The savings account with a guaranteed 20% return that no one ever talks about
🔸 Plus: A dating coach for female bankers describes some harsh truths 🔸 If you’re selling stuff on Vinted, prepare to be taxed 🔸 David Beckham made £72 million in licensing deals 🔸 Bitcoin is up!
Hello! Here’s today’s 2-minute guide to demystifying money and making you richer
A SIPP savings account will give you a guaranteed 20% return on your cash — but there’s a catch.
A dating coach for female bankers describes the harsh truth about high-earning women and the men who can’t handle them.
If you’re selling stuff on Vinted, Depop, or Airbnb prepare to be taxed.
David Beckham made £72.6 million in licensing deals.
The 1,000-day luxury cruise that turned into a shipwreck.
Cambridge University is trying to block any trademark that uses the word “Cambridge”.
Bitcoin hits a new high.
Yesterday’s markets:
S&P 500: 4,738.97 ⬇️ 0.65%, ⬆️ 0.0011% YTD
FTSE 100: 7,721.38 ⬇️ 0.15%, ⬇️ 0.15% YTD
Bitcoin: $45,162.10 ⬆️ 1.69%, ⬆️ 6.22% YTD
GBP to USD: $1.2622 ⬇️ 0.86% YTD
GBP to EUR: €1.1518 ⬇️ 0.15% YTD
The account with a 20% return that no one ever talks about
If you’ve got a some spare cash you’ve probably spent time looking for a savings account with a “high” rate of interest. At the time of writing, 5% is a decent rate of interest on a savings account but if you’re willing to juggle your money and obey a bunch of annoying rules (restrictions on withdrawals, etc.) you can get as much as 8% from Nationwide.
One of the government’s best-kept secrets
But there’s a type of account that doesn’t get talked about that offers a guaranteed 20% return on your cash. Like everything in personal finance, it has an unsexy name that disguises the fact that it’s one of the government’s best free-money schemes: It’s called a “self-invested personal pension”, or SIPP.
A SIPP is basically a private pension account that you control. For any amount of money you put into it, the government adds another 20%. Put in £100, and the government will give you £20. If you’re in a high tax bracket the government will match you at a higher rate, 25%!
It’s literally free money!
Just for opening an account and putting cash into it! You can open one at any of the usual brand-name asset management companies, such as Nutmeg, Barclays, Vanguard, AJ Bell, Abrdn, Hargreaves Lansdown, Schroder, or Legal & General.
Once you’ve got one you can just let that cash sit there, enjoying its 20% match from the government. Or you can invest it in stocks and mutual funds, like any other pension or ISA account, and watch it grow (or sink) with the markets.
Nigella Lawson’s dad invented this free money scheme
And yet, few people talk about SIPPs. Most people don’t have one. And almost no one remembers that SIPPs were invented by the father of celebrity chef Nigella Lawson.
Stats for SIPPs are difficult to come by. Estimates of the number of accounts in Britain range from a low of 768,500 to a high of 1.4 million. (Hargreaves Lansdown on its own has 542,000 SIPP holders — which suggests these numbers are underestimates.) Regardless, given that there are 42 million adults in the UK, very few of them have taken advantage of SIPPs and their 20% free cash offer.
Of course, free money comes with a catch
SIPPs are primarily pension accounts which means you’ll be heavily penalised for withdrawing any money before you are 55. So you should only open a SIPP using money you are sure you won’t need until you stop working.
The pros:
20% “tax relief” (in the form of a cash match) on any money you put in.
A 25% match kicks in if you’re in one of the higher tax brackets.
Your investments are not limited to the choices in your workplace pension plan, which often force you into a “lifecycle” funds based on your estimated retirement date.
The cons:
Any money you make in a SIPP is taxed like income, not capital gains.
You cannot withdraw any money from a SIPP before you’re 55 years old without incurring penalties of up to 55% in tax. That’s a pretty serious drawback!
If you begin withdrawing any of it after age 55, the government will limit your ability to add more money to the account — and this will apply across all your pension savings accounts.
Bottom line: SIPPs are for ninja-level savers
If you already have a workplace pension plan, are maxing out the match from their employer, and want to max out any further cash offers from the government, then a SIPP should be your next step.
BUT!!! You probably shouldn’t open a SIPP if you don’t already have a solid emergency cash fund saved in a high-rate account — you cannot touch your SIPP money before you retire without suffering big penalties.
If you think you might need the money before you’re 55, look into a stocks and shares ISA first. An ISA will let you do all the things you can do in a SIPP — like invest in stocks — but without the cash match and without the penalties for bailing out.
And for dessert …
David Beckham made £72.6 million in licensing deals in his last financial year, from brands like Maserati and Adidas.
Men say they want to date women who earn more than they do but … wealthy women say this is BS. A dating coach for female bankers describes the harsh truth about high-earning women and the men who can’t handle them.
If you’re selling stuff on Vinted, Depop, or Airbnb prepare to be taxed: HMRC is coming after you.
1,000-day luxury cruise turned into a total shipwreck. They were promised 382 ports of call in a nearly-three-year trip for $90,000 per cabin. But now their money is gone and the ship is nowhere to be seen.
Cambridge University is trying to block any trademark that uses the word “Cambridge”. Which is obviously ridiculous and mean.
Bitcoin hits a new high: the spot price rose to $45,817 yesterday, up from a low of $16,452 in 2022.
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Photos: Denise Rowlands, Flickr, CC; Andi, Flickr, CC. Nigella Lawson; David Beckham.