your funds from pension scams
Image source: Getty Images

Pension scams are on the rise in the UK. However, many savers remain in the dark about how to best protect their retirement funds. If you’re worried about falling victim to a scam, here’s how to protect your pension in 2022.

How to protect your retirement fund from pension scams

Modern technology has made it easier than ever for criminals to get their hands on your money. Unfortunately, this means that your hard-earned pension pot could be at risk!

Pensions are very attractive to scammers who look for individuals with substantial savings that could easily be manipulated into giving money away. In fact, according to the Financial Conduct Authority, scammers have taken £2 million from pension pots in the last five years! So, here are four ways to protect your savings and avoid pension scams. 

1. Be aware of deals

One way that scammers may try to get hold of your money is by advertising a fantastic deal. For example, a scammer may try to tempt you with a promising business venture or property investment.

They use these deals to encourage you to release funds from your savings pot into your personal bank account. Most of the time, the deal will disappear once the money has left your account and the scammers will leave with your hard-earned cash. 

The best way to avoid falling victim to this type of pension scam is to keep your funds in a reputable pension pot, rather than risking your money on investment schemes. If a deal seems too go to be true, it probably is!

2. Avoid free services

A common pension scam tactic is to advertise free pension services online or through social media. Generally speaking, reliable pension services will charge a fee for their expertise. Therefore, it is best to avoid any free or incredibly cheap pension schemes. In the worst-case scenario, those who fall for the schemes can be tricked into handing over their funds to a scammer. 

To keep your funds safe, always use an FCA-approved pension service to handle your funds. These companies have been regulated to ensure that your money is safe. You can use the FCA website to check whether a company is allowed to offer pension services and to access reliable companies through trusted links. 

3. Ask for a second opinion

Before making any changes to your pension plans, you should get into the habit of asking for a second opinion. More often than not, a second pair of eyes will see through a scam better than you might be able to! This is because pension savers can easily become distracted by the fantastic promises and may not be able to see scams for what they truly are. If possible, seek professional financial advice before making any changes to your pension. 

4. Always double-check

If you feel rushed into making any decisions about your pension, it could be a scam! Always take time to conduct research before making any final decisions. And double-check any facts or figures that you are given.

Scammers will often pressure you into rushing your decisions so that you don’t have time to find out the truth about their scheme. Meanwhile, legitimate companies understand that pension decisions are important, and they should give you all the time that you need to make your choice.

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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

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Cheapest areas to rent in London 2022

on February 17, 2022

Cheapest areas to rent in London 2022
Image source: Getty Images

The cost of living is soaring and is likely to worsen in the coming months. You’ve likely started looking into ways to save money to keep your head above water. If moving home is one of those ways and you’re looking for a cheap area to rent in London, here are some of the cheapest areas to rent as of February 2022.

What is the average rent in London in 2022?

Data from Rightmove indicates that London’s average rent is around £2,142 per month, a 10.9% jump year-on-year. In fact, it’s more than double the average rent outside the capital. However, the individual rent averages for Inner and Outer London are £2,577 and £1,823, respectively, which is a 16.2% and 5.8% increase.

Unfortunately, based on current projections, the future isn’t looking promising. Rightmove predicts a further 5% rise in London’s average rent in the coming months.

What are the cheapest areas to rent in London as of February 2022?

According to data from Rightmove and Zoopla, the cheapest areas to rent are as follows: 

 

Area

Travel zone

Number of bedrooms

Total average monthly rent

Shared rent per person per month

1

Bexley

Zone 6

1

£550 – £800

–

2

£1,050 – £1,250

£525 – £625

3

£1,250 – £1,450

£450 – £525

4

£1,650 – £2,100

£417 – £525
     

2

Hillingdon

Zone 6

1

£600 – £800

–

2

£1,200 – £1,500

£600 – £750

3

£1,500 – £1,700

£500 – £567

4

£1,800 – £2,100

£450 – £525

3

Bromley

Zone 5

1

£600 – £850

–

2

£1,200 – £1,500

£600 – £750

3

£1,500 – £1,800

£500 – £600

4

£1,800 – £2,200

£450 – £550

4

Enfield

Zone 5

1

£600 – £900

–

2

£1,250 – £1,500

£625 – £750

3

£1,500 – £1,900

£500 – £633

4

£1,900 – £2,200

 £475 – £550

5

Croydon

Zone 5

1

£600 – £900

–

2

£1,300 – £1,450

£650 – £725

3

£1,500 – £2,000

£500 – £667

4

£2,000 – £2,250

£500 – £563

6

Waltham Forest

Zone 3

1

£600 – £1,250

–

2

£1,250 – £1,600

£625 – £800

3

£1,600 – £1,850

£533 – £617

4

£1,900 – £2,400

£475 – £600

7

Lewisham

Zone 2

1

£650 – £1,250

–

2

£1,300 – £1,550

£650 – £775

3

£1,650 – £2,100

£550 – £700

4

£2,100- £2,500

£525 – £625

*The rental figures above were derived from Zoopla and Rightmove. They are just an average of how much you can expect to pay, meaning you can still come across rents lower or higher than these figures, depending on the rental property’s features.

What do these rental figures indicate?

Bexley appears to be the cheapest area to rent in London. However, before choosing a region, it’s important to consider factors such as where you’re working and how convenient or affordable it will be for you to commute.

It’s naturally clear that sharing a rental is cheaper, especially for a four-bedroom rental. As you weigh other individual-specific factors, consider this to save more of your hard-earned money.

Note as well that living in Zones 5 or 6 may mean spending more on commuting, especially if you’ll be working in Central London. It therefore makes sense to compare deals on travel cards to save money. However, if you’re working from home, they can be ideal zones to live in, especially with the need for space being a crucial feature when considering where to live nowadays.

Will rents in London go down soon?

Rents in London dropped last year to attract or retain tenants who were already moving out of the capital in search of space. After all, working from home had become the new normal, meaning many workers no longer needed to live near the office. But now that restrictions have been lifted and companies are adopting a hybrid working model, Brits have started returning to the capital, increasing demand.

Unfortunately, there is still an imbalance between supply and demand, so rents are increasing steadily. It doesn’t help that inflation is on the rise. These factors suggest that rents might continue to increase, at least in the short term. However, when supply starts meeting demand, rents may come down gradually.  

For now, if you need to be in London, it makes sense to find the cheapest places to rent. And while you’re at it, consider getting roommates to lower your rent as much as possible. Additionally, to help you remain financially resilient amid the soaring cost of living, try to:

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Victor is a freelance writer who loves to read and write about personal finance and related disciplines with the aim of educating people to make better financial and investment decisions.

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.

Why you might soon be unable to use your Help to Buy ISA to purchase a home

on February 17, 2022

Why you might soon be unable to use your Help to Buy ISA to purchase a home
Image source: Getty Images

First-time buyers in the UK could soon be priced out of a government scheme aimed at helping them get on the property ladder. According to Hargreaves Lansdown, runaway house prices risk overtaking the limits of the Help to Buy ISA, preventing buyers from benefitting from the scheme when purchasing their first home.

Here’s the lowdown, as well as a look at how first-time buyers can deal with this new development.

How does the Help to Buy ISA work?

The Help to Buy ISA is a tax-free savings account that was launched in December 2015 to help first-time buyers save for a deposit on a home. You can contribute up to £1,200 to the ISA in the first month and £200 each month after that.

In addition to your savings being tax free, the government will boost your contributions by 25% on up to £12,000 of your savings. So, for every £200 you save, you’ll get a £50 bonus. In total, you can earn a bonus of up to £3,000.

As of 30 November 2019, the Help to Buy ISA is closed to new applications. Those who opened their accounts before this date, however, can continue saving into them (until 30 November 2029) and get their 25% free bonus from the government when they are ready to buy.

The Help to Buy ISA can be used for any property worth up to £250,000 (or £450,000 in London).

Why might buyers struggle to use their Help to Buy ISA?

As explained by Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, when the Help to Buy ISA was first launched, the average price paid by a first-time buyer was less than £175,000. As a result, the £250,000 limit gave buyers a lot of leeway to find their first home.

However, house prices have risen dramatically since then, especially in the last two years. The average cost of a first home is now £225,000.

Despite the significant increase in house prices, the Help to Buy ISA limit has not changed. With prices expected to continue rising for the foreseeable future, Coles believes that there may come a time when no one using the scheme will be able to afford a typical starter home.

“It means that people who started a Help to Buy ISA in good faith back in 2015 could get to the point of purchase and realise they won’t get the bonus they were expecting,” says Coles.

How can aspiring buyers cope?

It’s clear that the government needs to seriously reconsider the limits of schemes such as the Help to Buy ISA.

Coles says that the overall limit should be linked to house price inflation. This will help prevent buyers from getting into a scheme where “they could be forced out by a hot property market“.  

Meanwhile, what can aspiring buyers do to avoid being priced out of the scheme?

If you are based outside London and want to buy a house worth more than £250,000, one option is to transfer your savings to a Lifetime ISA. This will allow you to take advantage of the Lifetime ISA’s much higher allowance of £450,000 for homes outside London.

In addition to its higher house price allowance, a Lifetime ISA also has a much higher contribution limit (up to £4,000 per year). As with the Help to Buy ISA, you’ll receive a 25% bonus on your savings (capped at £1,000 per year). 

Note, however, that a Lifetime ISA has strict eligibility criteria that you must meet. For example, you can only open one if you are between the ages of 18 and 39.

What other options are there to save for a home?

Government schemes such as the Lifetime ISA and the Help to Buy ISA can help you save for a home. They are not the only options, however.

For example, aspiring home buyers with a longer time frame to work with (at least five years) may want to look into a stocks and shares ISAs.

Although investing in stocks is riskier, they can provide higher returns over time than cash savings. Furthermore, if you invest using a stocks and shares ISA, any dividends or gains from your investment will be tax free.

If you are interested in learning more, check out the Motley Fool’s comparison of top-rated stocks and shares ISAs.  

Please note that tax treatment depends on the individual circumstances of each individual and may be subject to future change. The content of this article is provided for information purposes only. It is not intended to be, nor 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.

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Sean LaPointe

Sean is a personal finance writer with a strong passion for helping others become more financially literate and make better financial decisions. He covers everything from credit cards to savings to investing.

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.

Circle, the company behind the USDC stablecoin, doubles valuation to $9 billion in updated SPAC deal

on February 17, 2022

Watch Daily: Monday – Friday, 3 PM ET

Circle, the firm behind the stablecoin USDC, has doubled its valuation to $9 billion following a new deal with blank-check company Concord Acquisition Corp.

The two companies first revealed their plans to merge in July, in a deal that at the time valued Circle at just $4.5 billion. They have now updated the terms of the deal to reflect improvements in the company’s financial outlook and competitive position.

Circle CEO Jeremy Allaire told CNBC’s “Crypto World” that while the firm is ready to be listed as a public company, the process of getting the necessary approvals by the Securities and Exchange Commission had taken longer than planned. That’s because in an earlier agreement, the firms were concerned they wouldn’t merge in time for an April 3 deadline. This new deal replaces the prior agreement — and gives them more time to complete the combination.

“We have an SEC qualification process that we’re going through, we’ve been through multiple rounds of comments on that and that’s just taking longer,” Allaire said. He added that the extra time is necessary to a new company and industry, and that if approved, Circle will be better off for it down the line.

“The SEC is doing its job,” Allaire said. “There’s a lot of inherent risk in this space… as a company that wants to be trusted, transparent, and accountable, being a public company really helps with that. But also, going through the rigor of SEC review is a key part of that.”

Circle may be twice as expensive for shareholders of Concord, the SPAC planning to take it public, but Allaire said he sees it as a testament to what his company is building.

He also said that although several SPAC, or special purpose acquisition company, mergers have been called off recently, he’s confident this refreshed plan will go through. The agreement has an initial outside date of Dec. 8, with an option to extend to Jan. 31 of next year, Allaire said.

Stablecoins are digital currencies designed to be less volatile than cryptocurrencies by pegging their market value to an outside asset like the U.S. dollar. That makes them potential bridge currencies between volatile crypto assets and more stable, traditional assets.

Circle’s stablecoin, USDC, has increased in reach and popularity over the past year. For example, Mastercard last summer said it’s piloting a program that would utilize USDC to enable cryptocurrency payments between cardholders and merchants.

However, stablecoins have come under pressure in recent months by U.S. regulators concerned about their ability to threaten financial stability, by increasing the interconnectedness between the regulated financial system and the crypto markets.

Earlier this week New Jersey Rep. Josh Gottheimer unveiled an early draft of legislation aimed at placing definitions around stablecoins. In November, the Biden administration in urged Congress to regulate stablecoins to ensure they don’t pose a systemic risk.

These are the shares UK investors have been buying recently

on February 17, 2022

Image source: Getty Images

The latest data from a leading investment platform reveals UK investors bought shares in Vodafone, GlaxoSmithKline and BT Group last week.

So, what other shares were popular with UK investors? And which shares were investors selling? Let’s explore.

What shares have UK investors been buying recently?

According to data from Hargreaves Lansdown, Vodafone shares were the most popular to buy last week, with the telecommunications company accounting for 4.81% of all stocks traded.

Meanwhile, buys in GlaxoSmithKline accounted for 4.3% of the total last week, while Scottish Mortgage Investment Trust purchases accounted for 4.15%.

Here is the top ten list in full (based on the number of deals placed):

  1. Vodafone Group plc
  2. GlaxoSmithKline plc
  3. Scottish Mortgage Investment Trust 
  4. National Grid
  5. BT Group plc
  6. Royal Mail plc
  7. F&C Investment Trust plc
  8. British American Tobacco
  9. Lloyds Banking Group
  10. BP plc

Most bought shares: key takeaways

At the beginning of last week, Vodafone shares were valued at 137.4p, rising to 138.9p by Friday. While this was a modest rise, Vodafone shares have performed very well since the turn of the year. They’ve risen from 115.32p in January to almost 140p by mid-February.

With Vodafone topping last week’s list, it’s clear to see that many investors believe the company can continue its strong performance throughout 2022.

Meanwhile, the appearance of Lloyds Banking Group on the list of most-bought shares would indicate that many investors are confident the banking giant will bounce back following a recent slump in its share price value. Over the past month, Lloyds shares are down over 6%.

On a similar note, the BT Group share price has performed poorly over the past month. Therefore, we can assume its inclusion on last week’s list as an indicator that many investors consider the company’s current share price to be undervalued.

What shares have UK investors been selling recently?

Alongside a list of the most bought shares, Hargreaves Lansdown also revealed the most popular shares to sell.  International Consolidated Airlines Group topped the list, with share sales accounting for 2.25% of last week’s total.

Here is the top 10 list in full:

  1. International Consolidated Airlines Group SA
  2. BP plc
  3. easyJet plc
  4. Vodafone Group plc
  5. Lloyds Banking Group plc 
  6. Shell plc
  7. Premier African Minerals Limited
  8. Scottish Mortgage Investment Trust plc
  9. Rolls Royce Holdings plc
  10. BT Group plc

Most sold shares: key takeaways

International Consolidated Airlines Group (IAG), which owns British Airways, Iberia and other airlines, was the most popular share to sell last week among Hargreaves Lansdown’s UK-based clients. The airline group’s share price rose from 161.1p to 174.64p last week, though its price has since fallen to 165.95p.

The final quarter of 2021 proved a very difficult year for IAG’s share price, so investors will hope the company will fare much better for the duration of 2022.

Meanwhile, easyJet was the third most popular share to sell last week. The airline’s share price is up very slightly compared to a year ago, and it now stands at 683.4p. Despite this, it’s a long way off its pre-pandemic share price, which topped 1,270p back in February 2020.

Shell plc was the sixth most popular share to sell last week. The oil and gas multinational’s share price has risen from 1,700p to 1,971p since the turn of the year. Despite this, its price took a tumble towards the end of January. As a result, it appears some investors have arrived at the conclusion that its share price surge has peaked.

What can we learn from this data?

When investors flock to buy a particular share following a slump, it usually signals that investors believe a share to be undervalued. On the flip side, when investors look to offload stock in big numbers, it gives the impression that the share price in question is overvalued, and may potentially plummet.

Despite this, it’s important to remember that this data shouldn’t be used to make any investing decisions. That’s simply because past performance is not a reliable indicator of future performance.

If you like to pick and choose your own stocks, it’s far better to do your own research and act accordingly. As with any investing, always remember that the value of your investments can fall as well as rise.

If you are looking to invest, then take a look at our list of top-rated share dealing accounts.

If you’re a newbie investor, then it’s a good idea to read our investing basics first. Our list of top-rated share dealing platforms for beginners may also come in handy.

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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.


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.

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