Two things in life are guaranteed: death and taxes. Some of us have to deal with both at the same time.

You earn money and income tax takes its cut, with National Insurance following suit. You spend some of what's left and VAT takes its share. Buying a house? Stamp duty. You sell an asset that's grown in value, capital gains tax. You take a dividend from the company you built, dividend tax. Fuel duty, vehicle tax, insurance premium tax, council tax. Then HMRC comes in with the final punch combination when you die. Beneficiaries are at risk of inheritance tax. Forty percent of everything above the threshold.

With every other tax, you can do something about it on your own. Put more into the pension, use the ISA allowance, time a disposal, restructure how you take income. With inheritance tax, the planning that reduces the bill has to be done by the person you're inheriting from, and for larger estates, it has to be done years before they die. You cannot fix it afterwards. The bill comes out of the estate, which means it comes out of what would have been yours.

There are ways to reduce an inheritance tax bill though, such as making use of allowances and gifting during one’s lifetime. Often, the inheritance tax problem becomes a communication problem rather than a tax problem. Only 30% of over-55s have ever discussed inheritance with their children, according to research by law firm Irwin Mitchell. Ask people why not and 15% say it's awkward, 12% think it's rude, a Moneybox survey said. But the powerful determinant of an inheritance tax bill is whether a family can sit through that one uncomfortable conversation.

How inheritance tax thresholds work

Everyone gets a tax-free allowance when they die called the nil-rate band (NRB). It's £325,000, and anything above it is usually taxed at 40%. If the main home is left to children or grandchildren, and your estate is worth less than £2 million, a second allowance stacks on top: the residence nil-rate band (RNRB), worth another £175,000. So one person can pass on £500,000 before HMRC takes a penny. Anything you leave to your husband, wife or civil partner is completely exempt. If they die, you inherit whatever slice of their allowances they didn't use. Stack two sets together and a married couple can pass on up to £1 million tax-free – although this isn’t marriage advice.

The problem

The Institute for Fiscal Studies, a think tank, projects that if you were born in the 1980s, you probably won't inherit until your mid-sixties, and for roughly a third of that cohort, it won't be until their seventies or later.

The average person expects to inherit £62,500, according to interactive investor’s Great British Retirement Report 2026, which polls almost 8,000 savers in the UK. I don't know about you, but I think £60k would go a lot further for me at 29 than it would at 64. For a lot of high earners, the money is inherited after they’ve paid a house deposit or after the school fees mattered.

Then there's how much of it gets taken on the way. Roughly one in twenty deaths in the UK results in an inheritance tax charge, and in 2023/24 the average bill among them was £231,000, HMRC data shows. More people will get pulled into the hole every year, and one of the reasons is fiscal drag. The NRB tax-free threshold has been £325,000 since 2009 and it's now frozen until April 2031. Had it simply risen with inflation, AJ Bell reckons it would be worth close to £555,000 by the end of this decade. So while this threshold stands still, families are being dragged into the tax net as house prices rise.

Adding more fuel to the fire, from 6 April 2027, most unused pension pots will come into the estate for inheritance tax purposes. HMRC's own estimate is that around 10,500 estates will pay inheritance tax for the first time because of it, and another 38,500 will pay more than they otherwise would, at roughly £34,000 extra each.

How talking can reduce an inheritance tax bill

Changing the conversation and framing from “let's reduce an inheritance tax bill” to “when would gifting this money actually do the most good,” and you're having a completely different conversation with the same people about the same money. The second one leads to lifetime gifting. Lifetime gifting is also the thing that reduces the inheritance tax bill.

We want our parents around as long as possible. The conversation is about the money doing some good while everyone is still here to see it.

The headline rate for inheritance tax is 40%. The average effective rate those estates actually paid inheritance tax in 2023/24 was 13%. That is due to exemptions, allowances and gifts and every single one of them was a decision someone made while they were still alive to make it.

The bottom line: speak to your family about inheritance

If you're expecting some sort of inheritance, talk to your family. The potential alternative is that some of this hard-earned money goes to the taxman. If your family is anywhere near those thresholds and with the pension change coming in 2027. If you need help, consider speaking to a financial adviser – the fee for regulated advice could end up a rounding error against a £231,000 average bill.

In the weeks after the Budget of October 2024, pension schemes started receiving an unusual request. Savers who had taken their tax-free cash wanted to hand it back.

They had taken it because of rumours that the then chancellor, Rachel Reeves, was about to cut it in the Budget. She didn't.

By December 2024, HMRC was writing to schemes to explain the position. The money could go back into the pension pot, but because there is only so much tax-free in a lifetime, what these savers had taken had counted against that limit for good. The decision they took could not be reversed. There are strict rules around the tax-free pensions lump sum allowance.

The same thing happened the following year, before the Budget of November 2025, and again the rules were left alone.

Now the same warnings are circulating ahead of chancellor John Healey's first Budget on 28 October about pensions tax changes.

Healey himself has not made an announcement. This does not mean that this year's speculation is wrong, but the rumours simply mean you are being invited to act on a claim that has been made twice in two years, and been wrong twice. Which raises the question of where the claim keeps coming from.

Why Budget tax rumours keep appearing

I've worked in financial journalism long enough to know how these stories start. Journalists hear genuine policy discussions and think tanks publish proposals - and out come the warnings.

Interested parties lobby, and readers do need warning about measures that might plausibly arrive. But often, stories are

The difficulty is what happens on the way to the reader. 'This is being discussed' becomes 'this may happen'. By the time it reaches the kitchen table, it has become 'this will probably happen’, prompting some to take action too soon.

Where the numbers actually come from

In August 2024, the Fabian Society proposed that the maximum tax-free lump sum be cut to the lower of £100,000 or a quarter of someone's pension wealth. Torsten Bell, the pensions minister, had argued for £40,000 back in 2019, when he ran the Resolution Foundation.

The case for reform is a serious one, and it isn't confined to think tanks with a political affiliation. Writing in September 2024, the Institute for Fiscal Studies called the tax subsidies for pension saving generous, opaque and poorly targeted, and said they could sensibly be reformed. But it also warned against constant tinkering, and argued that savers need to know where pensions policy is going, whatever any one Budget does.

Two Budgets have come and gone since then, and savers are no clearer than they were. What they do have is a set of proposals, and no statement from any chancellor that he intends to act on them.

But the seeds of fear have been planted.

Why you can't simply put your tax free pension back

You can usually take a quarter of a pension without paying income tax on it. What far fewer people know is that there is also a limit on the total you can take tax-free across all your pensions in your lifetime, currently £268,275. It is called the lump sum allowance, and it moves in one direction. Once you have used part of it, it stays used.

HMRC's position is that sending the money back does not restore the allowance, and that there is no legal mechanism for doing so. The Financial Conduct Authority, which regulates pension providers, has said that taking tax-free cash does not by itself give you a right to cancel. Cooling-off rights attach to buying something new, an annuity for instance. Taking your own money out of your own pension isn't buying anything.

Suppose someone of 58 with a £600,000 pension draws the full quarter she is entitled to, £150,000, years before she needs it, because she has read that the allowance may be cut. The Budget comes and goes and nothing changes. Her £150,000 is now sitting outside a pension, where growth would have gone untaxed. And of the £268,275 she could have taken tax-free across her lifetime, £150,000 is gone. That part of her allowance is spent. None of what she had read was from anyone who really knew.

Are Budget rumours ever right?

Waiting is not always cheaper than acting.

In October 2024, capital gains tax rates rose from 20% to 24% for higher-rate taxpayers, and they rose on Budget day itself. People who had already decided to sell something, and brought the sale forward, saved four percentage points. The official forecasters later confirmed that enough of them did it to show up in the tax figures.

The speculation about cash ISAs proved right too. The cash allowance falls to £12,000 for savers under 65 from April 2027. So did the speculation about salary sacrifice, though that change doesn't take effect until 2029. Anyone who reorganised their pay in the autumn of 2025 moved more than three years early.

The people who gained in these three cases had something in common. They were mostly bringing forward a sale or a change they had already settled on, not doing something new because of something they had read.

Not everything in the news this autumn is speculation. Two changes affecting pensions and savings are already settled. The cash ISA change and the pension inheritance tax change both arrive in April 2027. You can plan around both, because both are coming.

A cut to the lump sum allowance is different. It has been proposed, and it has been reported. No government has said it is going to happen.

Three questions to ask yourself before 28 October

Before acting on anything you read between now, here’s what you should ask yourself first:

1. Has this been announced, or is somebody predicting it?
2. If the prediction is wrong, can you undo what you did?
3. What will waiting cost you?

The third question isn't a way of talking yourself into doing nothing. Sometimes waiting has a real price, as anyone who sold an asset after 30 October 2024 discovered. But that price is usually one you can work out in advance. The cost of acting on a rumour that turns out to be wrong often isn't.

The Budget is on 28 October. Until then, the thing to keep hold of is the difference between what the government has announced and what other people think it might do. The first one you can plan around. The second is a forecast, and there's no way of knowing in advance which forecasts are the right ones. Where a decision can't be undone, that difference is worth waiting a few weeks to resolve.

The government is reportedly looking at increasing capital gains tax (CGT) rates to help those on the lowest incomes.

The prime minister Andy Burnham and chancellor John Healey are understood to be mooting raising capital gains tax rates to as high as 45% to pay for a potential £3,000 hike to the tax-free personal allowance from £12,570 to £15,570.

The proposal is presented in a Budget submission from the Labour donor and green energy entrepreneur Dale Vince, The Telegraph reports.

According to modelling by economic research institute the National Institute of Economic and Social Research (NIESR) commissioned by Vince and seen by the publication, a £3,000 increase in the personal allowance would leave the lowest fifth of earners £600 a year better off.

It would cost the Treasury £20 billion but could be funded by increasing CGT rates and ending interest payments on Bank of England reserves while Vince said giving money back to lower earners through a lower income tax bill would also help stimulate the economy.

The proposals are reportedly being considered by the Treasury and No.10 ahead of the Autumn Budget next month.

A Treasury spokesperson said: “As has always been the case, decisions on tax are a matter for the chancellor to set out at fiscal events, rather than routinely commenting on rumour, speculation or proposals.”

What are the current rates of capital gains tax?

Currently, basic rate taxpayers pay a capital gains tax rate of 18%, while higher and additional rate taxpayers pay 24%.

The capital gains tax allowance is £3,000 per year, so you’re only taxed on any capital gains which exceeds this.

CGT has been targeted by both the previous Conservative Party government and the current Labour government in recent years.

The lower and higher rates of CGT were raised with immediate effect in the 2024 Autumn Budget while the tax-free allowance was slashed from £12,300 to £6,000 in 2023 and then halved to £3,000 in 2024.

Is there support for a capital gains tax hike?

A number of people close to Burnham have called for a change in the CGT rules to drum up cash for the Treasury.

In May, Louise Haigh, now first secretary of state, called for CGT to be brought closer to income tax rates.

“It would shift the taxation burden away from punishing work, and towards unproductive capital accumulation which does little to grow the everyday economy,” she said in an essay published in the Renewal journal.

In the same month, defence secretary Wes Streeting also called for CGT rates to rise in line with income tax bands.

Dan Neidle, tax lawyer and founder of the Tax Policy Associates think tank, said he thought Streeting’s proposal was “good”, suggesting the extra money brought in from raising CGT could be used to cut the basic rate of income tax.

“That would be a brave thing for a Labour politician to do, but in my opinion the right thing at this moment. Spend the rest on e.g. defence,” Neidle said.

However, the Centre for Policy Studies (CPS) has suggested significantly raising CGT rates could actually cost the Treasury money, as it would lead to behavioural changes.

Daniel Herring, head of economic and fiscal policy at the CPS, said: “It punishes the kind of productive investment the country needs to grow, those most likely to pay it can and will leave the country.”

Alphabet, the parent company of tech giant Google, is one of the largest companies in the world.

It is a front-runner in artificial intelligence (AI) and part of the so-called ‘Magnificent 7’ stock group. But, if you go to buy Alphabet shares, you’ll notice you have a choice to make.

Alphabet has two stock listings: (NASDAQ:GOOGL) and (NASDAQ:GOOG). The two tickers refer to separate share classes for Alphabet.

GOOGL refers to Class A shares or common stock, which carry shareholder voting rights – each share you hold grants you one vote whenever a shareholder vote takes place.

GOOG refers to Class C shares. These confer the same amount of ownership over Alphabet’s equity, but they don’t give you any voting rights.

Because both share classes represent the same level of equity in Alphabet, their prices are similar. However, GOOG tends to trade at a slight discount compared to GOOGL because it doesn’t give you any voting power.

For example, on 18 September GOOGL closed at $349.54 while GOOG closed at $344.41.

While each share class trades separately, they still represent equity in a single company and as such Alphabet’s market capitalisation (market cap) is calculated as the sum of both share classes.

You may sometimes see the two share classes split – for example, a list of S&P 500 stocks or the holdings in a tracker fund will usually list each share class separately.

As of 18 September the iShares Core S&P 500 UCITS ETF (LON:CSP1) lists Alphabet Class A as its fifth-largest holding with 3.1% of the fund, while Alphabet Class C is the seventh-largest with 2.5% of the fund. In reality, though, Alphabet is the third-largest company in the S&P 500 and accounts for a combined 5.6% of the ETF.

Which class of Alphabet stock should you buy?

The answer depends on what you’re hoping to get out of buying Alphabet shares.

If you want to be able to exercise shareholder voting rights then Alphabet’s Class A stock (GOOGL) is the one to buy.

But if you aren’t too fussed about voting – and it’s worth noting that, as Alphabet has a market cap over $4 trillion, your vote is likely to be a miniscule fraction of the total – then GOOG is slightly cheaper, meaning you pay fractionally less for a very similar level of financial return (it has a dividend yield of 0.26% compared to GOOGL’s 0.25% as of 18 September).

In reality, the difference is very small, and capital gains are likely to be similar for both stock classes over the long term (GOOGL gained 148% in the five years to 18 September, compared to GOOG’s 143%), so don’t fret too much over deciding which to buy.

Depending on the investing platform you use, the decision may be made for you as some platforms only offer a single class of Alphabet stock.

Is there a third class of Alphabet stock?

There is a third class of Alphabet stock – Class B. Unlike Class A and Class C shares (GOOGL and GOOG) Class B shares are not traded publicly, meaning you won’t be able to buy them.

Alphabet’s Class B shares are held by company insiders, mostly its senior leadership. They convey ten votes per share – meaning that senior executives hold the majority of control over the decisions the company takes whilst still being able to raise capital in the stock market.

Recent falls in Indian stocks have created opportunities to invest in some long-term growth stories at attractive prices.

India has been one of the world's fastest-growing major economies in recent years and this rapid economic growth is changing how its 1.4 billion people spend and save. As household incomes rise and more people move into the middle class, demand is growing for everything from convenient ways to shop and eat to insurance and branded consumer goods.

These long-term shifts are creating opportunities for Indian stocks that can capture a growing share of consumer spending, particularly those with strong brands, wide customer reach and plenty of room to grow.

At JPMorgan India Growth & Income, we focus on finding high-quality companies with the potential to benefit over the long term. Here are three examples.

Three Indian stocks for your portfolio

Zomato (Mumbai: ETERNAL) is one of India's leading online food delivery and restaurant discovery platforms, connecting consumers with restaurants and delivery partners across the country. As more Indians move to towns and cities and become comfortable ordering online, the company has grown rapidly, building a large customer base, an extensive restaurant network and more than 400,000 delivery partners.

Zomato's size gives it an important advantage, and its Blinkit business is also tapping into another fast-growing habit, offering rapid delivery of groceries and everyday essentials. Rising incomes, growing smartphone use and increasingly busy urban lifestyles are all helping India's food-delivery market to expand. With an established technology and delivery network, we believe Zomato (which trades under its parent name Eternal) is well placed to capture more of this spending as consumers increasingly prioritise convenience.

SBI Life Insurance (Mumbai: SBILIFE) is one of India's leading life insurance companies, offering a broad range of insurance and savings products. Its close relationship with State Bank of India, one of the country's largest banks, gives it access to an extensive branch and customer network, helping it reach a large pool of potential customers across the country. Insurance remains relatively underused in India, leaving considerable room for the market to grow.

Many Indian households still favour traditional ways of saving, but rising incomes and growing financial awareness are gradually changing these habits. As India’s middle class expands, more consumers are looking to protect their families and plan for retirement. With its strong distribution network and record of growing faster than many of its peers, SBI Life is well placed to capture this rising demand.

Varun Beverages (Mumbai: VBL) is India's largest PepsiCo bottler, manufacturing and distributing brands including Pepsi, 7Up and Mountain Dew. It operates in one of India's fastest-growing consumer categories, yet soft-drink consumption in India remains relatively low compared with other markets, leaving significant room for growth as incomes and spending rise.

Varun Beverages has built an extensive manufacturing and distribution network, helping it reach consumers across India's many cities, towns and rural areas. As the business grows, this scale also helps it produce and distribute drinks more efficiently. Combined with a strong record of execution, we believe Varun Beverages is well placed to continue growing as more Indian consumers spend on branded drinks.

India's recent market weakness shouldn't overshadow its long-term growth potential. As incomes rise and consumer and financial habits evolve, well-positioned companies have an opportunity to grow alongside the country's consumers and turn its economic expansion into attractive returns for shareholders.

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As CEO of Likewise Group (Aim: LIKE), Tony Brewer is playing out the final act in a long-running commercial rivalry. Brewer built UK flooring distributor Headlam into the market leader. But it collapsed into administration on 1 September, and now he is running the company taking its place

Brewer entered the carpet trade in 1977 as a 17-year-old at Midlands Carpet Distributors (MCD). There he learned the ropes under founder Graham Waldron. In 1991, Brewer and Waldron took a 22% stake in the listed conglomerate Headlam. Waldron was CEO at the time. They stripped out its legacy footwear and textile divisions, turning the company into a focused flooring distributor designed to consolidate the UK wholesale floor-coverings market.

At the time, the trade was populated by hundreds of small, family-owned merchants. Most carried modest stock, ran inefficient local delivery routes and lacked buying power with continental mills. Brewer and Waldron saw an opportunity and began buying these operators, preserving local trading names and centralising supplier negotiations.

Between 1991 and the 2008 financial crisis, Headlam became one of the London market's best-performing stocks, generating operating margins near 8% and returns on capital employed comfortably above 20%. When the crisis halted UK housing transactions, the sharp drop in flooring installations sent scores of private distributors to the wall. Headlam absorbed the shock, took the displaced accounts and emerged controlling roughly 30% of the domestic wholesale market.

Brewer was highly regarded by investors and staff alike. Then, in 2016, the board intervened. Disagreements over operational strategy and succession led to a boardroom rupture and Brewer walked out of the business he had spent a quarter of a century creating.

Two years in exile convinced Brewer that Headlam was vulnerable. Under the succeeding management, the market leader had become bureaucratic and indebted, with a sprawling network of regional properties and central administrative overheads. In 2018, Brewer partnered with property investor Paul Bassi to establish Likewise Group, floating the business on Aim to secure development capital. The objective was simple: build a modern distributor that could replicate Headlam's original service model without inheriting its structural deadweight.

Wholesale flooring distribution depends on logistics and relationships. Independent flooring retailers, regional contractors and self-employed carpet fitters cannot afford the capital or warehouse space to hold large inventories. The distributor carries the stock, extends trade credit and provides the delivery infrastructure needed.

Relationships matter just as much. Independent retailers and trade fitters tend to buy from sales representatives they trust to resolve delivery problems and secure stock allocations, rather than from a corporate brand. A decent sales representative will typically handle between 120 and 140 commercial accounts. Brewer used his industry standing to recruit heavily from Headlam's commercial team. Over several years, dozens of sales representatives, regional managers and senior logistics directors moved to Likewise. When they moved, many of their local trade clients followed.

The result was a damaging loss of volume at Headlam. In wholesale distribution, where operating margins rarely exceed mid-single digits, high fixed costs in depot leases and central overheads mean falling volumes can rapidly erode profits and turn to painful losses. As sales slipped, Headlam's overheads overwhelmed operating cash flow, turning predictable earnings into trading losses and adding to the strain on its debt facility until liquidity ran out. Capturing the spoils of Headlam's collapse will not be a simple walkover. The UK wholesale trade is no longer populated by the inefficient merchants of the 1990s. The surviving independent distributors are disciplined, well-managed businesses with clean balance sheets and strong regional customer loyalty. They will contest every square yard of displaced volume.

Likewise Group has plenty of room to grow

Likewise Group has been taking share from Headlam for years. Its national network is smaller but newer, and its sales operation has been built around many of the people who know Headlam's customers. Headlam falling into administration therefore accelerates a process that was already under way.

The business also needs to spend money on warehouses, equipment and stock before it can handle much more trade. That explains why Likewise Group raised £32.5 million in fresh equity in July. Management is using the proceeds to fund freehold logistics facilities needed to handle the additional trade.

Likewise Group now has significant spare capacity. As stranded trade accounts and displaced contractor orders flow into its national network, the additional revenue should carry little extra distribution cost. Moving from current revenue run-rates towards its £300 million capacity ceiling could therefore lift operating margins from the current 2.5% towards 5%, or 6% if the UK housing cycle turns favourable.

At full capacity, that throughput generates between £15 million and £18 million in annual operating profit. Against an enterprise value of about £100 million, the shares trade on less than seven times mature operating profit. The Aim market holds scores of cheap small-cap shares that languish for want of a catalyst. Likewise has one. The irony is that the man who built Headlam is now in the best position to pick up what it has left behind.

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In Paul Smith's new memoir, Threads, My Life in Style, he recalls how he went to his deserted offices during the Covid lockdown dressed in a suit in an effort “to make life seem more normal”. There he found 18 containers of milk burst on the floor and spent three hours mopping it up. He found himself thinking: “I wonder if my friend Giorgio Armani is doing something like this now? Or Tom Ford?” When he recounted this to his colleagues, “they all said the same thing: ‘Oh no! Only Paul Smith…'”. He took it as a compliment.

Smith's “can-do” attitude and infectious “joie de vivre” have always been a feature of his work, says the Financial Times. He's “the perfect ambassador for the soft power of tailoring – both in person and as founder and designer of his namesake business”. The atmosphere around him is one of such “merry eclecticism and creativity” that it's hard to believe he turned 80 in July.

Paul Smith on opening his first ‘boutique’ in 1970

Smith – who opened his first shop in Nottingham in 1970 – declares he doesn't think of the birthday as a milestone because “if you put too much importance on it, it becomes a burden. Like: ‘Oh, I'm old now.'” Smith remains in charge of his destiny. The business, which now has about 120 shops around the world, remains independent and he is the majority shareholder with a 69.5% stake. Tailoring remains Paul Smith's “north star” and the label has recently been emphasising the “practical” qualities of the suit – dubbing its latest men's collection, shown in Milan in June, “Suits in Unsuitable Situations”. Fashions change and cycles come and go – recent years have been as punishing for Paul Smith as any other luxury brand. But the bread-and-butter business is still socks: “the brand sells 700,000 pairs a year”.

“I always joke that I used to think VAT was vodka and tonic,” Smith says of his own business acumen as a young entrepreneur. It's one reason why he set up the Paul Smith Foundation to offer practical advice to people in the creative industries. But in fact, clothes were in his blood. His father, Harold, sold clothes and linens door to door on credit. Born in 1946 in Nottingham, Paul Smith left school at 15 with no qualifications and began working in a clothing warehouse as an errand boy, says Vogue. At 17, a serious accident put an end to his cycle-racing ambitions, but the upside of a six-month stint in hospital was that he made friends with the local art-school crowd, who introduced him to the world of art and fashion. After taking courses in tailoring, encouraged by his artist wife Pauline, Smith opened his first “boutique” in 1970 in a tiny back room in the city centre, says The Guardian.

The secret to Paul Smith's success

The 1970s were an exciting time to be building a fashion brand. Having made his name in London, Smith opened a shop in New York and was soon hanging out with the Studio 54 crowd – selling suits to Jack Nicholson and David Bowie. A big fan of the work of Yves Saint Laurent, a seminal moment for him was the launch of “Le Smoking”, the first woman's tuxedo from a major couture house. His own moment came when “suits got a boost thanks to the Big Bang in the 1986”, says the FT. Young urban professionals would head to Smith's shop in Covent Garden and find “Prince of Wales checks made with innovative colours and unexpected jacket linings”. They might also pick up a Filofax – one of the first of the many design objects that Smith has sourced or collaborated on over the years.

In the 1990s, the brand peaked, says The Guardian. “We're definitely not as relevant as we used to be,” says Smith of the brand's recent struggles, but “my company motto is ‘never assume' and that's helped me enormously over the years”. Longevity, he concludes, is about hard work, reassessing and never thinking you've “made it”. “Nobody cares how good you used to be.”

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The growth of passive investment means pension savers could be sleepwalking into disaster. Amid growing speculation about the potential for a stock market correction – or even just a prolonged period of flat returns – investment experts are increasingly worried about the risks many pension savers are unwittingly exposed to. Passive investment has compounded such dangers.

The reality is that most savers in workplace pension schemes never make an active investment choice – the employers' scheme Nest says more than 90% of savers behave this way – leaving their contributions to flow into default fund strategies. These largely rely on low-cost index-tracking funds that passively follow the market up and down.

Data suggests that even savers with self-invested personal pensions (Sipps), which offer more control over investment choices, are also opting for passive funds en masse. Data from platforms such as Interactive Investor repeatedly shows that index-tracking funds are among the most popular options with these savers.

The trouble with passive investment and index-tracking funds

The problem is that index-tracking investment may be riskier than savers realise. It's not just that these funds automatically follow markets down in challenging periods. The bigger worry is that many index-trackers are far more concentrated than is immediately apparent.

A low-cost fund offering exposure to the MSCI World Index, for example, sounds attractive. You're ostensibly getting a cheap way into a spread of investments on stock markets worldwide.

In practice, however, this is no longer the case. “While 20 years ago a passive investment approach provided well-diversified exposure, the same is clearly not true today,” points out recent analysis from JPMorgan Asset Management. “These benchmarks are now vulnerable to very specific risks inherent in today's shifting economic and political tides.”

In particular, the stellar performance of a handful of the large US technology giants in recent years has completely skewed the make-up of market indices. The US stock market now accounts for more than 60% of the MSCI World Index; within that allocation, the ten largest companies on the US market – mostly big tech – account for more than 40%.

In other words, investors with supposedly diversified portfolios are actually betting a very large chunk of their savings on a small number of businesses in the US tech sector.

There are similar concerns, meanwhile, about bond markets, where the huge issuance of US Treasuries to finance the mushrooming US debt has had the same effect. These bonds now dominate indices of fixed-income securities.

The impacts are significant. Pension savers are often invested via strategies that split their money by holding 60% in equities and 40% in bonds, with those allocations secured through passive funds.

But JPMorgan's analysis suggests savers who made such choices – or defaulted into them in the past – now have portfolios that look very different. A 60:40 strategy launched in 2008, for example, would have split equity and bond holdings accordingly, and allocated roughly 40% of the total portfolio to the US, with the remainder spread in markets across the rest of the world. But market movements since then mean that portfolio would today be more than 80% exposed to equities and 55% invested in the US.

Even worse, some investment experts believe passive investment increases the risk of a major stock market crash. By artificially inflating demand, passive funds drive some companies to unsustainable valuations, they argue, with the bursting of the bubble eventually becoming inevitable.

The bottom line? Your pension portfolio may be full of hidden dangers, particularly if you've left it alone for years and opted for default, passive investment strategies. Now might be a good moment to check where you stand.

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Metallurgical coal has spent the past few years as the industrial commodity nobody wanted to admit owning. It sits under the same coal label as the thermal coal that funds have been told to divest from, even though it does an entirely different job. Capital has stayed away, generalist investors have ignored it, and the sector has traded as if the world were quietly winding it down.

That is starting to look like a mistake. The metallurgical coal price has rallied from $224 a tonne to $282 in a few weeks, and the equities have followed. The median move across the listed coal group is close to 25%. This looks like the first sign of a market waking up to something that has been true for some time – metallurgical coal is structurally indispensable, and the world simply doesn't have enough of it.

What is metallurgical coal?

Start with what metallurgical coal actually is, because the name causes endless confusion. This is not the thermal coal that gets burned in power stations. Metallurgical, or coking, coal is an industrial input. It goes into a blast furnace alongside iron ore, and through a chemical process that has not meaningfully changed in a century, and becomes the coke that reduces iron ore to metallic iron. There is no other input that does this job at scale. If you want steel, and the world wants a great deal more steel, you need metallurgical coal.

This is where the demand story gets interesting, because it is not really a China story any more – it is an India story. India's National Steel Policy targets 300 million tonnes of crude steel capacity by 2030, roughly double where the country is today. That target is not aspirational chatter, it is showing up in blast-furnace construction across five states. My own modelling shows India's blast furnace capacity rising from around 99 million tonnes a year in 2025 to 197 million by 2030.

Run the standard conversion of roughly 0.8 tonnes of coking coal per tonne of crude steel through that, and you get somewhere in the region of 78 million tonnes of additional gross coking-coal demand once those furnaces are running flat out. However you cut it, the direction of travel is the same: materially higher.

India knows this is its weak point. The country imports 85% of its coking coal today, and the stated policy objective is to bring that down to 65% by 2030 through domestic washing and beneficiation (techniques designed to strip impurities from coal and metal ores). Even if that target is hit in full, absolute import volumes are still likely to rise because the base demand is growing so much faster than domestic supply can be brought on. India is diversifying away from its historic reliance on Australia, buying more from the United States, Russia, Canada and Mozambique, and state-owned groups have been in talks about acquiring Russian coking-coal assets outright.

Meanwhile, supply has been shrinking. Years of capital starvation induced by the trend towards environmental and social governance (ESG), permitting delays and genuine geological depletion in premium Australian basins have left the seaborne market thin. Add in diesel-driven cost inflation in Appalachia and Australia, worsened by Middle East oil disruption, and you have a supply side that cannot respond quickly to a demand shock. That asymmetry – fast-growing structural demand against supply that takes years and enormous capital to expand – is precisely the set-up that produces the kind of price move we've just seen. It should persist for years.

None of this means coal prices run in a straight line from here. A benchmark of $282 will attract new supply eventually; it always does. But the mistake I see investors making is treating this as a short-covering bounce in an unloved sector. It is not. It is a repricing of a genuine structural mismatch between where steel demand is heading, particularly in India, and where metallurgical coal supply actually is. The market has been asleep on this trade for a long time. It is now stirring. I would rather be early to that than early to leave it.

Metallurgical coal investments to buy now

The large, liquid metallurgical coal producers are the first port of call. Alpha Metallurgical Resources (NYSE: AMR) and Warrior Met Coal (NYSE: HCC) are the two most relevant US-listed groups: low-cost, high-quality producers with the operating leverage to a rising benchmark that has driven their share prices up sharply already this month.

Peabody Energy (NYSE: BTU) gives broader diversified exposure across both metallurgical and thermal coal, while Ramaco Resources (Nasdaq: METC) offers a smaller play on the same rally. All of them benefit mechanically as the benchmark price climbs, and all of them remain cheap against where metallurgical coal pricing looks to be heading over the next few years.

My own top pick sits a little further down the market-capitalisation scale: Clinch Resources (Toronto: CLCH). Clinch is bringing new North American metallurgical coal supply into production at exactly the moment the market has turned, with surface output already running at its Lanes Branch mine in West Virginia and underground production ramping up into the autumn. Production looks poised to climb from under 400,000 clean tons in the 2025-2026 fiscal year to roughly two million clean tons in 2027.

Our fair-value estimate, based on a $240-a-tonne benchmark that the market has already blown through, points to C$2.50 in the base case and C$3.90 in the bull case, against today's share price of around C$1.05. The firm also boasts a stake in JJ Resources' high-value coal project, and an early-stage rare-earths angle in leftover rock waste from previous mining activities, neither of which the market is pricing in at all yet.

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Gary Stevenson, a gobby former City trader turned socialist firebrand, known for his advocacy of a wealth tax and “for dressing like a 16-year-old scally despite being a 39-year-old man”, as Christopher Snowdon puts it in The Critic, was briefly all over the news during the silly season, when Parliament was in recess, and there was hence nothing better for political hacks to talk about.

Stevenson's perhaps most stunning achievement was to make and present a Channel 4 documentary about himself and his ideas in which he allowed his arguments to get severely and embarrassingly bested by people who know what they're talking about. His five minutes of fame ended with his early retirement from social media, citing burnout and exhaustion.

The big issue with wealth taxes

Sadly, his ideas have a bit more life in them yet, and for a simple reason – Andy Burnham, the new prime minister, is sniffing around for more money to fund his spending commitments. Where the cash will come from is, as Gerard Lyons says in The Times, the “defining fiscal question” of the present moment. Most economists rule out imposing wealth taxes as a solution to that problem, and for good reasons. But politicians are prone to forget sound economics when they have more pressing problems to deal with, such as huge fiscal holes to fill and political constituencies to placate.

Chancellor John Healey, now preparing his first budget for delivery at the end of October, has pointedly refused to rule out tax rises and faces the challenge of rebuilding a fiscal buffer eroded by the Iran war and weak growth while funding new spending commitments from a prime minister whose premiership so far seems distinguished mostly by his inability to see a spending commitment he doesn't like.

Healey's options are limited. The Office for Budget Responsibility is unlikely to upgrade its forecasts for economic growth or future tax revenues, and borrowing more will not be easy. Gilt issuance is already around £250 billion this fiscal year and debt servicing costs are on the rise. And Labour's manifesto commitments rule out increases in any of the main taxes. Attention has thus long been shifting to wealth and other taxes, presented as a simple way out of the predicament.

“They are not,” as Lyons says. Modern tax systems have evolved in the way they have because governments need “large, reliable and predictable” sources of revenue. That consideration means that revenues generally come primarily from taxing recurring flows of income, profits and spending. Such taxes generate around four-fifths of tax revenues across the OECD club of developed nations. Wealth taxes depart from this principle, seeking to draw income from a stock of wealth held in assets rather than from flows – and that is far easier said than done. Countries that have tried to impose them have usually ended up abandoning them. Where they remain, they have simply become another burden, not on idle wealth, but “on entrepreneurs, business owners and productive capital”.

Supporters of a wealth tax often cite the Wealth Tax Commission, the report of a group of independent experts tasked with studying the feasibility and impact of a wealth tax, but its own research undermines the case, says Lyons. Even at a tax rate of just 1%, the Commission estimated that behavioural responses could shrink the tax base by between 7% and 17%. “Many people are asset rich but cash poor. A tax that is detached from recurring cash flow eventually forces borrowing or the sale of assets simply to pay the tax. It alters behaviour, depresses asset values and adds administrative complexity.”

Why are wealth taxes so popular?

It is easy to portray those who oppose a wealth tax as “bootlickers for the haves and the have-yachts”, says Snowdon, but “the reason most economists are dismissive of the idea is the same reason governments of both right and left have abandoned them over the years: they are costly to administer, don't raise much money and drive talent out of the country”. What most people who advocate soaking the rich don't realise is that the money of the very wealthy is “not just sitting there in a bank account”. It is invested in shares, the value of which fluctuates daily and can spike or collapse dramatically. It is invested in property and possessions, the value of which is not known until they are sold. And in the case of people who technically own £10 million or more, it is the value of the businesses that they founded and own, the price of which is also not known until they are put up for sale.

The first task of a government that wants to introduce a wealth tax is to calculate how much wealth people have, but this is therefore an inevitably expensive and bureaucratic exercise requiring many arbitrary decisions that are open to challenge by those being assessed, says Snowdon. And that's just the start of the problems. In 1990, 12 OECD countries had a wealth tax. Today, there are only three. Norway and Switzerland use them as substitutes for inheritance and capital-gains taxes, and Spain's is “so full of holes that what remains can be considered largely symbolic”: it raises so little revenue that most fiscal accounts do not even bother to list it. In short, it soon dawns on governments that try to introduce them that wealth taxes are simply not worth the bother.

Why then are we still talking about them? Mainly because “more sensible proposals take five minutes to explain and therefore have little chance of being adopted in the current political environment”, says Joseph Heath, an academic philosopher writing on Substack. The main merit of the idea of wealth taxes for those on the left is that they are very easy to explain: “Billionaires are bad, so let's take away their money!” Wealth taxes are, in other words, a perfect example of “slopulism” – “policy ideas that make for quick, effective soundbites”, but that are useless and “almost universally rejected by experts”.

It is not even necessary to take a position on whether inequality is a big problem that we must deal with to see this. Perhaps you think it is. Even if so, there is nothing a wealth tax can accomplish towards whatever end you have in view that can't already be accomplished through the current tax system – that is, by taxing capital income. Some might say that this does not capture the increase in value of the stock of wealth when those assets earn a return or appreciate in value, but that is just an argument for treating the increase as income and taxing it – as happens already. All income derived from wealth in the form of dividends, interest payments and capital gains must be declared as income. The principle, as already stated, remains to tax the flow, not the stock of wealth. “For people who are angry about the Elon Musks and Peter Thiels of the world, a wealth tax offers the most immediate and intuitive way of channelling that anger. Unfortunately, the desire to punish one's enemies is not a sound basis for tax policy.”

Heath was talking about the situation in the US, but it is hardly very different here in the UK. Given that unfortunate fact, what we can expect from the current government in terms of tax policy? Nothing very pretty. Imagine you are a politician who does not believe in wealth taxes, but who wants to be popular with people who do, says Kristian Niemietz on Substack. You know wealth taxes don't work, you have economic advisers who tell you so, and you know they are usually more trouble than they are worth. But at the same time, you believe that the Gary Stevensons of this world have won the argument and, in any case, you need revenue sooner rather than later. What would you do? You would probably, says Niemietz, come up with “all sorts of policies that mimic aspects of what a wealth tax is supposed to do, without being a wealth tax proper”.

That would explain a lot of otherwise puzzling moves by the current government – why, for example, we have seen increases in the rates for capital gains taxes while tax-free allowances have been cut; why landlords face higher rates on rental income and higher stamp duty land tax rates; why we will see a “mansion tax”, a council-tax surcharge for properties worth more than £2 million. Polls show that such reforms are popular with the public. They might not be so popular when the consequences come home.

All such changes will probably decrease savings, investment and wealth generation while raising only minor amounts of additional revenue, as Niemietz points out. But other consequences will be more immediate, visible and intrusive. The government plans, for example, to send tax inspectors around the country to value homes believed to be in the price range of the mansion tax. Those inspectors will have powers to demand entry into people's homes so that they can conduct a valuation. This may seem to be an intrusion into the private sphere and a violation of civil liberties, but it is an inevitable consequence of the bureaucratic process of valuing wealth that hasn't yet been sold in order to impose wealth taxes. “If this sounds like a terribly inefficient way of raising money to you, just imagine what an actual wealth tax, which does the same thing for assets across the board, would be like.”

Policymakers need to heed the lessons of history

The popular support for higher rates and wealth taxes may not be all it seems either, says Viggo Terling, also in The Critic. Westminster has “convinced itself that the public is desperate to tax the rich harder”. But new polling conducted by the Adam Smith Institute suggests otherwise. True, asked whether they support a wealth tax, 61% of voters say yes. But told additionally that such a tax could drive high-net-worth individuals abroad and reduce the money available for public services, support plummets to 37%.

Voters should be capable of doing the maths themselves. The top 10% of earners contribute 60% of all income-tax revenue. If enough net contributors flee Britain to escape an ever-increasing tax burden, the resulting bill will land on everyone else, either in the form of higher taxes or worse public services, says Terling. Worryingly, the millionaire exodus seems already to have begun. Britain now has 442,000 sterling millionaires, down 7% since 2024 and the lowest number since the financial crisis. Britain's tax burden is already testing post-war highs – a level the Office for Budget Responsibility has called “uncharted territory” – and imposing new wealth taxes and leaving tax thresholds unchanged will change incentives dangerously for the super-rich and workers alike.

Today, earning between £100,000 and £125,140 can leave you facing an effective marginal income-tax rate of 60%. Yet 81% of the public agree that people should be able to keep more of what they earn and pass it on to their children. “That is about as close as Britain comes to a settled moral position on tax, and no major party currently builds its policy around it.”

It's beyond time that policymakers heeded the lessons of history and stopped “wasting public resources reviving failed ideas, especially ones that are more about political signalling than devising meaningful solutions”, says Cristina Enache for Project Syndicate. “To restore public confidence in our political and economic system, we should instead focus on fostering growth and expanding opportunity – on building the bottom up, not tearing the top down.”

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A decade ago, the idea that infrastructure could be an exciting, growth-focused investment was unlikely. The sector was seen as a source of steady income that would hopefully keep pace with inflation, but probably not offer much more. Talk to an infrastructure specialist today and it's clear how much has changed in a few years, especially when it comes to energy and power.

In the past two weeks, I've spoken to Jean-Hugues de Lamaze of Ecofin Global Utilities and Infrastructure (LSE: EGL) and Daniel Chu of ClearBridge Global Infrastructure Income Fund. Both argue that the fundamentals of the sector have shifted, yet markets are still underestimating the capital that will be required and what it means for investors.

To give a simplified summary, the bull case begins with the need to renew and replace ageing infrastructure, much of which was built over 50 years ago. This applies across many infrastructure subsectors. Second, there's the electrification of the economy as a result of the energy transition, which requires investment both in new generation and in grids and batteries to support more use of renewables in the generation mix. On top of that trend, we have the growth of new, power-hungry users such as AI and data centres adding fresh demand (see chart). Finally, there's a growing focus on boosting security of supply and resilience in the face of both geopolitical threats and climate change.

Infrastructure valuations at a discount

The investments needed will be large. As one example, de Lamaze points to Germany's infrastructure plans, which could require more than €700 billion between 2026 and 2035. Governments are not going to want to fund all of that given the state of public finances. This will create huge opportunities for private capital, often in partnership with the public sector.

A further positive for investors, he says, is that many utilities' business models have also changed for the better, especially in power. A greater share of revenue comes from longer-term contracts and less from short-term sales. This provides greater certainty for earnings, which is reassuring if much of the sector is likely to invest in expanding capacity in the years ahead.

Despite these tailwinds, valuations for listed infrastructure funds remain at a significant discount to where similar assets are valued in private deals, say both managers. We shouldn't bet on this gap being closed, but listed stocks look attractive by historical standards even before allowing for a structural shift in growth rates. Investors want to see more proof of successful execution and earnings growth, says Chu. That could come by 2028 – and with it, at least something of a rerating for the sector.

You'll be able to hear my discussion with Jean-Hugues de Lamaze on the MoneyWeek Talks podcast next week.

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There is a great wave of money – and artwork – heading the way of younger generations. The value of the “great wealth transfer” from the post-war baby-boomer generation in Britain alone has been estimated at £5.5 trillion over the next 30 years.

Baby boomers were prolific art buyers. “Spending on art accelerated as the rich got richer, moved into ever-larger houses and became eager to splash out on discretionary purchases,” says Felix Salmon on Bloomberg. That in turn led to a boom in artists who could afford to live by the brush. There were 8,300 artists whose works had sold at auction in 1988, according to the Artnet Price Database. In 2012, that number had ballooned to 90,275.

Sadly, unlike Hokusai's Great Wave – a print of which came from a single-owner collection amassed over years to sell for HK$21.7 million (£2 million) in Hong Kong last October – the great art wave racing towards the younger generations is mostly made up of works of questionable value. What to do with it all? “The sheer tonnage of boomer-owned art is vast, and the total demand for it doesn't come close to the amount of supply that's about to arrive,” says Salmon.

The big auction houses are only interested in the most-valuable artworks. So, that's fine for the likes of businessman Joe Lewis, 89, whose collection of paintings by Freud, Bacon and other celebrated artists sold for £296.3 million in late June to become the most valuable single-owner collection ever sold in London. And it's fine for the estate of the late Microsoft co-founder Paul Allen, whose collection fetched $1.6 billion in 2022 to set the global record. Other inheritors will count themselves lucky if they can slough off a painting or two to the local auctioneer. More probable, says Salmon, the whole lot will be sold to a professional estate liquidator.

What can you do with the unwanted artworks?

You could, of course, simply give them away. The cultural gifts scheme and acceptance in lieu can both be used in Britain to reduce inheritance tax bills.

But the artworks must be of a sufficiently high calibre and you must be able to find a museum or gallery willing to take them. That's not a given, since it involves a lot of time and expense, from cataloguing and restoring artworks to insuring and keeping them safe if not for immediate public display. And increasingly, museums can take their pick, because they are not short of offers.

So, after all that, you might as well admit defeat and keep the damn thing – which is probably what the original collector had intended or hoped you would do from the start. The trouble is, fashions change and what was fresh and exciting half a century ago may seem dull or worse in the social-media age, or the artist may have faded from memory, rendering their works worthless. It is a conundrum inheritors of art will have to face in the coming years.

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Saltford House, Saltford, Somerset

A Grade II-listed, late Georgian house with a walled rear garden with a large lawn, a patio and a greenhouse. The house has decorative plasterwork, wood floors, period fireplaces and a large kitchen with French doors. 7 bedrooms, 4 bathrooms, 4 receptions, 3-bed flat, garden room.
Price: £2.75m Hamptons 0117-911 1455

Allardice Castle, Inverbervie, Montrose, Angus

An A-listed, 16th-century castle with a walled garden and grounds bordering Bervie Water, on which it has fishing rights. It has an inglenook fireplace and a spiral staircase leading to a watch tower. 6 bedrooms, 3 bathrooms, 2 receptions, library, outbuildings, 3 acres.
Price: £950,000+ Strutt & Parker 07384-826784

The Garden House, Stockland Green Road, Tunbridge Wells, Kent

An award-winning contemporary property situated in a large walled kitchen garden. The house has floor-to-ceiling windows and sliding doors overlooking the landscaped walled gardens. 5 bedrooms, 4 bathrooms, 2 receptions, study, breakfast kitchen, boot room, cinema room, gym, outbuildings, gardens, 1.25 acres.
Price: £3.75m Knight Frank 01892-772947

Ludstone Hall, Claverley, Shropshire

A Grade I-listed Jacobean manor with mullioned windows and a balcony. The gardens include a front courtyard, a moat, a walled kitchen garden and wooded grounds with a stream cascading into lakes. It has a 17th-century carved oak staircase, oak panelling, open fireplaces and a kitchen with an Aga. 9 bedrooms, 7 bathrooms, 4 principal receptions, indoor swimming-pool complex, 2-bed gate lodge, coach house, 9.10 acres.
Price: £3.95m Fisher German 01530-410840

Newburn House, Newburn, Northumberland

A Grade II-listed Georgian house set in walled gardens that include a courtyard garden and a Japanese garden. It has open fireplaces and a large kitchen. 5 bedrooms, 2 bathrooms, 5 receptions, workshop, 0.87 acres.
Price: £850,000 Finest Properties 0330-111 2266

Dillington Hall, Dillington, Norfolk

A Grade II-listed Georgian house dating back to 1780 with landscaped gardens that include an established walled garden bordered by woodland. The house has open fireplaces and a large dining kitchen with an Aga. 6 bedrooms, 4 bathrooms, 2 receptions, study, office, old laundry, 2-bed apartment, cellars, stables, garage/workshop, stores, grounds, heated outdoor swimming pool, tennis court, 2 acres.
Price: £1.75m Sowerbys 01362-693591

Barholm Castle, Gatehouse of Fleet, Castle Douglas, Kirkcudbrightshire, Dumfries & Galloway

A restored, A-listed 15th-century tower house surrounded by landscaped gardens and walled gardens overlooking Wigtown Bay. It has a turnpike stone staircase, a great hall with a painted beamed ceiling and a barrel-vaulted kitchen. 3 bedrooms, 3 bathrooms, study/bedroom 4, 2.75 acres.
Price: £695,000+ Savills 0141-222 5875

The Old Rectory, St Just in Roseland, St Mawes, Truro, Cornwall

A Grade II-listed Georgian house on an estate in an Area of Outstanding Natural Beauty. It has walled gardens, a vegetable garden, a Mediterranean-style courtyard designed by an award-winning landscape gardener, and is situated 100 yards from St Just Creek with direct access to the beach. 6 bedrooms, 5 bathrooms, 3 receptions, breakfast kitchen, library, orangery, games room, 2 annexes, 1.09 acres.
Price: £5m Fine & Country 01326-334658

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Who says Apple doesn't innovate any more? After the iPhone and iPad, we now have something entirely new: iFlation. When the technology giant launched its latest phone last week, most of the attention focused on the way it folded in half. But there was something else eye-catching about it as well. It costs almost $2,000. A top-of-the-range version will retail at more than $3,000.

That's a lot for a phone and a big increase on earlier versions. When the first iPhone was launched back in 2007, it cost $499. Adjusted for inflation that is about $800 in today's money. So even in real terms, a flashy new Apple device has almost doubled in price over the last two decades. The ability to keep pushing prices higher may help explain why Apple is one of the biggest and most profitable companies in the world.

It is far from alone as there is a broader trend at work here. Lots of high-status, luxury goods keep on getting more and more expensive. Take tickets for the Glastonbury Festival. We learned last week that next year's event would cost £408. That compares with £87 in 2000 or £170 in today's money. Likewise, Chanel's signature handbag has risen fivefold in price over the past two decades. A Rolex Submariner has more than doubled in price in real terms.

These are just samples of a select group of products that don't simply perform a function – such as telling the time or making a phone call – but also signal your status, make you feel good about yourself, and impress your friends and neighbours. There are plenty of cheaper phones on the market that perform perfectly well. Some of them even fold in half. But they don't have the cachet of an Apple. Likewise, you can pick up a perfectly reliable watch in any department store, or even just use your phone, and it will tell you the time. But it doesn't tell the world how successful you are in the same way as a Rolex. The trouble with such high-status goods is that they are getting more and more expensive.

Why? To start with, companies have to keep pushing up the prices of such goods to maintain their exclusivity. By definition, a status good only maintains its position by having some degree of exclusivity. If everyone has one, it is not so classy any more. Price rises are one way to make sure its status is preserved.

Next, although we might not especially notice it in low-growth Europe, the world is getting richer. The number of millionaires in the world has roughly doubled from about 30 million a decade ago to roughly 60 million now, according to the UBS Wealth Report. There are a lot more people with plenty of money to spend, but often only a fixed number of things for them to spend it on. The result is that prices keep going up to match a limited supply with a soaring level of demand. As Asia and South America carry on growing a lot faster than the rest of the developed world, that is only going to get worse. On current trends, the iPhone 20 will cost $5,000 or more by the end of the decade.

Apple will only have themselves to blame

The problem, however, is that the economy is already struggling, with most people finding their living standards squeezed. If high-status goods become less and less affordable, it makes that situation feel worse. Even people who, by any reasonable measure, are making enough money to count themselves part of the affluent middle class may suddenly find they can't afford an Apple phone or a high-class watch. For anyone on a lower income, it becomes impossible to get to Glastonbury.

The divide between a tiny minority that can still afford a few luxury goods and everyone else will just get wider and wider. The result? The latter will feel more and more alienated from a free-market economy that no longer seems to deliver.

For corporations, raising prices is great for the bottom line, if you can get away with it. But if it means you undermine support for free-market capitalism, perhaps that is not such a great trade. At a certain point, iFlation will create a backlash, with the calls for wealth taxes and caps on corporate profits becoming louder all the time. The likes of Apple will only have themselves to blame for pushing prices up too aggressively.

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How is the music industry doing?

The music industry is doing an awful lot better than it was ten years ago and far better than many media sectors. In the first decade of this century, the global music business had a famously torrid time of it, as consumers pinched content for free via file-sharing sites. Sales of physical CDs collapsed and the nascent digital-download channel failed to make up the difference. Between 1999 and 2014, global revenues shrank by 40% and reasons to be cheerful were thin on the ground.

But since then, it's been a growth story, driven by technology. If the internet destroyed the record companies' old business model, the ubiquity of smartphones facilitated the rise of the now-dominant streaming model, where labels and artists license their content to sites such as Spotify (which marks 18 years in business next month) and Apple Music. In 2017, revenues from streaming surpassed sales of physical formats (CDs and the like) and downloads for the first time – and they've continued growing strongly since. At the same time, legacy formats, notably vinyl, have enjoyed a resurgence as a premium, niche product for superfans.

Has Spotify changed the music industry?

It has permanently altered the music industry's economics, yes. In the age of Spotify and Apple Music, it's easy to listen to songs via playlists without even knowing the name of the artist. That tilts power away from performers and towards songwriters. It has also made it harder than ever to break new acts and for artists to build long-term fan bases – both trends that raise questions over long-term revenue streams. At the same time, it has delivered lucrative new revenue streams for legacy acts, as new generations of listeners decide that the old songs really are the best. And it has helped moves by a growing number of big-name acts to sell off their back catalogues to investors.

How has Spotify affected artists?

The advent of Spotify has been to the benefit of artists and consumers, says Simon Heptinstall in The Spectator. The old bloated music industry, with its inflated unit prices, concentrated its massive wealth at the top, but failed to fund a thriving grassroots scene. The industry “funded Elton John's drug binges, Led Zeppelin's private Boeing 720 waterbeds and Keith Moon driving a Lincoln into a Holiday Inn swimming pool”. But if you weren't one of a handful of “anointed megastars, you didn't get pressed to plastic”. Last year alone, Spotify paid a record £860 million to the UK music industry, twice as much as ten years ago. Forty-five per cent went to independent artists and grassroots labels. Globally, it paid out $11 billion – up 10% in a year – with half going to independents. More than 1,500 artists earned over $1 million each and about 80 artists generated more than $10 million from Spotify alone.

How big is the music industry?

Big and getting bigger. According to UK Music – a trade body representing all sectors of the industry – the contribution of music to the UK economy hit a record £8 billion in terms of gross value added (GVA) in 2024 – up 5% on 2023. UK music exports that year hit £4.8 billion, also up 5% year on year. UK growth is currently in line with global trends. Goldman Sachs, which tracks the global music industry across the recorded, publishing and live sectors, reported 6.2% growth from 2023 to 2024. It puts the total global market at about $105 billion in 2024 and forecasts a lift to almost $200 billion by 2035. Its 2024 forecast puts the live market at roughly $35 billion, recorded music at about $31 billion and publishing at roughly $10 billion.

Did social media democratise music discovery?

The overarching theme is of a tech-enabled structural shift in power from labels to artists, says Nick Lawson of Ocean Wall, a London-based research-led investment bank. The traditional music business model was an unequal bargain, where advances were “loans dressed as gifts”, and rights were surrendered in return for “access to a distribution machine that only the majors could operate”. That machine is broken. “Streaming democratised distribution. Social media democratised discovery. And a generation of artists, watching their peers retain their masters and still reach global audiences, has concluded that independence is not just viable, it is preferable.” Some 55%-60% of artists now operate independently.

What does streaming mean for the music industry's growth?

Streaming is now maturing in developed markets, says Perry Gresham of MIDiA Research. Future growth will be driven by emerging markets and premium tiers. More broadly, beyond streaming, it will depend on the wider ability of artists and rightsholders to fully exploit the “fan economy” – the industry's new buzzword – meaning live music, merchandise, physical products, direct-to-fan services and other forms of “expanded rights”. According to Goldman Sachs, studies show that 10% to 15% of fans are willing to spend multiples of the standard price for premium offers such as early access to tickets, exclusive content, high-quality audio or merchandise. This could add billions of dollars to annual industry revenues by 2030.

Who will capture that value from the music industry?

Not the traditional record labels, says Lawson. The majors are built around rights ownership, but their data on fan behaviour is fragmented across ticketing platforms, streaming services and merchandise partners. Live music will remain the “structural backbone” of the industry – spending has risen in 29 of the past 33 years, an impressive recession-proof record. Meanwhile, artist-centric royalty platforms will shift payment models towards genuine engagement, rather than fraudulent streams and AI-generated oversupply. That leaves an opening for firms (such as ATC, in which Lawson owns a stake) that aim to serve artists in the round – combining management, fan engagement, touring, booking and exploiting intellectual property – rather than acting as rightsholders. The future is an “artist economy” in which authenticity is valued most. The firms that built the tools, the data and the trust stand to benefit the most.

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Baltic Classifieds (LSE: BCG) operates a wide range of car, job, real estate, and professional services websites in Lithuania, Latvia and Estonia. It is uniquely placed to benefit from the region’s prosperity. While countries such as France, Spain and Germany have been struggling, the Baltic states have been quietly getting on with boosting productivity and growth. Barely two decades after joining the EU in 2004, Estonia's GDP, adjusted for inflation, is now close to that of Portugal, while Lithuania's is not too far off Italy's.

Baltic Classifieds runs 14 different websites and has benefited from the fact that the Baltic states have a strong digital culture, regularly scoring highly in international surveys of digital competitiveness and digital security. Strong economic growth in the area has been a further tailwind.

How Baltic Classifieds is profiting from the network effect

Most of Baltic Classifieds' websites are leaders in their sector. This is important since online marketplaces tend to benefit from network effects, with buyers and sellers gravitating towards a few major portals. Some of Baltic Classifieds' websites, such as the Estonian car site Auto24, are so dominant they have no major specialist competitors. It's estimated that each resident of the Baltics visits the group's websites about ten times a month. This market power allows the company to make large operating margins, which reached 68% in 2026, and Baltic Classifieds earns a double-digit return on capital employed.

Baltic Classifieds should benefit from the fact that both income and wages in the Baltic should continue increasing at a much stronger rate than the rest of Europe. However, Baltic Classifieds is also attempting to increase its profits in three other ways. Firstly, it's investing in cutting-edge technology to ensure its websites stay popular. It's also trying to find new ways to monetise its websites through partnerships. Finally, it's selectively buying other companies to fill the gaps in its portfolio.

Baltic Classifieds's sales have more than doubled since 2021, with normalised earnings per share increasing more than tenfold during the same period, and both are expected to keep growing. The balance sheet is healthy, with net debt declining since 2022. Despite the company's solid fundamentals, the stock trades at a very reasonable 15.5 times projected 2028 earnings with a solid dividend (for a technology company) of 2%.

Baltic Classifieds also looks appealing from a technical perspective – the share price has done better than the overall market over the past one, three and six months and trades above its 50- and 200-day moving averages. I would therefore suggest you go long at the current price of €2.45, at £110 per €1. I would put the stop-loss at €1.65, which gives you a total downside of £880.

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Caledonia Investments (LSE: CLDN) is one of the market's more esoteric investment trusts. Founded by the wealthy Cayzer family, which once owned one of the world's most powerful shipping conglomerates, the £3.1 billion fund now functions as a multi-asset growth and protection vehicle.

Caledonia has been part of the MoneyWeek investment trust portfolio since 2013. We like its diverse approach and its aim of earning solid long-term returns of 3%-6% above inflation, while managing risk during periods of uncertainty and instability. The Cayzers own 51% of the trust, putting it under the stewardship of a powerful long-term shareholder.

However, while the trust has undoubtedly achieved its performance target over the past three, five and ten years, its recent record still leaves something to be desired with regard to its share price, which languishes on a 35% discount to net asset value (NAV).

Three-way split in Caledonia's portfolio

Caledonia's portfolio is split into three roughly equal pools: quoted equity, private equity funds and private capital. At 25% of net asset value, the private capital pool is the smallest of these three segments. This portfolio comprises ten high-quality UK mid-market businesses with “prudent capital structures”. The largest holding here – and in the portfolio overall – is AIR-serv Europe. This firm designs, manufactures, and maintains forecourt equipment like air, vacuum and jet wash machines. Since being acquired in 2023, its value has grown from £143 million to £215 million as of the end of August. Last year, the company paid Caledonia a £24.5 million dividend.

These types of holdings give the trust an edge over other wealth protection vehicles. Other trusts in the sector usually rely on third-party funds, equities and alternative investments, Caledonia has direct control over these holdings and is not subject to additional fees. It can also buy and sell when it sees fit – if an asset such as AIR-serv is working well, there's no need to sell. Other private capital holdings include hospitality operator Butcombe (4.1% of NAV or £127 million) and garden centre operator Blue Diamond (1.9% of NAV or £60 million). The latest addition is a 61% stake in Conquip Engineering.

Listed equities are 32% of NAV at present. This pool comprises around 30 equity holdings, including tobacco giant Philip Morris (2.9% of NAV or £91 million), Texas Instruments and Microsoft.

Finally, there's the private equity fund pool. At 32% of NAV, this is equal to the direct private holdings, but with holdings in 80 funds across 45 private equity managers, there's more diversification. Caledonia says it's often the only European investor in these vehicles, which are predominantly focused on buy-out deals in the North American mid-market segment.

Caledonia's stubborn discount

Aside from the goal of beating inflation by 3%-6%, Caledonia also uses the FTSE All-Share Total Return index as a benchmark for its performance. Over the past decade, the trust's NAV has beaten the consumer price index including housing (CPIH) by a factor of three times and matched the FTSE All-Share.

However, both NAV and share price have trailed the FTSE All-Share over three and five years, while the share price over five years has fallen short of its inflation-plus target. Management has tried a share split to improve liquidity and has been buying back stock to unlock value. Since 1 April, it has spent £30.6 million buying shares at an average discount of 37%. This has boosted NAV by 3.5p per share, but the discount remains stubbornly wide. More work is needed here.

That said, Caledonia's edge lies in its diversification. In an ever-rising market, its strategy is always going to lag. The test will come in the next crash, when we see if it outperforms investors who increasingly seem besotted with the AI bubble.

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Soaring oil prices have pushed UK inflation to a five-month high. Consumer prices rose 3.1% in the year to August. Motor fuel prices rose nearly a quarter, with petrol rising to 161.3p per litre and diesel hitting 181.8p. Brent crude is back above $100 a barrel. Trading at $108 as of Wednesday, it has risen 78% since the start of the year.

While there is no end in sight to America's war with Iran, until recently the White House had seemed to be gaining the upper hand in the economic battle. Despite the closure of the vital Strait of Hormuz artery, oil prices had stayed below $100 for several months. That was in large measure thanks to clandestine shipments through the strait – high-risk “dark crossings” made by crude tankers with their transponders turned off so as to evade Iranian detection, say Dmitry Zhdannikov and Anushree Ashish Mukherjee for Reuters.

Together with pipelines that circumvent the Strait of Hormuz, the “industry consensus” is that roughly two-thirds of pre-war Persian Gulf volumes are still making their way out of the region. All told, such “dark shipments” may have reached 500 million barrels between June and August, enough to put a meaningful dent in the world's thirst for fuel.

Now the pendulum is swinging the other way. Last week, Saudi Arabia was forced to close its vital east-west pipeline following attacks by Iranian-backed militias in Iraq. That may cut global oil supplies by as much as 3.6 million barrels per day, equivalent to 3.6% of global demand, according to analysis by Kpler.

Pipelines have been a major tool for bypassing Hormuz, but these strikes are a reminder that they can be destroyed, Anne-Sophie Corbeau of Columbia University tells the BBC. In war, pipelines are “sitting ducks”.

Meanwhile, the alternative Red Sea route is coming under renewed threat from Yemen's Houthi militia, says Gideon Rachman in the Financial Times. The Houthis are a tough nut to crack. They have been fighting better-equipped enemies for more than two decades. The persistence of the Taliban, another US adversary that ultimately outlasted Washington's patience, comes to mind. Another vital energy route is being squeezed just as the northern hemisphere enters winter.

Surging oil price at the root of the debt crisis

Surging energy prices and inflation are the root cause of the global spike in government borrowing costs, says Aaron Back in The Wall Street Journal. The benchmark US ten-year Treasury this week topped 5% to hit its highest level since 2007. After years of deficit spending and the “twin crises” of Covid-19 and Russia's invasion of Ukraine, the world's developed nations entered this year in a “weakened fiscal position”. That was “the dry timber that the Iran war now threatens to set ablaze”.

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The full new state pension is set to exceed £13,000 per year next April, breaching the tax-free personal allowance for the first time.

The triple lock mechanism means the state pension increases by the highest out of wage growth, inflation or 2.5%.

The state pension is set to rise by 3.9% from April 2027, in line with the earnings growth element of the triple lock. This will likely be confirmed in chancellor John Healey’s Autumn Budget.

If confirmed, the full new state pension would rise to £250.70 per week, or £13,036.40 a year.

The first £12,570 of taxable income you get per year is tax-free thanks to the personal allowance, meaning many retirees who only received the state pension haven’t been taxed on it in the past.

State pension income will not be taxed if it's sole income, government says

If you had a taxable income of £13,036, you would usually owe around £91.48 in income tax.

However, the government said last year that pensioners will not need to pay tax if they only receive income from the state pension, even if it goes above the £12,570 personal allowance.

In the 2025 Autumn Budget, then-chancellor Rachel Reeves said: “We are ensuring that people only in receipt of the basic or new State Pension do not have to pay small amounts of tax through simple assessment from April 2027.”

She later added in an interview with broadcaster Martin Lewis in November 2025: “In this parliament, [people who only receive income from the state pension] won’t have to pay the tax, further out, I’m not going to be able to make any commitments on that, but we’re looking at a simple workaround at the moment.”

Although Reeves is no longer chancellor, pensions minister Torsten Bell confirmed the new government will stick to this pledge on 16 September.

He said: “In line with the commitment made at Budget 2025, pensioners who only just exceed the personal allowance will not have the administrative burden of paying small amounts of tax in this Parliament.

“The chancellor will set out further details on how that commitment will be delivered at the Budget.”

The government said the move will “ease the administrative burden for pensioners” and mean they do not have to “pay small amounts of tax via simple assessment”.

The system for this hasn’t been confirmed but more details may be released in the Autumn Budget.

Do you have to pay tax on other pension income?

If you have income from another source, perhaps from a workplace pension or part-time work, you will likely have to pay income tax.

Your pension provider usually calculates your tax and deducts it from your pension income through pay as you earn (PAYE), meaning any tax you owe will be automatically paid for you.

What is simple assessment, and will you have to pay tax on your state pension using it?

Simple assessment is a method used by HMRC to collect tax when a self-assessment tax return is not required but tax cannot be collected through PAYE.

It is used by HMRC to collect tax in some simple circumstances, including if you need to pay tax on your state pension.

Had the government not intervened, pensioners whose sole income is the UK state pension may have had to pay tax by simple assessment next year.

However, as the government has confirmed those who only get an income from the state pension will not need to pay small amounts of tax on it, you will likely not need to complete simple assessment.

The video games industry has seen more change in recent times than almost any other. Over the past 15 years, gaming technology has “moved very quickly, the behaviours and culture have grown and expanded exponentially, and there has been a constant stream of changes that has made the industry exciting”, says Greg Weller, head of gaming partnerships at Generation Media. Some of the changes have been positive. The industry has become “an established, mainstream constituent of the entertainment industry”, with an estimated 3.6 billion people around the world now playing games in some form, says Gavin Smith, a senior commercial banker at Arbuthnot Latham.

However, “rising development costs, greater regulatory scrutiny and the concentration of player attention around a handful of major franchises could end up limiting that growth”, says Smith. Artificial intelligence, too, clearly has “significant transformative power”, though it's too early to say whether this will be good for the sector.

The industry's reputation for being “recession-resistant” has already been tested, with companies cutting around 45,000 jobs since 2022, as Adam Smart, global director of products for gaming at AppsFlyer, points out. Still, the opportunities outweigh the risks, making it a great time to invest. Consultant BCG estimates the market will grow by about 6% a year, reaching a value of $350 billion by 2030. Other estimates put the growth rate even higher.

Browser-based video games are the future

The big growth has come from games that you can play on your mobile phone or through your web browser as they are “really easy for virtually anyone to play” without having to splash out on expensive gaming hardware, says Matthew Dolgin, a senior equity analyst at Morningstar. Many of them also have a social element or are integrated into social media, which is bringing more and more people into gaming, including many of those who wouldn't otherwise have ever considered playing video games.

At the same time, the balance of power between mobile companies and the app stores has shifted. Until recently, developers just accepted that 30% or more of their revenue would go to Google Play or the Apple Store, says Stein Janssen, chief operating officer at browser-based games website Poki. But this has been increasingly challenged in the courts and in legislation. Apple has faced an investigation from the European Commission as well as lawsuits. Janssen expects this pressure to lead to a reduction in the cut that Google and Apple are able to take from sales of mobile games.

Indeed, many mobile games companies are starting to bypass Google and Apple completely by “starting their own stores for people to download games or buy in-game items”. Others are switching from mobile games funded by payments (either up front or in-app) to ones that are free, but rely on advertising revenue. Browser-based games are the future, says Janssen, as they can be played immediately, rather than waiting for a download.

Shifts in the big-budget video games subsector

Mobile and browser gaming may be the fastest-growing part of the industry, but the big budget games (or the AAA games as they are sometimes known) are still doing well. Revenue for this subsector will grow by a still respectable 4.7% a year for the next four to five years, according to BCG. Whenever “there are truly engaging games on the market new people start playing, and every year we see new generations of gamers log on”, says Andrew Bowell, CEO of immersive entertainment studio Iconic Interactive. Throw in the older generations who are already at home with games and the industry “should continue to grow”.

At the same time, outside expanding areas such as Asia, much of the growth is less about attracting new players and more about how revenue is collected – or in other words, about getting existing players to spend more, says Noam Korbl, CFO at PropFirms. Large parts of the industry have “moved from selling a boxed product once to charging for continued access, cosmetics, season passes and subscriptions”. Recurring spending from an existing player base is “far more predictable than hoping a single release performs well in its launch quarter, and investors tend to pay more for predictability than for creativity”.

Another big trend affecting AAA gaming is what Smart calls “platform convergence”, where the “old lines between console, PC and mobile blur as cross-platform play and cloud gaming let the same title reach players everywhere”. This means that studios and publishers now receive “diversified revenue streams”. This doesn't completely insulate them from the financial consequences of a flop, but it does mean that a shock in one segment, system or region “doesn't necessarily sink the whole industry”.

Video games conquer films and TV

Modern games have moved away from being just single products to being “franchises made up of a wide-ranging bundle of intellectual properties, with distinctive characters and even music”, all of which “lend themselves to broader application than just computer games”, says Aminder Khatkar, a partner at Brandsmiths. Such intellectual property (IP) can (and has) been exploited for lots of different things, including experiential events, but the most obvious application is in film and TV. There is a “definite convergence”, says Khatkar, between gaming and TV and movies.

The conversion of characters and franchises that have their roots in gaming into films and TV shows represents “one of the biggest opportunities across the media industry”, says Smith. Recent adaptations such as drama series The Last of Us and Fallout have shown that “gaming IP can attract substantial audiences beyond gaming itself”. Successful gaming franchises have “established fan bases, global reach, and richly developed worlds that sustain audience engagement across a range of formats”. In some cases, gaming IP is becoming more valuable than traditional film or television enterprises. Nintendo, for example, is expanding franchises such as Pokémon, Zelda and Super Mario into films, merchandise and theme parks.

The number of games being adapted into TV shows or films is increasing, says Stefan Seidel, a professor of information systems at the University of Cologne. Well over 200 adaptations have been commissioned since 2019, according to market research firm Ampere Analysis. And when an adaptation succeeds, “it lifts the games that already exist”. After the Fallout television series, for example, “the years-old Fallout 4 video game climbed back into the top five of the US sales chart, and daily players of the older games stayed far above pre-series levels for months”.

Interestingly, the circular effect is bigger for TV adaptations than films. The typical TV show increases the number of people playing a particular title by more than 200%, compared with 48% for films, according to Ampere's research. Still, even the boost from film is substantial and far greater than the increase in numbers that comes from updates and new downloadable content. The games industry is starting to become a much bigger and lucrative version of the toy industry, says Heather Delaney of Gallium Ventures, where TV shows based on the toys have long boosted sales.

Will virtual reality live on?

Delaney is a bit cooler on virtual reality (VR), which many previously saw as the wave of the future. Indeed, Facebook changed its name to Meta in October 2021 due to its belief that the future lay in what it called a “Metaverse” of people communicating (and playing) through virtual-reality headsets. Recently even Meta has been pivoting away from both the Metaverse and VR in general, closing three of its VR studios and laying off 10% of staff in the area, in favour of “adaptive reality” glasses that merge digital content with the physical environment. VR turned out to have too many limitations when it comes to gaming, not least the feeling of isolation while playing.

Meta's “gradual retreat” from VR “probably tells us something about where the wider subsector is heading”, says Smart. Enthusiasm for VR came at a time when people “were stuck at home” during the Covid pandemic and looking for escapism. Still, VR is unlikely to entirely disappear as it has attracted a “passionate core audience” and when done well can provide “one of the most exciting experiences in gaming”. The launch of new hardware, such as Valve's Steam Frame, may attract a new audience to VR.

Others are more optimistic. Meta may have cut back its investment on VR, but it has not completely abandoned it and it is still trying to push the technology, albeit in a way that is less high-profile, says Khatkar. Indeed, Meta's partial retreat shows the sector no longer needs to be “artificially propped up” by big tech firms but is strong enough to be left to individual companies producing software that can meet the demand, says Matt Celia of Light Sail VR. More than 20 million Meta Quest headsets have now been sold, with one in four teenagers in the US owning a VR headset, and a new product upgrade is likely in the near future. More than a million people use the headsets every day, “which is relatively high for an emerging technology”. Several independent studios and apps have started to make money from VR games.

AI won't kill the video games industry

One of the biggest questions hanging over the industry is the impact of AI. Some of the fears are clearly justified. It's hard to deny that the demand for processing power and chips created by AI “has pushed up the cost of consoles and computer equipment”, says Sean Kealy, VP of equity research at Panmure Liberum. But fears that AI will allow anyone to easily create games at zero cost, making games companies redundant, are also exaggerated – at least for the foreseeable future. AI “is not capable of producing a video game in and of itself, by itself, straight away”.

The release of footage generated by Google's cutting-edge AI world-building tool Project Genie, which caused the share price of many developers to fall when it was released in February, demonstrates the limitations of modern AI. “Video generation struggles to maintain coherent frames over more than a few minutes, with the entire world behind you different from the one that you walked through just seconds previously,” says Kealy. He also points out that there are open questions around copyright, not just in terms of the use of copyrighted content in AI, but also in terms of copyrighting AI-generated content.

There's a long way to go before the human element in games creation can be bypassed completely, agrees Seidel. The more likely outcome is that AI will be used in something like the same way as the industry has over the past few decades used “procedural generation” – where game elements such as the appearance of monsters and treasure are randomly created. After a lot of trial and error, games companies found this worked best when it was accompanied by designers “who kept evaluating and adjusting what the tools produced, and who continued to design the parts of the world that mattered most by hand”.

At the same time, AI could help the industry in two main ways. Firstly, it will help keep costs under control. With the typical cost of making a game having “risen over time from $50 million to $500 million”, anything that helps the industry “take a leaner approach to game development” will be good for developers, says Bowell. There could be particularly big time-saving efficiency gains when it comes to creating characters, environments and texturing. The use of large language models will also make the interactions between gamers and computer-controlled characters (NPCs) more “non-scripted and dynamic, which in turn will make games more interesting and replayable”, says Massimiliano Calamai, games director at Smallthing Studios.

Over time, the positive and negative aspects of the AI revolution will make “distinctive intellectual property and strong distribution even more valuable”, says Marc Fernandez, the chief strategy officer at Neurologyca, which tries to produce AI that better understands context. The big winners will be studios with “valuable IP, engaged communities, and the ability to turn adaptive, personalised worlds into long-term player engagement”.

We look at some of the most promising investments to profit from all these trends below.

The best gaming investments to buy now

Take-Two Interactive (Nasdaq: TTWO) owns Rockstar Studios, the company behind the successful Grand Theft Auto franchise. Gamers are eagerly anticipating GTA VI, the latest instalment in the franchise. It is “an example of exceptional intellectual property that can help sell software, move hardware and command the culture”, says Greg Weller of Generation Media. The company also owns games studio 2K, which has several successful franchises, and mobile developer Zygna, which allows it to also benefit from the boom in mobile gaming. Take-Two has a strong record, with revenue nearly doubling between 2001 and 2006. The stock trades at a reasonable 21 times expected 2028 earnings.

If Take-Two is a growth story, then Ubisoft (Paris: UBI) is about value. The company has faced many challenges and has struggled with sales and profitability, says Matthew Dolgin of Morningstar. But with rival Electronic Arts now a private company, Ubisoft is the best option for those who want to invest in a traditional games company with multiple large franchises, which include the Assassin's Creed and Far Cry series. Ubisoft looks cheap on multiple valuation metrics, trading at less than half the estimated value of its net assets.

CD Projekt Red (Warsaw: CDR) is an example of just how volatile the fortunes of games companies can be. It has struggled since the release of a hotly anticipated game resulted in mixed reviews. Its sales and share price are now well below pandemic peaks. Development delays have also been a problem. However, the company still makes money from licensing the brand rights to its hit series of Witcher games and is preparing several big releases in the next few years, including Witcher 4 and Cyberpunk 2077 II, which should substantially boost revenues. The stock trades at 25 times estimated 2027 earnings.

Sony (Tokyo: 6758) is not a pure play as it only makes about a third of its sales from games and related services, with music and entertainment systems also being major sources of revenue. The importance of gaming to the firm is only set to rise, however, following its decision to partially spin off its financial services business. It sells games hardware, most notably the PlayStation (which includes a VR headset), as well as its own software. Some of its game franchises, most notably the post-apocalyptic drama The Last of Us, have also become successful TV series. The stock trades at 16 times expected 2028 earnings.

Nintendo (Tokyo: 7974) is a games company with a long pedigree. It still produces a regular stream of new titles and hardware (most recently the handheld Switch 2) and it has also been finding new sources of revenue. Nintendo has been working harder to make money from its major franchises outside gaming. The Super Mario Galaxy Movie, for example, has already made more than $1 billion at the box office and a major new film based on The Legend of Zelda series is due out next spring. The stock trades at 21.5 times projected 2028 earnings.

One smaller UK-listed company worth looking at is Everplay (Aim: EVPL). Everplay has three businesses, including German developer Astragon and Storytoys, which produces educational apps for children between the ages of two and eight using licensed IP. The big business is Team 17, which publishes independent games such as Worms and Wardogs. The latter recently sold a million copies on the first day of its release. Everplay has an impressive record of monetising the IP of the developers that it works for, says Sean Kealy of Panmure Liberum. Revenues have more than doubled between 2020 and 2025 and the stock trades at only 10.3 times projected 2027 earnings.

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Arriving at ROMEO Napoli felt less like checking into a prestigious luxury hotel and more like wandering into a contemporary art gallery. A Christian Leperino sculpture was there to greet me, and there were artworks at every turn. It was easy to forget I was visiting the heart of Naples. But only momentarily, since ROMEO Napoli does such a good job of delivering incredible food and a vivid, vibrant atmosphere – two things that are very much associated with the city.

Elegance meets modern comforts at ROMEO Napoli

Each ROMEO property has been designed by a different architect, giving each hotel its own identity. The Naples hotel, designed by Japanese architect Kenzo Tange, strikes a balance between contemporary luxury and elegance.

I stayed in a deluxe harbour room, where rich macassar ebony wood, soft lighting and modern furnishings came together to create a warm, calming space. The hotel offers a range of rooms and suites to suit different stays, from stylish harbour-view rooms like mine to expansive wellness suites with their own steam room and sauna. At the top end is the two-bedroom penthouse suite, spanning 165 square metres.

Naturally, there are plenty of spaces to relax beside your room, at ROMEO Napoli. I particularly liked the games area in the lobby, where a vintage radio, table football and a carefully laid-out chess board are surrounded by contemporary artwork. There's also an impressive wine cellar with more than 600 bottles, giving guests another reason to stay in for the evening.

Spa experience to remember

However, the spa was the highlight of my stay. The spa experience starts before you have even stepped inside the treatment room. I walked down a softly lit corridor, with warm orange lighting and calming music playing, before misted glass doors slowly opened to reveal the spa area.

I started with the hot and cold stone walkway (a hydrotherapy feature, where guests walk barefoot through shallow channels of water at different temperatures), before moving between two Jacuzzis, each set at a different temperature, followed by the steam room and sauna. The facilities were excellent, but it was the atmosphere that really made it special. Dark stone, soft blue lighting and gentle water features created a space that felt so calming. I could easily have spent the entire afternoon there.

As if the spa weren't enough, the rooftop infinity pool is another highlight.

Looking out across the Bay of Naples towards Mount Vesuvius, it's the kind of view that makes you want to stay in the water a little longer. It was the perfect place to slow down after a day exploring Naples.

Dining chez Alain Ducasse

No trip to Naples would be complete without experiencing the city's food, and dining at the hotel's Il Ristorante Alain Ducasse Napoli didn't disappoint. Breakfast was served each morning here, and it quickly became one of my favourite parts of the day, the breathtaking view being reason enough. There was something so peaceful about eating breakfast while overlooking the water. We also returned one evening for the restaurant's five-course tasting menu. Every dish was beautifully presented, but what really stood out was watching one of the pasta courses being finished right at our table. Seeing it prepared in front of us made the whole experience feel that bit more special.

Seared red mullet with carrot and seafood kimchi, followed by roasted Laticauda lamb (a local breed), served with a pearled jus, are two dishes that feature on the tasting menu (€270 per person). It was also the attention to detail and the interactive nature of the meal that made the dining experience so memorable. For example, when the bread arrived, it came with two small wooden spoons – one topped with butter and the other with sea salt and pepper that we crushed using traditional stone grinders. Such a simple touch, but it turned something as ordinary as seasoning bread into part of the experience.

Exploring Naples and beyond

The location is one of the best things about ROMEO Napoli. Sitting right by the waterfront, it was the perfect base for exploring the city. During our stay, we made the most of the city's famous food scene, trying authentic Neapolitan pizza, hunting down the legendary €1 Aperol spritz, and ending many afternoons with some of the best coffee gelato I've ever had. Naples was the perfect way to begin our trip, offering a taste of Italy's history, culture and energy before we continued on to the Amalfi coast. A visit to Pompeii was also easy to arrange, with the ancient city just a 40-minute bus ride away, and the coaches conveniently located opposite the hotel. From there, we continued to Amalfi, with a stop in Sorrento – a fitting next destination, as the ROMEO Collection is set to open its next hotel there shortly.

Vaishali was a guest of ROMEO Napoli. From €555 per night, visit theromeocollection.com.

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“We really do earnestly believe AI could kill all humans!”, says Anthropic researcher Evan Hubinger on X. He thinks there is more than a 10% chance we could all be dead “within the next decade”. Talk of AI's apocalyptic potential is in the air. Senior figures at AI labs are said to be terrified by the capabilities of recent models, which could be used to create bioweapons or elude human control and go rogue. The panic hit a new level at the weekend when a group of AI CEOs, including Dario Amodei – Hubinger's boss at Anthropic – publicly backed calls for a slowdown in AI development.

Anthropic: the AI company at the centre of a media storm

Scary stuff. Perhaps Silicon Valley really has been seized by a collective spasm of conscience about the consequences of building AI. Or maybe this is a PR campaign so slick and devious that it would make Alastair Campbell weep. For one thing, the timing is highly suspicious. Anthropic, the AI startup at the centre of the current media storm, is preparing to launch the largest initial public offering (IPO) in history in a matter of weeks.

A basic tenet of critical thinking is to pay attention to vested interests. Dario Amodei is not a neutral commentator. He is trying to secure an IPO valuation of up to $2 trillion. Yet much of the tech media, keen for a dramatic story, uncritically treats the self-serving pronouncements of AI executives as objective statements of fact.

The more conspiratorially minded pointed out that the tweet by Jacob Coxon, the Anthropic researcher whose resignation triggered the latest news cycle, was viewed 140 million times despite the fact that his account had almost no prior activity. While Coxon's concerns are probably genuine, the way his message was picked up and boosted by multiple influential figures appears less than organic.

On the face of it, it's not obvious how dire warnings about existential risk would be beneficial to the AI industry. Big tobacco spent years suppressing information about the dangers of its products. So why are AI executives so keen to talk about how their technology could be used by terrorists or lead to the extinction of swathes of white-collar work?

Is Anthropic doom trolling?

The answer, as Cal Newport, a computer science professor at Georgetown University, argues, is the pervasive use of a marketing technique he calls “doom trolling” (a spin on phone addicts' “doom scrolling”). Fear sells. Outrageous claims about the dangers of large language models (LLMs – the currently favoured AI technology) go viral, generating vast amounts of free media coverage for the company that originated them. Talk of existential risk makes AI products appear hugely powerful and desirable.

This buzz helps to distract from the less exciting reality. Yes, LLMs can do impressive things in highly structured domains such as coding and translation, where clear failure conditions help limit their tendency to go off the rails. In other areas (including journalism), their catastrophic tendency to make up information greatly circumscribes their usefulness.

In short, the LLM is a new software category, but investors are not going to pay trillions of dollars for a newer version of Microsoft Excel. Instead, these tools must be imbued with a dark, apocalyptic glamour. Such doom-mongering is longstanding industry practice. As Parmy Olson notes on Bloomberg, in 2019 OpenAI said it would hold back its GPT-2 model from general release on the grounds that it was too dangerous – this for an LLM that struggled to answer primary-school-level reasoning tasks. Terrifying indeed.

This year the AI doom campaign has been turned up to max. Barely a week goes by without claims (all originating from within the AI companies themselves) that a bot has gone on a rogue hacking spree, CEOs, including Anthropic's Dario Amodei, have backed a slowdown in the development of AI or that a new model can't be released because it creates serious cybersecurity risks (it is then released shortly afterwards anyway). The effect has been to generate precisely the sort of frenzied atmosphere that one would want to surround a trio of high-stakes AI-linked IPOs: SpaceX in June, Anthropic scheduled for October, and OpenAI sometime next year.

Who benefits from AI doom trolling?

The AI industry's calls for regulation carry the whiff of “regulatory capture”. Government red tape is more burdensome for upstarts than it is for big established players. New safety regulations could help AI leaders throttle the competition. There is persistent suspicion that Anthropic's Amodei would like to see regulations that effectively excludes his main competitor – cheaper, open-source, often Chinese AI – from major Western countries. If you can't beat them, ban them.

It is also possible that calls for a slowdown represent an attempt to put a brave face on the fact that the AI arms race is becoming too expensive. OpenAI is on course to spend $45 billion this year alone on training and inference (the cost of running AI), but the performance of new models is running into diminishing returns. That isn't an ideal backdrop in which to successfully list a growth company. Instead of breaking the bad news to investors and tanking the valuation, why not piously tell the media you are choosing to slow down development because of your abundant love for humankind?

Don't fall for the hype

What does all this mean for ordinary investors? For starters, don't fall for the tech hype machine. Steer clear of this year's big flashy IPOs, a crowded trade if ever there were one. Secondly, diversify widely. Continue to look for the sort of underexplored investment themes that we cover in depth. And finally, keep your head. There is no knowing how long the current AI fever will last, nor exactly how wide the damage will be when it breaks, but you can at least regain some tranquillity by tuning out the endless talk of doom. Perhaps AI really will kill us all in some hypothetical future. But for now, it is the AI-marketing hype that represents a clear and present danger to our collective mental health.

This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.

Challenger bank Monzo has launched a new credit card offering customers the chance to earn cashback and automatically invest it.

There are many cashback credit cards on the market, letting you earn rewards on your everyday spending, but Monzo’s new Aura card is the first in the UK to allow you to auto-invest any cashback you earn.

The card has a monthly £15 fee (£180 a year) and can be opened by existing Monzo customers aged 18 or over who have a Monzo current account.

The account is being gradually rolled out so might not be available to open yet. Monzo said it will contact customers to let them know when they can apply.

Luke Enock, general manager of borrowing at the bank, said: “We know our customers really value products that deliver both immediate benefits and longer-term financial progress in one.

“For the first time, Aura combines fee-free auto-investing and cashback as you spend, so every purchase has the potential to do more.”

What’s on offer from Monzo’s Aura credit card?

The Monzo Aura card offers 1% cashback on food shopping and 0.5% on everything else. Cashback is uncapped so there’s no limit on how much you can earn.

The average person spends £33 on food and non-alcoholic drinks each week, according to the government, or £1,716 a year. Someone spending this amount would get £17.16 in cashback a year from the Monzo Aura card.

If that person spent £10,000 a year on everything else, they would receive £50 in cashback.

The Aura card also comes with a range of perks which Monzo says are worth £360 a year, including an Apple TV subscription which is typically £9.99 a month and Google AI Plus which costs £4.49 a month.

You also get two airport lounge passes and two airport fast-track passes per year.

The card has a representative APR of 64.2% (variable) because of the high £15 monthly fee, but the purchase rate, which is applied if you don’t pay off your balance in full each month, is 29% per year (variable).

Credit cards in the UK come with Section 75 protection. This means the credit lender is jointly liable with the retailer if anything goes wrong with a purchase, if it is more than £100 and up to £30,000.

How does Monzo Aura’s auto-invest feature work?

The main unique selling point of the Aura card is the auto-invest feature on cashback earned. The feature can be turned on and off when you want.

You can invest in a range of exchange-traded funds (ETFs) including the FTSE 100, S&P 500 and Nasdaq, as well as exchange-traded commodities (ETCs) in gold and silver.

You will pay a fund management fee to asset management firm BlackRock, but it comes out of the value of your investments rather than as a separate charge.

The value of your investments could go up or down and you may get back less than what you put in.

How does Monzo’s Aura credit card compare?

The American Express Platinum cashback credit card is arguably more competitive – you can get 5% cashback (up to £125) on purchases for the first three months, dropping to 0.75% on spending up to £10,000 per year afterwards.

It also has a lower £25 annual fee versus Monzo’s £180 per year fee. Its purchase rate is a similar 29.1% per year (variable).

American Express also has an Everyday cashback credit card with no annual fee offering 5% cashback (up to £125) on purchases for the first three months, dropping to 0.5% on spending up to £10,000 per year afterwards. The purchase rate is 29.1% per year (variable).

Santander’s Rewards Credit Card comes with no monthly fee and offers 3% cashback on travel, eating out and takeaways and 0.25% on food shopping in your first year. After the first year, you earn 0.25% on everything.

You can also get 35% off Santander Travel Insurance.

Rachel Springall, finance expert at data firm Moneyfactscompare, said: “The Aura card will be of most benefit to consumers who use a credit card as their preferred choice when covering everyday expensive and frequent grocery bills, but also those who might want to automate small investments through the cashback they earn.

“As with every credit card, it’s important to pay off debts before interest applies, because interest charges could wipe out the benefits of the cashback offer. Clearing the balance every single month will be essential.”

One of the biggest appeals of investment trusts is their ability to pay out dividends, even during tougher economic times.

However, some investment trusts are better than others at consistently increasing the amount they return to their shareholders.

The Association of Investment Companies (AIC), an industry body representing investment trusts, tracks so-called ‘dividend heroes’ – investment trusts which have raised dividends for at least 20 consecutive years.

Annabel Brodie-Smith, director at the AIC, said: “Investment trusts can achieve these impressive long records of dividend growth because they can smooth their flow of dividends.

“A trust can retain up to 15% of the income it receives each year, and this reserve of income can be used to boost dividends when markets are difficult.

“Dividends are never guaranteed, but these long records of resilient dividend growth are much appreciated by income investors.”

The investment trust dividend heroes with the longest dividend-raising streaks

The City of London Investment Trust (LON:CTY) topped the AIC’s list, having increased its dividend payout every year for the last 60 years. The trust invests in UK-listed equities, with top holdings as of 31 July including HSBC, Shell and NatWest.

The trust says its focus is on providing a steady income stream to customers in dividends as well as delivering long-term growth on investments.

“By reaching this milestone we celebrate not only 60 years of consecutive annual dividend increases, but also the resilience of the UK market and indeed the benefits afforded to us by the investment trust structure,” said Job Curtis, fund manager at the investment trust.

“Our investment approach prioritises patience, valuation discipline and long-term thinking, all of which has allowed us to navigate the varied market conditions of the past six decades.”

Three investment trusts could join City of London in the 60+ threshold next year, having been consistently raising dividends for the last 59 years: Bankers Investment Trust (LON:BNKR), Alliance Witan (LON:ALW) and Caledonia Investments (LON:CLDN).

Bankers Investment Trust’s main focus is on holding a global portfolio of stocks selected for their potential to grow and generate increasing income over time.

Its largest holdings as of 31 August are in chip designer Nvidia, cloud and e-commerce giant Amazon and chipmaker Taiwan Semiconductor Manufacturing: holdings also include American aerospace and defence firm RTX as well as Japan Post Bank.

Alliance Witan is run by 11 fund managers who pick high-conviction stocks from around the world with the goal of delivering long-term returns through capital growth and a rising dividend.

Top holdings as of 31 July are Microsoft, Alphabet and Taiwan Semiconductor, alongside smaller holdings in drinks firm Diageo and Samsung Electronics.

Caledonia invests in public and private companies across the globe, but mostly in North American, UK and Asian-listed stocks, including family services company Stonehage Fleming and investment company Cobepa.

Which investment trust became a dividend hero in 2026?

BlackRock Greater Europe (LON:BRGE) became a dividend hero in May, when it reached its twentieth consecutive year of increased dividends.

The investment trust invests in equities across more than a dozen European countries, with 22.5% based in the Netherlands, 16% in France and more than 16% in Switzerland.

Stocks are held across a range of sectors such as technology, energy and healthcare. The trust has a dividend yield of 1.22% and has grown its dividend at an annualised rate of 3.06% over the last five years as of 11 September, according to Morningstar data.

Andrew Impey, chair of BlackRock Greater Europe Investment Trust, said: “We are pleased to have delivered 20 consecutive years of dividend growth to our shareholders, reflecting the resilience of BlackRock Greater Europe’s underlying portfolio holdings through different market cycles.

“This resilience is underpinned by BlackRock’s highly regarded and well-resourced European team, which seeks to identify the best investment opportunities across Europe, focusing on companies with durable competitive advantages and quality management teams committed to long-term value creation.”

Source: theaic.co.uk / Morningstar, as of 11 September, 2026

Investors holding cash in their stocks and shares ISA face a triple blow from next year when new rules come into effect.

From April 2027, any interest earned on uninvested cash held in a stocks and shares ISA will be taxed at 22%. Investors will also be barred from moving cash from their stocks and shares ISA into a cash ISA.

With many investment platforms paying low or no-interest on cash balances, experts are urging investors to check what interest their earning on uninvested cash held in their stocks and shares ISA, and consider if they could be left worse-off or trapped.

Almost half (46%) of stocks and shares ISA providers pay 0% interest on cash, according to research by consumer group Fairer Finance, while 84% of platforms pay less than 3% – a level below the average for a savings account.

Once the new rules come into force, investors who want to continue holding the cash will either need to swallow low interest rates and extra taxes, or use part of their annual ISA allowance to move it from the investment ISA into a cash ISA.

James Daley, managing director at Fairer Finance, said: “Consumers now face a triple blow: a new tax on cash held in their stocks and shares ISA, no ability to transfer back to a cash ISA, and investment platforms paying little or no interest.

“It’s quite normal for investors to hold cash in their investment accounts. Income that’s not automatically reinvested or maturing investments, can legitimately build up cash on account, and many investors may take their time to decide where to allocate it. Some investors may actively choose to increase their cash balances at certain parts of the market cycle.

“Penalising investors by not paying proper interest on cash holdings risks discouraging responsible investing rather than encouraging it.”

Investment platforms offering low interest rates on cash balances

Interest rates on uninvested cash have tumbled ever since the Bank of England started reducing the base rate, research from Fairer Finance shows.

Of the 49 providers analysed by Fairer Finance, 21 offer no interest at all, 33 offer rates of less than 2% and 37 offer less than 3%.

Britain’s largest investment platform, Hargreaves Lansdown, has halved rates on cash balances below £10,000 since August 2024, moving from 2.75% to just 1.3% today.

The highest interest rate available for uninvested cash in a stocks and shares ISA is currently 3.8%, offered by Trading 212, although this has fallen from a peak of just over 5% in 2024.

What ISA rules are changing?

From April 2027, the ISA regime will receive its biggest shakeup since the tax wrapper was introduced in 1999.

While the total £20,000 annual ISA allowance will remain in place, savers under 65 will only be able to save a maximum of £12,000 a year in cash ISAs.

They will still have the overall £20,000 annual ISA allowance, so if they put £12,000 into cash ISAs in 2027/28, the remaining £8,000 of allowance that year would need to go into a stocks and shares ISA.

The change was announced in the 2025 Autumn Budget by then-chancellor Rachel Reeves who said she wanted to “create more of a culture in the UK of retail investing like what you have in the United States, to earn better returns for savers”.

HMRC later confirmed a set of new anti-circumvention rules in a bid to stop people simply holding cash within a stocks and shares ISA.

A new tax of 22% will be introduced on interest earned from uninvested cash in a stocks and shares ISA.

Meanwhile, ISA portfolios made up of 100% ‘cash-like’ investments like money market funds will also be banned.

To stop people from putting cash in their stocks and shares ISA and then transferring it to their cash ISA, you will not be able to complete an ISA transfer between a stocks and shares ISA and a cash ISA.

More than 5,000 estates paid over £1 billion in inheritance tax on lifetime gifts between 2020/21 and 2023/24, according to new Freedom of Information (FOI) figures.

In 2023/24 alone, 1,390 estates paid £315 million in inheritance tax on lifetime gifts, an average of £226,000 per estate, the figures obtained from HMRC by financial advice firm NFU Mutual showed.

There are annual inheritance tax gift allowances, such as the annual exemption and small gifts allowance.

You can also give away any amount of money and no inheritance tax is owed if you die seven or more years after making the gift, but, if you die within seven years after making the gift, it may be liable for IHT.

These types of gifts are known as potentially exempt transfers (PETs).

NFU Mutual said families were increasingly gifting money or assets to loved ones to reduce their IHT exposure, a trend likely to accelerate with most unused pension pots set to be included within estates from April 2027. However, leaving gifting until too late can see your beneficiaries stuck with a significant IHT bill.

Ade Babatunde, senior financial planning director at wealth management firm Rathbones, said: “Many people start thinking about inheritance tax planning later in life, leaving less time for the seven-year clock to run.

“This is one of the reasons we frequently encourage families to start planning earlier than they think necessary.”

Source: HMRC FOI (submitted by NFU Mutual)

How the seven year rule applies to gifts

How inheritance tax is applied depends on when the gift was made and its size. If the gift is a potentially exempt transfer, meaning it isn’t within an inheritance tax gift allowance, the tax rate may apply on a sliding scale depending on the time between the gift being made and your death. This is known as taper relief and applies to gifts given three to seven years before your death.

It only applies if the value of the potentially exempt transfer goes over your £325,000 nil-rate band – this is a tax-free amount which you can pass on free from inheritance tax.

Source: Gov.uk

Gifts made within the seven years before death ‘eat’ your £325,000 tax-free allowance first, with the tapering of the tax applying to any part above that.

Sean McCann, chartered financial planner at NFU Mutual, gave an example of someone making a non-exempt gift of £100,000 then dying six years later. This would reduce their IHT-free allowance to £225,000 and no IHT would be owed on the gift by their beneficiaries.

However, if the gift was worth £425,000 and that person died six years later, the first £325,000 would ‘eat’ their tax-free allowance and the £100,000 would be chargeable based on the sliding scale.

In this instance, the rate of tax applied would be 8% on the £100,000 (£8,000), not the typical 40%, because the gift was made six to seven years before death.

After the £325,000 tax-free allowance was wiped out, the beneficiaries would have no tax-free allowance left to use against the rest of the person’s estate.

How else to use gifting to lower an inheritance tax bill

There are a number of allowances which are not subject to inheritance tax.

The first is the ‘annual exemption’, which lets you give away up to £3,000 each tax year to one or more people.

If the exemption was not used in the previous tax year, it can be carried forward for one tax year.

“This allows an individual to gift up to £6,000 immediately,” Babatunde, from Rathbones, said.

You can also make smaller gifts of up to £250 to as many people as you want each tax year, so long as you haven’t used another exemption, such as the annual exemption, on them.

In addition, parents can gift up to £5,000 to a child getting married or entering into a civil partnership, while grandparents can give a grandchild who is getting married or entering into a civil partnership £2,500.

You can also give £1,000 to someone getting married or entering into a civil partnership even if you’re not a parent or grandparent.

This wedding allowance can be combined with any other allowance, but not the small gift allowance.

Babatunde said: “For families with multiple children or grandchildren, this can be an effective opportunity to pass wealth at an important stage of life.”

Another avenue for gifting can be made through the gifting out of surplus income rule, with any gifts falling outside of your estate for IHT purposes.

There is no upper limit on how much you can gift using this method, but the gifts must be made as part of a regular pattern, be funded from income rather than capital and not reduce your standard of living.

Babatunde said: “For retirees who receive more pension, rental or investment income than they actually spend, this can be one of the most effective ways of reducing inheritance tax exposure.

“The challenge is ensuring the gifts are properly documented and that adequate records are retained.”

The Chinese economy is facing headwinds. There is weakness in consumer spending, its property market is still in a slump, and there’s weakness in business investment.

Speaking on the latest episode of MoneyWeek Talks, Dale Nicholls, manager of Fidelity’s China special situations fund says while there may be negative things to say about the country’s economy, there are also bright spots to look out for,

“In terms of the domestic business, things are relatively muted. But, as always there’s pockets of strength in certain areas.”

He pointed to some constituents of his fund which are producing good numbers, like high-end mall operators and some restaurant chains, and added that while there is a “relatively weak consumption market”, the firms that have the right business model are taking market share.

Artificial Intelligence (AI) is also an exciting area for the region. “The companies that are involved particularly with anything AI-related, there’s somewhat of a tech boom. Business is strong for the companies that are involved with that,” he said.

AI is a major growth area for the global economy, and the controversies around it are mirrored in China too. For example, the concerns around the extent of capital expenditure and the return on investment.

Nicholls said: “The big technology companies – the Alibabas, the Tencents of the world – the market’s reacted badly to them increasing capex, but this feels to me a little bit overdone.”

The investors who are scorning increased capex are not asking the right questions, Nicholls claimed, namely whether the firms have a reputation for bringing returns on their investment.

“A lot of these companies have pretty good track records of generating good returns, and the feedback we get from them on what the return they’re getting on their spend is pretty good,” he said.

Nicholls was confident that parts of the AI market in China still provide good value. “Some of those big tech names I would put in that category. They’ve been sold off but if you think about the businesses as the sum of its parts – things like cloud – you’re actually seeing accelerating growth now, so it’s definitely seeing things pick up.”

Is China winning the AI race?

Although the models produced by US-based firms are currently the global leaders in AI, Chinese models are giving them a run for their money.

“[China] has some of the most competitive LLMs (large language models) out there, but the market doesn’t seem to be giving them a lot of value for that. Particularly if you look at the standalone LLM companies listed in China, they’ve done quite well.”

Chinese models have already disrupted the Western AI market multiple times. The release of DeepSeek’s R1 model in January 2025 brought with it a lot of panic in the West as investors reacted to Chinese AI challenging Western models.

A similar panic was caused when Kimi K3, another Chinese AI model, caused panic was released in July.

“Kimi K3 is interesting because it’s quite different in terms of size relative to others, but the performance is right up there with global frontier models. It’s much bigger, and they’re pricing it that way as well. So not quite the levels of US models in terms of their pricing, but obviously much higher than the other open weight models that the Chinese have been offering.

“So I think it’s another indication of the innovation that’s happening on the ground.”

For more, watch the full episode of MoneyWeek Talks with Dale Nicholls in conversation with MoneyWeek’s Cris Sholto Heaton on YouTube – or listen on any podcast platform.

About the podcast

MoneyWeek Talks is a podcast that helps you unlock the secrets to financial success. Editors Kalpana Fitzpatrick, Andrew Van Sickle and Cris Sholto Heaton are joined by influential guests – from CEOs and entrepreneurs to economists and fund managers – to share their top tips on managing money, investing wisely and building wealth.

Subscribe to the MoneyWeek Talks podcast and get ready to make it, keep it and spend it with confidence. You can also watch the episodes on our YouTube channel.

Pensioners will likely get a 3.9% increase in their state pension next April.

Under the triple lock mechanism, the state pension rises each April by the highest of the previous September’s Consumer Prices Index (CPI) measure of inflation, 2.5% or average earnings growth from the previous May to July.

Provisional figures published by the Office for National Statistics (ONS) today (15 September) confirmed average earnings growth between May and July was 3.9%.

Unless CPI inflation for September 2026 rises sharply from 2.9% in July, the 3.9% figure is likely to drive how much the state pension will go up by next April.

The 3.9% uplift will probably be confirmed by the chancellor John Healey in next month’s Autumn Budget.

The latest wages figures for May to July are initial estimates and potentially subject to change when revised data is published in October. However, revisions of this sort are typically minor.

Rachel Vahey, head of public policy at investment platform AJ Bell, said: “Although we still need to see September’s inflation figure and any revisions to July’s earnings growth before we know for definite how much it will increase by in 2027, it’s looking very likely that the value of the full new state pension will surge past £13,000 – and the personal allowance – for the first time.

“Even using the lowest measure of 2.5% under the triple lock means the full state pension amount would exceed the personal allowance of £12,570.”

How much will the state pension rise by?

The full new state pension, paid to men born on or after 6 April 1951 and women born on or after 6 April 1953, is likely to increase from £241.30 per week (around £12,547 per year) to £250.70 per week (around £13,036 per year).

The basic state pension, paid to older pensioners, looks set to increase from £184.90 a week (around £9,614 per year) to £192.10 (around £9,989 per year).

Some people don’t benefit from the state pension triple lock and those on the old state pension won’t see all elements of their pension rise in line with the mechanism.

For example, additional amounts such as SERPS or state second pension are inflation-linked.

Will retirees have to pay tax on their state pension?

More pensioners face paying income tax from April 2027 due to the ongoing freeze to income tax bands and the state pension rising each year.

A recent Freedom of Information (FOI) request submitted by Steve Webb, former pensions minister and now consultant at LCP, revealed hundreds of thousands of pensioners are gradually being pulled into paying more tax due to frozen tax thresholds and rising incomes.

With the full new state pension set to breach the £12,570 personal allowance, even pensioners whose sole income is the state pension will be pulled into the basic rate tax band.

However, former chancellor Rachel Reeves said these pensioners are not expected to have to pay the “small amount” of tax on the state pension.

Torsten Bell, minister for pensions, said the chancellor will “set out further details on how that commitment will be delivered at the Budget”.

Analysis by LCP suggests, as the policy currently exists, one in 16 pensioners will benefit from the move.

How to protect yourself from income tax

There are ways pensioners facing a greater income tax bill from next April can lessen the blow.

James Norton, head of retirement and investments at investment firm Vanguard Europe, said: “For those with other sources of retirement income, given the personal allowance remains frozen at £12,570 and the higher rate tax threshold has stayed at £50,270, a considered approach to tax and retirement is needed to make sure you keep as much of your hard-earnt savings as possible.”

Only draw the pension income you need. Leaving surplus funds in your pot will allow it to grow while reducing your taxable income.

You can also make the most of tax-free accounts like ISAs, ensuring any investment gains or interest earned from savings are shielded from tax.

Couples can make the most of each other’s allowances to lower overall tax bills as well. For example, if you’ve used up your capital gains tax (CGT) allowance for the tax year, you could transfer assets to a partner who hasn’t used their full allowance to lower your combined CGT bill.

Savers with Self-Invested Personal Pensions (SIPPs) could boost their retirement pots by tens of thousands of pounds by ditching platforms with costly platform fees and claiming tax relief, according to new analysis.

Research by investment platform InvestEngine suggests a basic rate taxpayer with a SIPP putting away £500 a month for 30 years could end up £18,000 worse off by choosing a platform with a 0.25% annual fee compared to a fee-free platform.

The same person choosing a platform with a 0.45% annual fee would be £32,000 worse off compared to a fee-free platform, the analysis suggests.

Higher rate taxpayers opting for costly platforms and failing to claim additional tax relief are losing out by even more.

Basic rate taxpayers with SIPPs have tax relief added automatically, but higher and additional rate taxpayers have to claim any extra relief on top, something many forget to do.

This is because tax relief on SIPPs is applied using the ‘relief at source’ rather than the ‘net pay’ method.

InvestEngine’s analysis found a higher rate taxpayer putting £500 a month in a SIPP for 30 years could end up £139,000 worse off based on choosing a platform with a 0.45% annual fee over one with no annual fee and by not claiming higher rate pension tax relief.

Bob Tronson, head of pensions at InvestEngine, said: “Pensions are a long-term product, which means small changes today will deliver surprisingly large improvements over time.

“A fraction of a percentage point in annual fees over decades can cost tens of thousands of pounds. Higher rate taxpayers not claiming the extra tax relief they're entitled to will miss out on even more.”

Source: InvestEngine, based on an initial pension value of £20,000 and annual investment growth of 5%

How do SIPP platform fees compare?

When considering what SIPP to get, there are typically a number of fees to consider. The account fee, sometimes known as platform fee, is one of the most important.

MoneyWeek analysed platform fees across some of the biggest providers to see how they compared.

Fees for trade shares or funds can vary across providers too.

For example, Hargreaves Lansdown charges customers with a SIPP £1.95 for each one-off fund trade and £6.95 per share trade (if they made 0-19 trades the month before) and £3.95 per trade (if they made 20 or more trades the month before).

SIPP customers with ii paying for the basic £5.99 per month ‘core’ package pay £3.99 per fund or share trade.

AJ Bell charges customers £5 per share trade or £3.50 if they had 10 or more share deals the previous month. Fund dealing costs £1.50 per trade.

Some providers have better customer service than others too, while some platforms offer a wider choice of funds or shares to choose from than others.

How to find the best SIPP for you

Ultimately, the best provider for you will depend on what you want from your SIPP and how much money you have to invest.

According to research firm Kepler Trust Intelligence, ii is the best all-round choice for SIPPs based on its fee structure, broad choice of investments and strong customer service.

Freetrade is the best low-cost provider as it charges no trading fees across its plans and has a wide selection of education guides and market insights.

AJ Bell is considered the best for customer service, while also offering a wide range of investments to choose from.

If your choice of SIPP is based purely on platform fee then, generally, platforms charging fixed fees cost less for those with larger pension pots, according to Sam Richardson, editor of Which? Money.

If you’ve got a smaller pot, percentage-based annual platform fees tend to be the most cost-effective option.

Richardson also said it’s worth checking if a platform fee includes the cost of funds held within a SIPP as some providers will charge an additional ongoing fund charge.

He added that sometimes SIPPs with ready-made portfolios can prove cheaper, in terms of fees, than if those same funds were held within a DIY SIPP.

Pension contributions are often the first cuts made when money is tight. It’s understandable – the benefits of these savings are not realised for many years ahead, so it’s easy to pause contributions.

But many do this with a huge misconception that you can make up for it at a later stage, and it is not as simple as that. The moment you stop, you miss out on compounding, free money from your employer, and the tax rebates – you cannot make up a pound for a pound at a later stage.

So while stopping pension contributions may seem like the obvious way to boost your immediate income, it could cost you thousands in later life.

What are the costs of stopping pension contributions?

Research from investment platform Moneybox shows the average earner (£39,000) could boost their annual income by £1,000 by pausing pension contributions for one year, but the cost of doing this is £12,000 on their overall retirement pot.

The longer you stop, the more significant the impact is. Standard Life finds a 22 year old on £25,000 paying the minimum contribution of 5% and getting 3% from their employer could build a pot of £210,000 by 68. But if they pause contributions for two years between 30 to 32, the pot would only be £200,000. A five year pause between 30 to 35 would mean you take a financial hit of £25,000. And should you take a long break of 10 years between 30 to 40, you could end up with £49,000 less.

There may be many reasons that force you to stop paying into your pension, such as taking a break to raise a family, redundancy or going self-employed. Often, just wanting more money in your pocket each month is the reason. Life happens, but is pausing pension contributions always the only solution?

What can I do instead of pausing pension contributions?

If you are looking to boost your monthly income, then instead of pausing pension contributions, take a look at other ways you can cut your costs.

For example, as simple as it may sound, having a budget in place can help identify unnecessary spending and costs. For example, are you paying for unwanted subscriptions? This is one trap I find myself often falling into.

Ask yourself if you could also get cheaper deals on broadband, mobile phones, or insurance costs. I recently saved £400 on my home insurance by simply switching to a new provider instead of accepting the renewal quote.

You may find that you can save a lot more with a budget and slashing unnecessary costs than you would by temporarily pausing pension payments.

If you have little choice, then think about gradually paying in more when you do restart pension contributions. You could even pay in bonuses or pay increases to give your pension pot an ad hoc boost. And if you're lucky to have an employer who is happy to match increased contributions, then this is worth considering as this is free cash from your workplace that you may otherwise not get.

How much do I need in my pension?

If you think losing a few thousand off your pension pot may not be a big deal, then it is first worth thinking about whether you will have enough in the first place.

Most people underestimate the income they would need in retirement and how big the pension pot needs to be to deliver that. Two-thirds of your pension will typically come from investment growth, so the longer you are invested the better.

According to Pensions UK, a single person would need to have a post-tax income of £45,400 for a comfortable retirement – or £62,700 as a couple.

The single person would need a pension pot of £691,000, according to analysis from wealth management company Quilter, while a couple would need a combined pot of £778,000.

The’ rule of 300’ for retirement

Another way to work what you need to maintain a certain lifestyle when you stop working is by using ‘the rule of 300’ by Standard Life. You simply multiply your everyday costs by 300 to estimate what it will cost you throughout retirement.

So, for example, if you pay £12 subscription a month, multiply it by 300, meaning you would need £3,600 in retirement to continue to pay for it. And if your golf membership is £75 a month, you will need £15,000 to carry on golfing.

So, before you stop pension payments, it may be worth thinking about the retirement you really want and how you will pay for it.

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What’s inside MoneyWeek

In each issue we cover all this, and more...

The F&C Investment Trust aims to deliver long-term growth in capital and income for shareholders. It is a FTSE 100 constituent and is the oldest and one of the largest investment firm in the UK, with assets that exceed £7 billion. It invests in listed equities and private equity and has delivered 55 consecutive years of rising dividends. The trust is globally diversified and conservatively managed.

I have managed the firm since mid-2014, working with specialist stock-pickers from Columbia Threadneedle Investments and elsewhere in the market. This gives the trust exposure to different geographies, investment styles and sectors, including firms benefiting from long-term changes in what we spend money on, how we pay and use technology. The following holdings illustrate these themes.

Diverse stocks for long-term growth

Mastercard (NYSE: MA) is at the heart of the long-term move from cash towards card and digital payments. It earns fees on transaction volumes and values without taking credit risk, enabling an asset-light business model and exceptional capital returns. Its scale provides a significant competitive advantage. Consumers want cards that are widely accepted, while retailers want to accept the cards their customers already use, making Mastercard's network difficult for new competitors to replicate. Beyond the ongoing shift away from cash transactions in developed markets, there are opportunities for growth in emerging markets too. Mastercard is also expanding its value-added services, including cybersecurity, data analytics and open-banking services, providing further opportunities for growth.

Infineon Technologies (Frankfurt: IFX) is a leading supplier of the technology underpinning three significant long-term trends: electrification, energy efficiency and AI infrastructure. It has a strong competitive position built over many decades. Sophisticated power management is at the heart of many of the transitions currently underway, including the shift to electric vehicles, renewable energy and modernising the grid, and Infineon is the global leader in power semiconductors, which are essential in this area.

The rapid growth of AI is creating another significant source of demand. The data centres needed to train and run increasingly sophisticated AI models require huge amounts of computing power and electricity, making efficient power management increasingly important. This represents a significant new growth market for Infineon that barely existed a few years ago. While its shares have been volatile, we believe the current valuation does not fully reflect the potential.

Live Nation Entertainment (NYSE: LYV) is the world's largest live entertainment company and has grown revenues by 15% per year on average since the pandemic. The company is benefiting from a structural shift in consumer spending towards experiences over goods, with demand for live experiences, such as concerts, increasing as a result. The combination of ticketing through Ticketmaster, concert promotion through Live Nation and venue ownership and management gives the business a strong position across the live entertainment industry. Consumers can buy their tickets, see their favourite artist and attend a venue all within the same platform. This vertically integrated model creates a powerful competitive advantage, allowing Live Nation to benefit at several different points as demand for live entertainment grows.

The three businesses above operate in very different industries, but each has built a robust competitive position in an area benefiting from a long-term shift in demand. For investors, identifying companies capable of turning these structural changes into sustainable long-term growth can provide opportunities that extend well beyond the short-term market cycle.

This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.

Shares in housebuilder Vistry (LSE: VTY) jumped 18% on 25 August when it was announced that the Kent-based company would receive £350 million as part of the government's £39 billion social and affordable homes programme.

The funding package was significantly higher than the award under the previous programme (£278 million). It was also the largest possible award in the first round of funding allocations (£9.5 billion). Vistry said it will deploy the funds immediately to more than 3,000 affordable homes. Per-home funding is £116,000, up from £79,000.

Vistry delivers around 15% of the UK's social/affordable homes and is one of the best ways for investors to benefit from Labour's drive to get the country building again, but the firm has consistently disappointed investors. After the recent funding package, there could be some light on the horizon. At the current valuation, investors don't seem to be pricing in any growth.

How Vistry became the UK's most shorted company

It's fair to say that Vistry has a chequered history as a public company. Greg Fitzgerald, the former CEO and executive chair, built the firm, which was formerly known as Bovis Homes, through a series of deals, rebranding the group as Vistry in 2020 following its £1.1 billion acquisition of Galliford Try's housing businesses. Fitzgerald aimed to create a builder focused on partnerships with local housing providers and local authorities, rather than sales to private markets, which seemed the right course as politicians began to re-prioritise public-sector housebuilding. To that end, the group bought Countryside Partnerships for £1.3 billion in 2022.

Fitzgerald had the vision, but struggled to realise it. Vistry's vocal shareholders, US hedge funds Abrams Capital and Browning West (more than 20% ownership), haven't helped. The funds came on board with the Countryside merger and have since increased their stakes. In March 2023, it emerged that they wanted to offer Fitzgerald a bonus of up to £60 million if the shares hit £18 within three years. The proposal mimicked the agreement with Persimmon's former boss Jeff Fairburn, who was forced to resign following public outcry over his £75 million long-term bonus package. Vistry's remuneration committee voted it down, but the damage was done.

Since then, the firm has issued six profit warnings. In October, November and on Christmas Eve in 2024, it issued three consecutive warnings that higher-than-expected costs would hit the bottom line. This trend continued in 2026. In March, the shares plunged more than 20% in one day when Vistry announced Fitzgerald would retire and the firm lowered its outlook for the year. Then, in May, Vistry said material cost inflation would hit pre-tax profit by around 10% for the year. In July, these forecasts were scrapped altogether. The firm told investors it would report a pre-tax loss of about £30 million for the first half of 2026 on top of the £40 million reported for the first half of 2025.

This stream of bad news has crushed the shares. Although they have risen 20% since their multi-decade low in June, they're off 80% after peaking in August 2024. Vistry is now the most shorted company listed on the London market.

Is there any silver lining for Vistry shareholders?

Unfortunately for long-suffering shareholders, there could be more bad news to come. Reports suggest Fitzgerald pushed Vistry's land buyers to purchase any land they could get their hands on, some of which can't be used. It's believed that the new CEO, Adam Daniels, is working to undo these errors. Ultimately, sales will help him improve the balance sheet, but there could also be write-downs. Buyers know the company is in a rush to sell and they will push a hard bargain.

So where's the good news in all of this? Well, Vistry is operating in a structurally sound market with increasingly supportive stakeholders across the value chain. The government's £350 million cash pot has removed immediate speculation about a deeply discounted rights issue and private bank funding for social housing is starting to be crowded in. Lloyds and Santander have both announced boosts to funding for the sector this year.

As a new CEO, Daniels has a chance to get to grips with all past problems (the group is also replacing the CFO) and reset expectations. Vistry needs to take control of costs and move forward rather than stumbling over its own mistakes.

Vistry is a deep value play

While the company faces an uphill struggle, brokers are optimistic. Panmure Liberum thinks the company is taking the right steps to reduce leverage (with a year-end target of £100 million of net cash and average daily debt of £650 million in the second half compared with last year's £771 million) and has pencilled in housing completions of 16,330 for fiscal 2026, up from 15,658 as stalled developments from last year reach completion. The broker believes completions will rise further to 17,170 in 2027 and to 20,157 by 2030. Panmure has pre-tax reported profit falling from £196 million to £29 million in fiscal 2026, before rebounding to £173 million in 2027 and then £452 million by 2030.

Peel Hunt has a similar outlook, with a pre-tax profit of around £300 million pencilled in by the end of the decade. If Vistry comes close to these figures, the shares look cheap at current levels. Vistry is trading at an average forward price-to-earnings (P/E) ratio of 5.5 for 2027 based on Peel Hunt's and Panmure's figures. What's more, its tangible book value per share – mostly land and property yet to be sold – is 625p, a full 120% above the current price. With the shares priced at around half the sector average and more than 50% below book value, if Vistry can prove to the market it's back on track, the shares could double.

This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.

Since the turn of the century, the price of gold has risen more than fifteenfold, while the S&P 500 is a mere 8.5 times higher, after including dividends. Who'd have thought it? Selective dates, I hear you cry, but it remains true. In 2000, gold was on its knees after a two-decade bear market, while US equities were in a generational technology bubble, rather like they are today. Still, at no point have equities been stronger than gold this century, even at the depths of despair in 2015, following a 45% correction in the gold price.

Gold is a popular form of jewellery because of its beauty, timelessness and durability, but financiers like it because it is scarce and liquid. Being scarce means that governments can't print more, making it an effective store of value. Being liquid means you can trade gold in billions of dollars at the touch of a button, whatever the state of the global economy. Gold provides the backstop to the financial system.

Our governments have borrowed too much money, and it's an open secret that they'll never pay it back. But they'll pretend to do it the old-fashioned way, which is to print more money. That will devalue the currency, which ultimately means the purchasing power of money falls. The rising gold price will not only compensate for the falling pound in your pocket, but will also deliver something extra as the asset becomes increasingly sought after around the world.

Why gold is a universal form of payment

Central banks have always believed in gold. Imagine trying to transact large sums of value around the world before modern payment systems were created. An ounce of gold was recognised from here to Timbuktu and still is to this day. Central banks hold much of their reserves in gold, both to protect themselves from inflation and to meet foreign liabilities when required.

Before Nixon took the US dollar off the gold standard in 1971, the central banks typically held 60% of their reserves in gold. The figure spiked in 1979, after high inflation in the 1970s, as the price soared. Then we had the “Volcker Moment” in 1980. The then-chair of the US Federal Reserve, Paul Volcker, hiked interest rates to an unprecedented 20% to fight off inflation, which then embarked on a four-decade decline, up until Covid.

In the 1980s and 1990s, with inflation low and growth solid, the central banks lost interest in gold. Their share of reserves fell until 2008, just in time for the global financial crisis. Gold reserves then stabilised at 10%. After the invasion of Ukraine they started to rise for the first time since the 1970s. The 2022 war in Ukraine, which is still ongoing, saw the US and Europe freeze Russia's reserve holdings of US Treasuries. Central bankers, especially in the Middle East and Asia, took note. If Russia's reserves could be confiscated, so could theirs. The diversification into gold grew at the expense of US Treasuries, with China leading the charge.

Today, gold's share of reserves has grown to nearly 30%. Some of that can be attributed to a rising price, but the central banks have also added a staggering 4,500 tonnes to their holdings, worth $20 billion. With such high demand, gold has been able to shrug off the impact of higher interest rates.

The relationship between gold and real yields

Since gold pays no interest, it has traditionally moved inversely to bond yields. If rates are at 10%, it is more expensive to hold gold, in terms of opportunity cost, than if they are 1%. Inflation matters too: if yields are 10% and inflation is also 10%, the real yield is zero. Gold is said to be an inflation hedge that maintains its purchasing power over the ages. In that sense, the real yield has always been a more important driver for the gold price than the yield itself.

But there are different types of inflation. Consumer prices (CPI) reflect the cost of living, which many believe to be understated. Then there is monetary inflation, or the money supply, which has grown at an average rate of 7.5% for three decades. For most gold watchers, this is the number that really matters. If the amount of money increases, gold will appreciate and act as a balance.

It turns out that the growth of the value of the above-ground gold supply follows monetary inflation over the long term. Indeed, this is the basis for the World Gold Council's expected return framework for gold. They say the gold price should match nominal GDP growth over the long term. That is real growth and inflation combined. Since nominal GDP and the money supply normally match, gold follows the money supply, which is entirely logical.

It turns out that it does over the long term, but with cycles. There are times, like today, when demand from central banks and investors is high, and so gold rises faster than new money creation. And there are other times, such as the 1980s and 1990s, when gold gives up ground at a time when growth is robust and inflation contained.

In January this year, the price of gold touched $5,595. That marked a 434% gain from its $1,064 low in late 2015. The year 2025 was gold's second-best in modern records, with a 65% rise, last beaten in 1979 with a 126% gain. That was too much, too soon and there can be no doubt that gold got ahead of itself. Since then, there has been a healthy 29% correction. I think the worst is behind us and a gradual recovery is underway.

The recent boost came in August, when US Treasury secretary Scott Bessent announced an intervention in the Japanese yen and then two weeks later increased purchases of long-dated Treasury bonds. The amounts of money involved were on the light side, but the signalling was explosive. Governments are worried about the rising cost of borrowing and are prepared to intervene. Whatever they say, everyone knows it means printing more money, and there is much more to come.

The gold price will hit $7,000 by 2030

In 2020, I wrote a piece entitled The Rational Case For $7,000 Gold By 2030 for the London Bullion Market Association (LBMA), the world's trade body for gold. At the time, the gold price was $1,700 an ounce, and many dismissed my piece as pie in the sky. Yet the premise was simple: long-term expectations for inflation would shift from 2% to 4%.

So far, and according to official data, the shift has been gentle, but expectations are rising. The bond market, as measured by Treasury Inflation-Protected Securities (TIPS, inflation-linked US government paper), is not yet pricing in much higher consumer-price inflation, but is heavily concerned by public debt. Inflation expectations have not yet rung alarm bells, but with rising food and energy prices, and higher debt-servicing costs, it is a matter of time. Gold is signalling where the bond markets are headed, and that is not a happy place.

With $5,595 reached this year, my $7,000 target for 2030 looks plausible. I am confident that it will be achieved and wouldn't be averse to increasing that target given what is coming down the road. Many Western governments are broke, yet continue to be spendthrifts. The worse the situation gets, the more investors will flock to gold to protect themselves from the carnage caused by rising interest rates.

In the interests of balance, I'll explore the bear case. Under the right set of circumstances, that could be devastating for the gold price, just as it was in the 1980s and 1990s. But what would need to happen?

The US budget deficit is 6.1% of GDP. In practice, that means in 2026 they will spend $7.4 trillion against tax receipts of $5.6 trillion. That is a $1.8 trillion annual deficit. Then consider that their outstanding debt recently exceeded $40 trillion, a sum that keeps growing. In Germany, the deficit is 2.8%, in China 4.5%, in the UK 5% and in France 5.7%.

Austerity would mean balancing the budget, which the UK last managed to do in 2001. With a balanced budget, as the economy inflates and grows the ratio of debt to GDP soon declines. Do that for a decade or so, and debt servicing returns to being a minor expense. Take Ireland, where debt ballooned to 120% of GDP after the 2008 crisis. With an enforced austerity programme, it has now slid to 33%. Portugal was at 140%; now the figure is 91% and falling. The Netherlands, Denmark and Sweden all have low debt-to-GDP ratios despite being “progressive”. If the major industrialised nations balanced their budgets, or even signalled their intent to do so, the price of gold would fall. But with the US, the UK, Japan, China, Germany, France, Italy and others still behaving badly, we are not there yet – or frankly even close.

Gold is a buy until the political winds change, which will one day happen. The electorate in Argentina surprised us all when they chose president Javier Milei with his chainsaw. The people were fed up with an over-indebted, failed state, and they opted for austerity over chaos. The real surprise was that the support came from the youth, who gave him 70% of their vote.

It comes down to the simple fact that today's debt is tomorrow's problem. Governments that borrow to pay their bills are passing the bill to the next generation. There comes a time when austerity shifts from being perceived as an immoral choice to becoming the only choice. When that happens, it will be time to reduce your gold and switch back to bonds, possibly at very attractive interest rates.

Gold investments to buy now

You can invest in gold in a number of ways. My clients at ByteTree hold the gold exchange-traded fund (ETF) known as the iShares Physical Gold ETC (LSE: SGLN). They also hold the Silver ETF, iShares Physical Silver ETC (LSE: SSLN) and gold miners through the VanEck Gold Miners ETF (LSE: GDGB). Silver and the miners tend to do much better than gold in a rising market, but fare worse should the gold price fall.

British investors who want to touch their gold should hold Britannias or Sovereigns, which are free of capital gains tax. They can do this through a reputable dealer such as Sharps Pixley or The Pure Gold Company. But if you do buy physical gold, please keep it in a vault. And if you insist on keeping it at home, then the best security is not to tell anyone!

For the adventurous, add a little Bitcoin into the mix. I created the BOLD index, which combines bitcoin and gold on a risk-weighted basis. Bitcoin is often considered digital gold since the supply is constrained and it is a store of value. Rather than have a 50/50 split, I weight according to volatility.

That means more gold than bitcoin, since it is less volatile. That manages the risk and since the assets have low correlation and act independently, BOLD rebalances the portfolio each month. BOLD reduces the stronger asset, adding to the weaker asset, in a top-secret investment strategy known as “buy low, sell high”. The result is a strategy that has similar volatility to gold, but with higher historical returns. BOLD is available as an ETF, the 21Shares Bitcoin Gold ETP (LSE: BOLD).

This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.

Britain gained full access to the CPTPP, the huge Pacific free-trade zone, last week after Canada's ratification. It is by far the most significant trade deal that Britain has been able to secure since leaving the EU. Though, with the bond markets in meltdown, the cost of Britain's debt starting to soar, and the economy sliding closer to recession, it is perhaps not surprising that this piece of positive news did not get much attention.

The CPTPP – or Comprehensive and Progressive Agreement for Trans-Pacific Partnership, to give it its full, if slightly cumbersome name – is a free-trade zone that covers 12 countries across Asia and the Americas, including Canada, Japan, Mexico, Australia and Malaysia. It became fully operational on 1 September. Our exporters now have full, tariff-free access to its 600 million consumers. The Treasury estimates the deal could deliver a £2 billion boost to the economy. It could be far larger: the CPTPP represents a vast market that is growing at a rapid rate.

The problem is that at precisely the same time that the CPTPP comes fully into effect, the government is talking about a “reset” with the EU. Prime minister Andy Burnham has talked constantly about getting closer to the EU, and senior ministers have come out in support of joining the customs union. But any closer relationship would, in effect, mean leaving the CPTPP. Brussels would demand full control of our trade policy as part of any deal, and membership of the customs union would mean that the EU would set Britain's tariffs again, including levies on anything we buy from the Pacific. The two trade deals are incompatible.

It would surely be crazy to choose Europe over Asia. Europe is a larger overall economy, it is a lot closer, and it still accounts for more than 40% of British exports. But we already have tariff-free access to the EU's market through our existing agreement. For growth, which is what really matters, the Pacific bloc is far more important than the European one.

To start with, it is rising in significance, while Europe is steadily declining. At the start of the century, the EU accounted for 25% of global output. Today it is down to 15%. By contrast, the Pacific, on both Asian and American coasts, has been growing far faster. Right now, the CPTPP is only £4 trillion behind the EU, measured by total GDP. Within a decade, the Pacific bloc will have overtaken the EU. That makes it a far more lucrative market.

The CPTPP is what the EU might have been

Next, the legal framework of the CPTPP is far superior. Members have full access to each market within the bloc based on recognition of each other's standards. Subject to local vetoes, if your product is on sale in Japan and meets all its safety and regulatory standards, then you can sell it in Mexico or Australia, and vice versa. It acknowledges that there is no need for an extra layer of bureaucracy. More importantly, there is none of the paraphernalia of an emerging superstate. There is no CPTPP flag, or anthem, or foreign minister strutting about on the world stage. There is no freedom of movement. It is just a simple free-trade zone that allows goods and services to be sold, and without tariffs, across a huge range of territories – akin to what the EU was back when it was just the Common Market.

Finally, it is easier to do business with. When an economy is stuck with zero growth, as Italy, France, and now Germany are, there are very few commercial opportunities. Not much is getting built, companies are not investing and consumers don't have much money to spend. By contrast, when it is growing rapidly, as most of the Pacific is, lots of possibilities open up. People are ready to sign deals because they need stuff. British firms will find it far easier to grow their order books in Australia, Chile or Malaysia than they will in Portugal, Greece or Austria.

So long as the PM keeps talking about a reset with the EU, there is no point in British businesses embracing the opportunities offered by the Pacific deal. The government should make it clear that Britain's main trading bloc is the CPTPP and that we have no interest in anything other than our existing trade deal with Brussels – and then seize the opportunities the CPTPP offers.

This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.

The on/off Middle East crisis is on again this week, sending up oil prices in response. Dated Brent – a key benchmark based on North Sea oil – is above $100 for the first time since July at the time of writing.

Every time oil moves in a significant way, it raises the question of how best to play higher prices. One answer to that depends on what kind of move you expect.

Dated Brent – which is the benchmark that you tend to hear most – reflects what is happening to demand for physical oil right now. It is an example of a spot price, meaning the price to complete a commodity transaction immediately. In the case of Dated Brent, the buyer is buying a cargo of oil that will be loaded on a predefined date in the next few days or weeks.

However, traders also pay close attention to futures prices – the price of a contract to buy or sell oil at some point in the future. That date may be in one month, three months, six months or further ahead. There is a long chain of contracts which can stretch out for years, but most activity is in the ones closest to expiry.

As an individual investor, you can't trade physical oil directly. You could trade oil futures, but using an exchange-traded fund (ETF) such as WisdomTree Brent Crude Oil ETF (LSE: BRNT) is simpler. Yet this distinction between spot and futures prices is still important when using an ETF.

How oil ETFs work

While ETFs for gold or other metals often hold physical metal and reflect the spot price, oil ETFs have traditionally worked by buying futures contracts for near-term months. As each contract gets close to expiry, the ETF sells its existing position in that contract and rolls over into another contract a month or two further out.

So the ETF will reflect the trends in near-term oil futures. It will also gain or lose from a less obvious source of return called roll yield. If futures prices for the nearest months are higher than those for more distant months, the ETF will be selling higher and buying lower each time, and will earn a profit from doing so. Conversely, if prices for nearer months are lower than more distant months, the ETF will be selling lower and buying higher, and the roll yield will be negative.

If – as is often the case in a crisis – spot prices spike by much more than futures, a typical oil ETF will not rise by as much as the spot price does. However, the new-ish Onyx Spot Return Crude Oil ETF (LSE: OIL) takes a different approach. It holds very short-term daily Dated Brent futures, which it continuously rolls over. As a result, it is a closer proxy for the spot price. This product launched in June and has beaten traditional ETFs since then (see chart). Whether it keeps doing so depends on whether spot prices remain much higher than futures and on whether the futures roll yield is positive or negative. Regardless, it's interesting to see a new way to trade immediate shocks to physical oil prices that relies less on shifts in futures.

This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.

Airlines have been one of the hardest-hit industries as a result of the war in Iran, and the industry is struggling to recover from a succession of punishing shocks.

The Covid pandemic was a challenging start to the decade for the airline industry, as it all but shut down global travel. Two years later, Russia’s invasion of Ukraine sent oil prices sky-high, pushing up input costs for airlines.

The story has been similar in 2026, with the US/Israeli conflict with Iran prompting the closure of the Strait of Hormuz, through which around a fifth of global oil supplies previously moved, adding further upward pressure onto the cost of jet fuel while pushing global inflation higher.

“High oil prices are turning the coming winter into a stress test for airlines,” said Lale Akoner, global market strategist at investing platform eToro. “Fuel and labour costs are rising, while geopolitical disruption and pressure on household budgets make it difficult to pass them on through higher fares.”

The International Air Transport Association warned in June that global airline profits would halve in 2026 due to higher fuel costs.

Airline stocks have been punished. The NYSE Arca Airline Index, an index of US-listed airlines, fell 11.9% in 2026 through to 10 September, while the STOXX Europe Total Market Airlines Index, which comprises European-listed airlines, fell 12.8% over the same period.

But while it is undoubtedly a challenging period for the sector as a whole, are there opportunities amid the disruption?

What does EasyJet’s acquisition mean for airline stocks?

One of the biggest consequences of the rout in airline stocks appears to be the acquisition of EasyJet (LON:EZJ) by US-based private equity firm Apollo.

EasyJet rejected a sequence of bids from private equity firm Castlelake, calling the bids “opportunistic” given they followed a sharp nosedive in the airline’s share price. EasyJet’s share price had declined by over 30% in the 12 months to the end of May, before Castlelake’s first bid.

Eventually, though, Castlelake’s rival Apollo made a bid that EasyJet’s board felt compelled to accept, and it now looks as though the airline will be acquired.

“EasyJet is now a different kind of investment, with Apollo agreeing to buy the airline for 715p a share,” said Akoner. “The deal, which appears likely to be completed, has largely insulated the shares from the latest fuel shock.

“However investors should be wary as most of the takeover gain has already been captured, leaving limited additional upside before the expected completion in early 2027.”

EasyJet’s takeover highlights the extent to which airlines are under pressure, and that this creates an opportunity that institutional investors are already exploiting.

“We think this difficult backdrop could still produce winners,” said Akoner. “Airlines are already cutting unprofitable routes, and weaker operators may have to go further. Fewer available seats should support ticket prices and allow the most efficient airlines to increase market share.

“For investors, the sector increasingly looks like a contest between companies with genuine cost and balance-sheet advantages and those relying mainly on passenger growth.”

Which airlines could be resilient?

Andrew Hollingworth, founder and portfolio manager at Holland Advisors, is of the view that the worse things get for most airlines, the better they are for Ryanair (DUBLIN:RYA) as it has permanent pricing power.

“Ryanair is the lowest cost producer,” said Hollingworth. “If they put their prices up by three euros, [no other airline] is remotely near them, so everyone’s got to pay. “

Most other airlines, though, only have pricing power when the winds are blowing in their favour.

“If the oil price is moderate or rising, but the economy is good, and demand on their routes is good, and they haven’t got new competitors, they can put their prices up and pass on cost inflation,” said Hollingworth. “But if the economy isn’t so good, but the fuel price is still rising, hard luck. There isn’t enough demand to pass on the cost inflation.”

Like Ryanair, Jet2 (LON:JET2) is also a low cost provider, but it offers more to customers through its scale economy than low prices alone.

“It’s not actually an airline, it’s a package holiday company,” said Hollingworth. “Jet2 gives you good value for money on a package holiday, but it also gives you customer service.”

That gives the company excellent customer loyalty, but Hollingworth doesn’t believe this is fully priced.

“The stock market's got it on a very low P/E ratio because it says ‘it's just another average tour operator like Tui,’ but that's not how the customer sees it,” he said. “The customer sees that they give them value for money, they give them good quality service.”

How to invest in airline stocks

If you think it’s time to buy rather than sell airline stocks, you have a few options (besides buying the shares of companies outright).

There are a number of thematic exchange-traded funds (ETFs) tracking the travel sector that offer exposure, such as the iShares STOXX Europe 600 Travel & Leisure UCITS ETF (DE:EXV9) which is a tracker fund following its namesake index, and the US Global Investors Travel UCITS ETF (LON:TRIP) which is an actively-managed ETF offering exposure to travel and tourism stocks. While both of these are diversified travel and leisure funds, airline stocks like Ryanair feature prominently in both portfolios.

Another option is the VT Holland Advisors Equity Fund, which is managed by Hollingworth. It holds Jet2 as its largest holding (with 8.1% of the portfolio) and Ryanair as the sixth-largest (with 4.4%) as of 28 August. Note this isn’t an airlines-focused fund, but one which aims to invest in compelling business models trading at favourable valuations across a range of sectors.

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For listed private equity funds, discounts to net asset value (NAV) widened sharply when bond yields rose in 2022. Investors were anticipating that the valuations of private equity investments would follow share prices down after the customary lag.

Boards responded with share buyback programmes in an attempt to add value and close the discounts. Yet discounts remained stubbornly high as valuations stagnated.

When markets started to move higher two years ago, investors could reasonably have expected private equity fund valuations to follow. This should have led to a fall in discounts, regardless of buybacks. Yet the evidence for this is mixed.

Diverging fortunes for private equity funds

Pantheon International (LSE: PIN) and HarbourVest Global Private Equity (LSE: HVPE) have returned almost 20% in one year, while Patria Private Equity (LSE: PPET) is up over 50% in three. All had significant help from narrowing discounts. However, 3i (LSE: III) has lost 25% and HgCapital Trust (LSE: HGT) almost 15%, as their discounts have headed in the wrong direction.

What is going on? The answer is that 3i and HGT are special cases. 3i traded on a large premium thanks to the phenomenal performance of discount retailer Action, which had come to account for over three quarters of its NAV. When Action's growth appeared to falter, that led to a slump in 3i's share price. The £28 billion trust now trades on a 7% discount, up from 30% a few months ago.

3i's update at its annual general meeting in June showed that pessimism about Action had been overdone. Performance in the rest of the portfolio is steady, but accounts for less than a quarter of the total. So despite 3i's shares being much better value than they were a year ago, they are still very much a bet on one company.

HGT specialises in the software sector and so it has suffered from fear that its holdings will be disrupted by AI. This fear may prove exaggerated, but has led to a justifiable fall in the share price even though underlying performance has been good. In its June update, it reported growth in revenue and cash generation of 16% and 19%, respectively, as well as £134 million of realisation proceeds in the first half at an average uplift to carrying value of 31%.

However, it has continued to reduce valuations and its portfolio is now valued at a weighted average multiple of 23 times cash generation. This still looks rich, especially as the portfolio carries plenty of debt, but is more than offset by the shares trading at a 23% discount. The shares have recovered from their May low, but the rally should go further.

The price of Oakley Capital (LSE: OCI) has also recovered, but it still sits on a discount of 33%, despite reporting a gain of 6% in NAV in the first half. Literacy Capital (LSE: BOOK) was a sector darling until two years ago, since when its shares have slid 40% to a 37% discount. The NAV has fallen 7% over the last year and is up just 3% over three, but an upturn is surely imminent. Both shares look a bargain.

Time to boost demand for private equity funds

Meanwhile, the funds of funds such as HarbourVest, Pantheon, Patria, ICG Enterprise (LSE: ICGT) and CT Private Equity (LSE: CTPE) – which invest in the funds of other managers or co-invest in companies alongside them – all trade on discounts of 25%-30%. Their boards continue to be obsessed with share buybacks to reduce the discount, but they need to focus more on increasing the demand for their shares than reducing the supply.

Investors are hungry to see evidence of hidden gems in private equity fund portfolios that can grow much larger over time. Action was once just a modest holding for 3i. Boards need to move onto the front foot in extolling their holdings. Yet investors shouldn't wait for them to do so, or they will end up paying much higher prices.

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What is a data centre?

A data centre is a big, highly secure building full of computers and the other physical infrastructure that the digital world is built on. They've been around for decades (since the 1940s, reckons IBM, in the form of “server rooms”), but the internet, cloud computing and now the widespread adoption of AI have all radically increased the need for giant – and now “hyperscale” – centres. Nowadays, much of what we do online every day – from Google searches to banking to streaming Netflix – depends on computing power and connectivity housed in data centres. There's no single authoritative figure for the number of such centres in the world, because there's no universally accepted definition of how big an installation has to be to count as one. But in terms of large data centres, commercially operated by companies such as cloud providers, there are around 11,000–12,000 worldwide, with the majority in the US.

What's inside a data centre?

A typical data centre will contain servers (powerful computers that process, store and distribute data); networking equipment (to connect the servers to the internet); sophisticated cooling systems (otherwise computers get very hot, and then stop working); and power infrastructure (such as substations, back-up generators and batteries). In recent decades, data centres have got much bigger, with so-called “hyperscalers” – the likes of Microsoft, Google and Meta – building vast campuses covering many acres. A data centre with 150 racks holding 25 servers each equates to 3,750 servers; but that's no longer considered large. According to the International Data Corporation, a true “hyperscale data centre” is one that contains at least 5,000 servers and occupies at least 10,000 square feet of physical space and uses more than 100MW of energy. And many are now vastly larger than that. A hyperscale data centre can hold thousands of racks and hundreds of thousands of servers – all built on vast sites covering hundreds of acres.

Why are data centres controversial?

Much media coverage of the backlash (or “techlash”) against data centres focuses on distrust of Big Tech and AI, and fear of job losses. More than half of Americans say they're more concerned than excited about the growing use of AI in daily life, according to a recent report from the Pew Research Centre. But the dominant sources of opposition are more mundane, says The Economist. Polls suggest that what worries people about the centres is their perceived local impact. In a recent Fox News poll, 75% of respondents cited concerns such as energy use, utility and water bills, construction disruption and traffic as the main reason they opposed a data centre in their area. Just 11% pointed to AI itself.

The politics around building data centres

More than 500 US counties and municipalities have passed data-centre bans or moratoriums, while dozens of proposed projects have been abandoned. Research group Data Centre Watch calculates that grassroots groups blocked or delayed at least 75 data centre projects worth about $130 billion in the first three months of 2026 alone. That's close to the $156 billion worth of facilities that were disrupted during all of 2025. What's striking, too, is how swiftly politicians have shifted their position. The Republican governor of Texas, Greg Abbott, once touted the state as the “epicentre of AI development” – it boasts the most of any state except Virginia. Last week, though, now up for re-election, he said data centres had “dug their own grave” by overreaching. Across the US, the issue has emerged as a surprise key battleground in the US midterm elections, with some unexpected opponents (Republicans) and supporters (union-backed Democrats) of development. With typical grace and tact, president Donald Trump opined that: “The only reason that communities throughout the USA should not want data centres is if they want to end up being backwards and poor. If they want to be successful and rich, with far lower taxes and jobs all over the place, let data reign.” China is delighted with the US backlash, he claimed. “If we kill the golden goose, you will only have yourselves to blame.”

Is Donald Trump right about data centres?

Perhaps. “Voters and politicians alike are making a big mistake” in blocking data-centre growth, says The Economist. One common myth is that data centres guzzle endless water. In fact, a mid-sized centre uses about as much as two golf courses and much less if it recycles its water, as many now do. Concerns over energy use are more credible, but there's little evidence that they raise energy prices for households; rather, by increasing demand they spread the fixed costs of infrastructure among more kilowatt-hours sold. And in any event, the “answer to competing demands on resources – whether water, electricity or something else – is to price them according to their scarcity, thereby encouraging more provision and higher living standards over time. It is not to ration inputs according to the arbitrary judgment of scolds.”

What about here in the UK?

Britain has a claim to being the home of the first data centre – in the large shed at Bletchley Park where wartime cryptographers built Colossus, the world's first programmable electronic computer. Today, the UK has 450 “large data centres”, according to government figures, with more than half of them in or close to London. In September 2024, the government designated data centres as critical national infrastructure and in January 2025 announced five “AI Growth Zones”, with £28.2 billion of planned investment. Our biggest data centre to date, says James Price on CapX, is a 148MW site outside Cardiff, but progress is slowing, with the likes of the UAE and Japan now steaming ahead. This, of course, is hardly a surprise. “In Britain, we can force £100 million to be spent on a bat tunnel; imagine what our planning system will do with a gigawatt campus.”

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New Year in the Maldives

Join Pixie Lott in the Maldives this Christmas. The British pop star will be performing on New Year's Eve at the InterContinental Maldives Maamunagau as part of the resort's "12 Pearls of the Ocean" programme of festivities. Each "pearl" is a day of activities and entertainment following a theme, starting with the lighting of the Christmas tree on 22 December. Santa arrives by boat on Christmas Day, the "Pearl of Champagne" features an exclusive yacht cruise with Champagne, while the Pearl of Play takes the form of a lively lagoon party and a moonlit dinner by the sea. At midnight on New Year's Eve, the sky above Maamunagau will be illuminated with fireworks and a drone display to see in 2027. In tandem with the "12 Pearls of the Ocean", guests can also learn about marine life with British artist and diver Janavi Kramer or enjoy a treatment in the spa, where wellness practitioner Braj Raj Singh will be taking up residence.

From around $1,500 a night, maldives.intercontinental.com.

Live like a local in Munich

Have you ever wished you could experience a place the way the locals do? Kempinski, Europe’s oldest luxury hospitality company, has launched a programme to achieve just that. Called E.R.A.s, which stands for Experience Real Access, guests staying at the Hotel Vier Jahreszeiten Kempinski Munich can undertake a literal flying visit of Bavaria’s royal castles aboard a private flight, guided by two historians. There is, as part of the programme, also a hosted dinner with live music in the royal halls of the Nymphenburg Palace. Alternatively, guests can brush up on their skills as painters, discover Bavaria's famous beers and the region's automotive heritage. Or they can take the plunge – into the Eisbach canal, guided by a Wim-Hof expert and go for a morning run with legendary German former footballer Lothar Matthäus.

E.R.A experiences from €130 per person, kempinski.com.

Starry nights in Northumberland

Matfen Hall's location on the edge of the International Dark Sky Park in Northumberland makes it the ideal luxury stay for enjoying starry nights in Britain. The area offers some of Europe's clearest night skies. The wild and rugged Northumberland National Park is also just a 25-minute drive away from the hotel, encompassing around 400 square miles of untouched landscape, tranquil rivers and sweeping moorland close to the Cheviot Hills. But if the nights prove too brisk, you don't even have to leave the comfort of your room – the spacious suites have their own telescopes. Within the Dark Sky Park, the Kielder Observatory will also be hosting stargazing activities. Afterwards, warm up in Matfen Hall's three AA Rosette The Emerald Restaurant.

From £350 a night, matfenhall.com.

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Reaching the age of 65 signals the beginning of retirement for many, but it can also usher in a phase of tax headaches.

The number of over-65s paying income tax has risen by more than three million over the last five years, according to figures from HMRC.

Meanwhile, greater numbers of beneficiaries of estates face paying inheritance tax (IHT) as asset values rise and with unused pensions set to be included in estates from April 2027.

The number of over-65s paying tax on their savings interest is rising too, while 38% of people who paid capital gains tax (CGT) in 2024/25 were 65 or older.

However, there are ways those in their mid-60s can minimise the damage and keep the taxman at bay.

Income tax on state, personal and workplace pensions

An increasing number of pensioners are paying income tax on their pension wealth due to frozen tax thresholds.

The personal allowance has been frozen at £12,570 and higher rate income tax band at £50,270 since April 2024. Meanwhile, the additional rate tax band was cut from £150,000 to £125,140 from April 2023.

A recent Freedom of Information (FOI) request submitted by Steve Webb, former pensions minister and partner at pension consultants LCP, revealed hundreds of thousands of pensioners are being pulled into paying more tax due to these frozen thresholds – a process known as fiscal drag.

The FOI found those of state pension age, aged 66 and over, paying income tax at 40% or 45% has more than doubled from 494,000 since 2021/22 to 1,092,000.

The number paying tax at 45% has almost tripled from 39,000 to 115,000.

With income tax thresholds frozen until 2031, these figures are likely to rise higher.

Webb said: “Many people of working age may have expected that they would be basic rate taxpayers in retirement, but few will have expected to find themselves paying 40% or more out of their pensions in tax.

“But this is the norm now for over a million pensioners, with the number set to rise further.”

How to pay less income tax on your pensions

One way to avoid tipping your income into a higher tax band is to time when you make withdrawals from your pensions, Webb said.

For example, you could split a single large withdrawal into two and spread it across two tax years to keep your taxable income in those two years lower.

Another, Webb said, is by adding more into a pension after you’ve retired.

He explained: “It’s still possible to get tax relief on contributions up to age 75, which lowers current taxable income – especially in years when you would otherwise be a higher rate taxpayer.

“For those who have income to spare in retirement, additional pension saving can be worth considering.”

It’s worth noting, there are rules around how much tax relief you can receive on pension contributions if you have flexibly accessed your pension.

For example, the money purchase annual allowance applies to contributions if you’ve accessed taxable cash from a defined contribution pension. If the allowance is triggered, tax relief is usually limited to contributions of £10,000 a year gross.

Capital gains tax

Over-65s often take up a large share of CGT liabilities in the UK.

Data from HMRC reveals that of the 551,0000 people who paid CGT in 2024/25, 212,000 (38%) were aged 65 or older.

Sarah Coles, head of personal finance at investment platform AJ Bell, said: “People tend to build assets as they go through their working life, so wealth peaks around the age of 65, and at that point they start spending their way through their wealth. This period captures that turning point.”

How to lower your capital gains tax bill

Wherever possible, you should hold assets within tax-wrappered accounts like ISAs or pensions so any gains are free from CGT.

Make the most of your CGT annual allowance as well. This allows you to dispose of gains of up to £3,000 each tax year free from CGT.

Coles, from AJ Bell, said it’s worth making the most of your CGT annual allowance each year on an ongoing basis, so you can dump assets tax-free bit by bit.

Also, if your partner hasn’t used their annual CGT allowance or ISA allowance, you could transfer assets to them to pay less tax or even a lower rate of CGT.

Source: HMRC

Income tax on savings

Over-65s are increasingly paying income tax on savings held outside tax-wrappered accounts.

The number of savers in this age group paying income tax on their savings is forecast to reach 2.1 million in 2026/27, more than four times the 517,000 in 2022/23, according to Freedom of Information (FOI) figures obtained by Paragon Bank.

The total tax liability facing over-65s in 2026/27 is expected to reach £3.34 billion compared with £795 million in 2022/23, based on the FOI figures.

How to avoid paying tax on your savings

You could try overpaying on your mortgage if you’ve got surplus cash you don’t need to access immediately. You could also pay off any credit card bills or personal loans using money from your savings pot as well.

Make sure you’re putting savings into tax-wrapped ISAs as any interest earned on them will be tax-free.

Andrew Wright, head of savings at Paragon Bank, said using ISAs was particularly critical for those aged 65 and over, as new rules limiting the annual cash ISA limit to £12,000 from April 2027 won’t apply to this age group.

“Making full use of your ISA allowance can help protect more of your hard-earned interest from tax and those aged 65 plus have the benefit of retaining the full £20,000 cash ISA allowance from next tax year,” Wright said.

Inheritance tax

Frozen IHT thresholds and rising asset prices are dragging more and more estates into HMRC’s net, including those of over-65-year-olds.

IHT receipts in the three months to July 2026 totalled £3.2 billion, according to HMRC, £100 higher than over the same three month period in 2025, and they’re expected to climb more when unused pensions form part of people’s estates from April 2027.

Ian Dyall, head of estate planning at wealth manager Evelyn Partners, said: “It’s worth remembering that it’s not strictly the deceased estate-owner who pays inheritance tax but the beneficiaries.

“However, that doesn’t make it any more palatable to those who have carefully saved and invested, and who want to pass on that family wealth without a big tax charge.

“It’s also worth pointing out that as people are living longer, many beneficiaries are in their fifties or even sixties before they inherit from their parents – so it may well be the case that more 65-year-old beneficiaries are starting to face IHT bills.”

How to lower an inheritance tax bill

Start with making the most of your gifting allowances. For example, you can give away up to £3,000 tax-free each financial year to one or more people through the annual exemption rule.

You can also make regular gifts to people, as long as they’re made out of income and not capital and they don’t affect your standard of living.

This is known as ‘expenditure out of income’ and can include regularly paying rent for a child or adding money into an under-18’s savings account.

Gifts of any size can be made IHT-free if they are made seven years or more before your death.

Dyall said: “The earlier gifting is done the better as that gives the seven year rule more time to expire, which then means the gift will be fully outside the estate.”

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Nationwide has boosted the perks of its fee-free FlexDirect current account, meaning new customers could get up to £370 in free cash in their first year.

The building society has upped its cashback deal, with customers now able to get up to £120 in free cash from spending in their first year, double its previous offering of just £60.

Spending is rewarded through £5 a month cashback when you spend at least £500 on your debit card, up to a maximum of £60 a year.

An additional £5 a month cashback is available when you spend at least £300 through direct debits on anything from water bills to streaming subscriptions, up to a maximum of £60 a year.

In addition to its boosted cashback offer, Nationwide’s FlexDirect account also provides 5% interest on current account balances up to £1,500 in the first 12 months, giving customers up to £75 in interest. This interest rate drops to 1% after your first 12 months.

The FlexDirect current account is fee-free, meaning none of the free cash you earn over your first year with the account will be eaten away by monthly account costs.

Since 2023, Nationwide has also distributed an annual 'Fairer Share' payment of £100 to each individual with a qualifying account, and in previous years having an active FlexDirect account has made you eligible for the payment.

That means if the building society decides to make the payment again in 2027, you may receive an additional £100 bonus.

Fred Powell, head of current account at Nationwide, said: "With our new free FlexDirect account, customers can still earn interest on money in their account, get cashback on everyday spending and benefit from a £175 switching offer.

“It means new customers could get as much as £295 with Nationwide in their first 12 months and that’s without adding the 5% on current account balances [and] access to savings accounts,” he added.

How to get £370 of free cash by switching to Nationwide’s FlexDirect

FlexDirect’s perks mean some new customers could manage to get £370 in free cash in their first 12 months – as long as they keep enough money in the account.

Firstly, new Nationwide customers are eligible for a £175 switching bonus when changing their main bank account to Nationwide through the Current Account Switching Service (CASS).

To qualify for the switch incentive, customers need to complete a full switch using CASS within 28 days of opening the new FlexDirect account, switch from an account with at least two direct debits, and pay in at least £1,000.

Then, once you have an active FlexDirect account, you can get £5 a month in cashback from everyday spending of at least £500, and another £5 a month in cashback from direct debits of at least £300

Together, this cashback will come to £120 over the full 12 months.

Finally, you can get another £75 from the 5% interest on your current account balance over your first 12 months.

To get the maximum amount, you will need to have a current account balance of at least £1,500 and make sure it does not drop below this all year to get the full £75 interest.

Put together, these bonuses mean new customers switching to Nationwide can get a maximum of £370 in their first year with the FlexDirect account – or more if Fairer Share is repeated this year.

Rachel Springall, finance expert at Moneyfacts, said: “Households are no doubt looking for simple ways to make their money go further, so it is incredibly important to take time out to review all the financial products they have, including current accounts, which are often overlooked.

“Nationwide’s FlexDirect account could offer customers up to £470 in value in the first year, including cashback, credit interest, the switching incentive and, assuming the £100 Fairer Share is paid again.

“The account is highly attractive all-round and rewards customers on their day-to-day spending with cashback. Those who keep a bit of cash in the account will earn an inflation-busting interest rate.”

Are you eligible for a FlexDirect account?

To be eligible for a FlexDirect account, you need to be aged 18 or over and be a UK resident.

To keep the account active, you will need to pay in at least £1,500 every month. This would most likely come from your monthly salary, but could also come from other sources like savings.

You must also agree that your FlexDirect account is for personal use only, and you must hold no more than three existing sole or joint Nationwide current accounts.

Most people build an investment portfolio gradually over many decades, through monthly contributions they barely notice.

An annuity works the other way. It is bought in one transaction and cannot be undone, often leaving buyers agonising over timing. With annuity rates at an 18-year high, is now the moment, or is it worth waiting for better gilt yields?

When you buy an annuity can make a big difference. On Canada Life's benchmark, a healthy 65-year-old with £100,000 bought £4,521 a year in January 2022. By the end of September 2022 the same £100,000 bought £6,873. Those who waited nine months got an extra £2,352 a year for the rest of their life.

Then again, 2022 was not a normal year, and no one knows what will happen in advance.

Tracking annuity rates

UK consumer champion Which? tracks the annuity market each month, recording the best income a healthy 65-year-old could buy with £100,000. In 2025, the worst month to buy was February, at £7,525 a year. The best was June, at £8,011. December closed at £7,665. The difference between best and worst was £486 a year for life.

But now compare providers. In January 2026, the most generous on the market offered £7,649 on the same £100,000. The least generous offered £7,100.

You can close the provider gap by collecting quotes. But you can’t close the timing gap. You can only stop a single day setting your income for life.

While drip-feeding into equities usually leaves you worse off than buying the lot at once, because shares are expected to rise and uninvested money misses the climb, annuity rates carry no such expectation.

Buying in stages is insurance against a rate move nobody can forecast. It won’t leave you better off than a single purchase would, but spreading the purchase over several dates means no single morning's pricing sets the whole income.

Huang, Milevsky and Young worked the problem through in the Review of Finance in 2017. Give a buyer a fixed budget, improve the rate on offer by roughly a tenth, change nothing else, and the sum they should commit today jumps from about 5% of that budget to about 85%. The authors call the pattern 'an asymmetric dollar-cost averaging strategy'. The market is American and the product is a deferred annuity, so the numbers do not transfer, but the pattern does.

Standard Life's model fixes the dates in advance. It is the only detailed UK modelling of staged annuity purchase I can find, and its saver buys at 65, 70, 75 and 80 whatever rates are doing. The rate improves at each purchase, from 6.6% of the pot at 65 to 7.0% at 70, 8.1% at 75 and 10.0% at 80. Every bit of that improvement is the buyer getting older. In the model, market pricing never moves. A model in which conditions never change cannot demonstrate the value of spreading purchases across changing conditions.

Standard Life's saver starts with £150,000. About £90,000 buys a level annuity at 65, and about £20,000 more buys another at 70, 75 and 80, with whatever is left in drawdown. The model assumes 5% a year on that balance, 3% drawn from it, and good health throughout. By age 90 that saver has drawn £259,115. A single purchase at 65 would have paid £253,775. Standard Life does not do that subtraction anywhere in the release, so here it is: £5,340.

Across 25 years, that is 2.1% more income.

The staged buyer pays for that £5,340 up front. In year one the income is £8,155 against £10,151 for a single purchase, a fifth less. Annual payments catch up at 75. But a decade of shortfall takes some making up, and the running total does not favour staging until 88. The model stops at 90, so the whole gain lands in the last three payments. The drawdown pot is empty by 80, which means the flexibility being sold runs out eight years before the money arrives.

The cost of waiting to buy an annuity

The cost of waiting is built into the rate. An annuity pays more at 80 than at 65 partly because the insurer expects to pay out over fewer years, and partly because buyers who die early subsidise those who live longer. Money still sitting in drawdown earns no share of that subsidy. It sits in markets instead, taking a different risk while it waits. The better rate at 80 is what waiting since 65 has already paid for.

Can you split your annuity pot?

Splitting a pot is easy enough. Aviva, Canada Life, Legal and General and Standard Life all set a £10,000 minimum on what is left after tax-free cash, so £250,000 divides four ways at each of them.

Pricing the split is harder. Phoenix Life, which shares an underwriting company with Standard Life, tells consumers that some providers may pay more on one large purchase than on several small ones. It doesn't say how much more. Standard Life's adviser site, meanwhile, says an annuity is unlikely to suit a client who wants savings kept invested for growth, which is what staging asks of them for 15 years. I can find no published estimate of what a UK annuity ladder would actually have returned.

But one argument for staging survives. Insurers price on life expectancy, so a condition that shortens it lifts the rate, and a later purchase may qualify where an earlier one did not. Which? found a 65-year-old in relatively poor health quoted six% above the standard rate by Legal and General and 15% by Aviva. Nobody can plan around that, but it is real.

So the order matters. Collect quotes first: in January 2026 the gap between the best and worst provider was £549 a year, and it is the one gap in this decision you can close. Then decide whether a fifth less income at 65 is worth paying to spread a risk nobody can forecast.

Staging is insurance. Sold as anything else, it is a poor deal.

Retirement planning and making the most of pension pots is firmly under the spotlight with more people facing a shortfall when trying to achieve a comfortable retirement.

The government’s Pension Commission warned in a recent report around 15 million people aren’t putting enough away for later life, particularly low and middle-earners, the self‑employed and women.

Meanwhile 45% of working-age adults, around 18 million people, are not saving into a pension at all despite nearly half of them being in work, the report found.

Greater numbers of people are forecast to be renting into retirement as well, according to recent research by retirement firm Standard Life, increasing the financial burden on pensioners.

All the while, the cost of the triple lock is coming under strain and the state pension may not be as generous in the future.

Given the context, your pension savings should be working as hard as possible. Experts say, though, for a lot of people, they're not and basic errors are costing savers potentially tens of thousands of pounds.

Steve Webb, partner at pension consultants LCP, Helen Morrissey, head of retirement analysis at investment platform Hargreaves Lansdown, and Daniela Silcock, director of Daniela Silcock Pensions Research, shared six pension mistakes you should be avoiding.

Not keeping paperwork

An estimated £31 billion is sitting in lost pension pots, according to the Pension Tracing Service. If you have a pension you have forgotten about, then some of this money could be yours.

Losing tracking of a pension pot can be easily done if you've misplaced paperwork containing contact details for pension providers and policy numbers.

These types of details will usually be on annual account statements or sometimes welcome packs or joiner letters from your pension provider.

Webb said: “I have lost count of the number of people who have contacted me asking for help tracking down a lost pension from a previous job.

“Those who have kept paperwork have a far better chance of success, enabling us to work out where the pension money is now held.”

If you’ve looked thoroughly and can’t find key pension paperwork anywhere, there are other ways to track down policy numbers and contact details for providers.

If you’re looking for an old workplace pension pot, you can try getting in touch with a previous employer through Companies House. Failing this, you could contact the free-to-use Pension Tracing Service.

Not making the most of employer matching

Under auto-enrolment rules, workers earning more than £10,000 a year are automatically put into an occupational pension scheme by their employer.

Under the rules, you contribute a minimum of 5% of your monthly salary to the pension and your employer adds 3% on top.

However, you can contribute more to a workplace pension if you want and some employers will ‘match’ this amount.

For example, you could pay 8% a month and your bosses would add 8%. If you have the budget, then matching is worth considering as it could give you a significant boost to your pension savings with extra free cash from your employer.

Research by Standard Life found someone starting working at 22 on a salary of £25,000 increasing monthly contributions into a workplace pension by just 1% could add £26,000 to their pension pot.

Webb said: “[It] is an incredibly efficient way of rapidly building up a pension pot, as every extra contribution is effectively doubled overnight.”

Not claiming tax relief on pensions

Pension tax relief is a tax break offered by the government to encourage people to save for retirement.

It is applied at your marginal tax rate, for example a basic-rate taxpayer would receive 20% tax relief and a higher-rate taxpayer 40%.

All basic-rate taxpayers receive pension tax relief automatically, however, if you are in a ‘relief at source’ pension scheme, you will need to proactively claim tax relief if you are a higher or additional-rate taxpayer.

Roughly 800,000 people failed to claim higher rate pension tax relief worth over £1 billion in 2023/24, according to a Freedom of Information request submitted by Webb.

He said so many people were missing out simply because they “will not realise that there are two different ways in which pension tax relief can be delivered”.

“This may be news to many people…but it matters hugely – if you pay £80 into a pension you get £20 basic rate relief making a gross contribution of £100 into your pension. But having made a gross contribution of £100 you are entitled to £40 relief if you are a higher rate taxpayer, not £20, and £45 if you are an additional rate taxpayer.

“You only get this if you claim it. The missing amount is £20 per £80 that you have paid in, which could amount to thousands of pounds for some people.”

You can claim tax relief either through your tax self-assessment tax return or via gov.uk.

Transferring a defined benefit pension into a defined contribution pension

A defined benefit (DB) pension, sometimes called a final salary pension, typically pays out a certain amount based on your salary and how long you’ve been part of a pension scheme.

Defined contribution (DC) pensions pay out a certain amount depending on how much you and potentially an employer have put into them, as well as how your investments have done.

You can transfer a DB pension into a DC pension, however Silcock explained once you’ve done this, the guaranteed benefits that come with it are permanently given up.

“A DB pension provides an income for life with protection against inflation. It may also provide an income for a partner or other dependent after the member dies.

“After a transfer [to a DC pension]…poor returns or high withdrawals could mean that the money runs out.”

That said, there can be advantages to transferring to a DC pension, including that you get more flexibility in choosing how your pot is invested.

You can also withdraw all the money from a DC pension in one go, which could work out more cost-effective than a DB pension if you don’t have long to live or you need the money to cover medical expenses if you have a terminal illness.

In addition, while most DB pensions will continue to pay a portion of your pension income to any of your dependents after you die, DC pensions can typically be left to a wider set of people, giving you more choice in who inherits your pension funds.

Adding too little into your pot and for not long enough

Not putting enough into a pension throughout your life, and starting too late, will reduce the size of your retirement pot.

Silcock pointed out that some people don’t contribute to pensions because they’re taking on caring responsibilities or simply because they can’t afford it, however others delay saving simply because “retirement feels a long way off”.

“People are likely to get more from their pension if they start contributing when they are young and continue throughout their working life,” Silcock said.

She gave the example of someone’s pension growing at 5% a year, with £1,000 contributed at age 20. This would be worth around £7,040 by the time the person turned 60.

This same amount added to a pension at age 50 would be worth just £1,630 – £5,410 less.

Silcock said for someone who doesn’t have the budget to start saving into a pension, it’s worth exploring if a partner can make contributions on their behalf.

Assuming you will get a full state pension

The full new state pension is worth £241.30 a week and can form the bedrock of your retirement pot, but not everyone will get that amount. Anyone planning for retirement should take time to look at how much state pension they will get.

To receive the full amount, you need 35 years’ National Insurance (NI) contributions, however you may be missing years, for example if you’ve had to leave a job to care for a child or relative.

Morrissey warned: “Don’t assume that you will receive a full state pension. If you’ve spent any time out of the workforce, you could have gaps in your National Insurance record that mean you get less.”

If you are missing years, you can top up your state pension with voluntary contributions – but before you do, consider whether it is worth topping up National Insurance contributions.

If you're young and still working, you have plenty of time to make up for the gap.

When geopolitical shocks occur, like the conflict in Iran that has shaken markets since late February, knowing where to put your money to protect your wealth is key.

The Association of Investment Companies (AIC), an industry body representing the UK’s investment trusts, has identified the closed-ended funds that have shown the greatest resilience during the conflict’s duration.

Technology-focused investment trusts have led the way, with the continued demand for artificial intelligence (AI) stocks and funds lifting the sector in spite of global turbulence.

“Investment trusts in the technology sector have continued to power ahead as the AI investment boom goes on,” said Annabel Brodie-Smith, director of the AIC. “And the growth capital sector has thrived due to its big holdings in fast-growing private companies and potential IPOs such as Anthropic, ByteDance and Revolut.”

So which investment trust sectors proved the most resilient – and which ones have delivered the greatest returns for shareholders over the course of the conflict?

The investment trust sectors that have been most resilient

It wasn’t all about tech and growth sectors. Some of the other top-performing investment trusts since the start of the Iran conflict have come from less obvious sectors – particularly renewable energy.

^{Source: theaic.co.uk / Morningstar. Share price total return in % from 02/03/2026 to 31/08/2026. Excludes VCTs. See AIC sector definitions.}

“Shares across the [renewable energy infrastructure] sector have bounced as investors have warmed to renewable energy during a war that has exposed the weaknesses of our oil and gas supply chains,” said the AIC’s Brodie-Smith.

Commenting on the outperformance of the renewable energy infrastructure sector, Charlie Wright, co-lead investment manager of Foresight Environmental Infrastructure (LON:FGEN), said “Iran conflict has perhaps prompted investors to reassess the strategic value of renewables and environmental infrastructure, reminding investors that an overreliance on volatile imported fuels is not a wise position to take.”

Which investment trust sectors have outperformed since the start of the Iran war?

Foresight Environmental Infrastructure was one of two renewable energy infrastructure investment trusts to make the top-five in terms of share price total return since the start of the Iran conflict.

Growth capital trust Molten Ventures (LON:GROW), which holds stakes in Revolut and Finnish space economy start-up ICEYE, took the top spot, while the Biotech Growth Trust (LON:BIOG) took second and Allianz Technology Trust (LON:ATT) came third.