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How to Teach Your Children About Investing Issue 47 / January 2019 FE Trustnet magazine How to teach your children about investing SELFIE DEFENCE BREXIT WOUNDS RINGING THE CHANGES Protecting your portfolio How our departure The best investment against youth trends could hit your pension strategy for every decade Fund, Pension, Trust / Sector Profile / Stockpicker / What I Bought Last Issue 47 / January 2019 Editor’s letter FE Trustnet magazine ust like with “the with them for years. ignore how changing underperformance has which fund he is using birds and the Cherry Reynard finds consumption patterns made it cheap, John to gain exposure to one How to teach your bees”, talking to out how to approach among the young are Blowers worries about of the defining trends of children about investing J your children about the subject in this disrupting established the impact of Brexit the 21st century. investment and finance month’s cover story. businesses. Meanwhile, on his pension and Enjoy reading, may not be the easiest Learning shouldn’t be I find out what has been LGIM’s Gavin Launder conversation you ever a one-way street for the best investment names three stocks SELFIE DEFENCE BREXIT WOUNDS RINGING THE CHANGES Protecting your portfolio How our departure The best investment against youth trends could hit your pension strategy for every decade have, but leaving them experienced investors, strategy in every decade. using digitalisation and Fund, Pension, Trust / Sector Profile / Stockpicker / What I Bought Last to their own devices however, and as Daniel In our regular automation to add value. ISSUE 47 can have unintended Lanyon discovers, columns, Adam Lewis Finally, Brewin Dolphin’s Anthony Luzio CREDITS consequences that stay they can’t afford to asks if Europe’s recent Rob Burgeman reveals Editor FE TRUSTNET MAGAZINE (FORMERLY INVESTAZINE) Contents IS PUBLISHED BY THE TEAM BEHIND FE TRUSTNET IN Data hub What I bought last SOHO, LONDON 12 Crunching the biggest trends Brewin Dolphin’s Rob Burgeman says Schroder WEBSITE: www.trustnet.com down into figures EMAIL: editorial@financialex- P. 40-41 Global Cities Real Estate press.net Securities offers exposure to one of the defining trends of CONTACTS: Brexit wounds With just 10 years to the 21st century Anthony Luzio retirement age, John Blowers P. 50-51 Editor 34 T: 0207 534 7652 can’t help worrying about the impact of Brexit on his pension Javier Otero 48 Art direction & design P. 42-47 W: www.feedingcrows.co.uk “The talk” Ringing the changes Cherry Reynard finds out how Anthony Luzio looks at the most The automation game Editorial Gary Jackson to teach your children about effective investment strategy in L&G Growth Trust’s Gavin Editor (FE Trustnet) investing – without turning each of the past five decades Launder names three stocks T: 0207 534 7680 them off the subject for life P. 20-27 using digitalisation to add Rob Langston News editor P. 4-11 value T: 0207 534 7696 Fund, pension, trust P. 48-49 Janus Henderson Multi-Asset Sales A question of culture Richard Fletcher Baillie Gifford US Growth Absolute Return, Lindsell Train Head of publishing sales Trust’s Gary Robinson tells IT and Royal London UK Equity T: 0207 534 7662 Richard Casemore Colin Donald why a strong Income find themselves under Account manager company culture is often a the spotlight this month T: 0207 534 7669 competitive advantage P. 28-33 Constance Candler Account manager P. 12-15 T: 0207 534 7668 Every cloud… Photos supplied by iStock Selfie defence The factors that have Cover illustration: Javier Otero Daniel Lanyon finds out how to contributed to Europe’s recent protect your portfolio against underperformance could soon changing consumption begin to work in its favour, patterns driven by the young writes Adam Lewis P. 16-19 P. 34-39 20 Cover story 4 / 5 [ FINANCIAL EDUCATION ] Cherry Reynard finds out how to teach your children about investing – without turning them Until November of last off the subject for life DO’S year, there wasn’t even & DON’TS a financial education “The talk” FOR YOUR textbook to help teachers CHILDREN and pupils get to grips with the subject · Do teach them about saving and debt first young people were poor at handling money, didn’t always understand · Don’t focus too the consequences of debt and were much on making generally bad at saving for the future. money; it’s about Yet the education charity Young education Money estimates more than half of schools are not delivering this here seems little question · Do invest in products education, partly because teachers that a good grasp of money that interest them lack confidence. Until November of is more useful as a life skill last year, there wasn’t even a financial than understanding, say, · Do encourage them education textbook to help pupils T to work towards the Jacobite rebellions. That may not get to grips with the subject. This be true for a wannabe student of 18th a goal was remedied by the launch of Your century history, but it’s not a stretch Money Matters, funded by Money to say it is accurate for pretty much · Don’t let their Saving Expert’s Martin Lewis. everyone else. Yet the two take equal mistakes be too The problems associated with this priority on the national curriculum. costly (no one lack of education are obvious. Young Financial education in schools under 18 needs Money, which is financed by a number remains inadequate. In September to be shorting or of the major investment groups, states 2014, it was made a component of spread-betting) that people who don’t save enough the “citizenship” part of the national for retirement cost the government curriculum, designed “to enable · Do make sure £6.2bn in income subsidies. students to manage their money on a they get the “Financial education, especially in the day-to-day basis, and plan for future basics: regular time of pension auto-enrolment, could financial needs”. This was introduced in savings and cut this cost by £1.8bn a year,” it adds. the face of overwhelming evidence that diversification FE TRUSTNET trustnet.com Cover story 6 / 7 SCOTTISH MORTGAGE INVESTMENT TRUST “Financial education, There are less obvious, but equally especially in the time of insidious, consequences of this pension auto-enrolment, problem. A poor understanding could cut this cost by of investment is evident from the swathes of long-term savings left in £1.8bn a year” cash. Almost three-quarters of all ISA subscriptions in the 2017 to 2018 Do me a favour tax year were left in the cash version, With this in mind, teaching your and the figure has been far higher in children about investing does them a previous years. Because most cash ISA real favour. Many people are afraid of accounts don’t beat inflation, this pot the volatility associated with financial SCOTTISH MORTGAGE of capital is diminishing all the markets, but getting them used to this ENTERED THE FTSE 100 INDEX IN time, gradually reducing from an early age can help them MARCH 2017. already anaemic long- conquer this fear. There’s no point term savings. teaching them about the joys of compound interest before they can add up, but Maike WANTED. DREAMERS, VISIONARIES Currie at Fidelity AND REVOLUTIONARIES. points to research Visionary entrepreneurs offer opportunities for great wealth creation. TheScottish Mortgage Investment Trust suggesting that actively seeks them out. children start Our portfolio consists of around 80 of what we believe are the most exciting companies in the world today. Our vision recognising the is long term and we invest with no limits on geographical or sector exposure. Our track record as long-term, supportive shareholders makes us attractive to a new breed of capital-light businesses. value of money And our committed approach means we can enjoy a better quality of dialogue with management teams at transformational organisations. Over the last five years theScottish Mortgage Investment Trust has delivered a total return of 206.2% and its basic compared to 110.2% for the sector*. And Scottish Mortgage is low-cost with an ongoing charges figure of just 0.37%†. purposes by the Standardised past performance to 30 September* age of seven: “The 2014 2015 2016 2017 2018 earlier you can Scottish Mortgage 27.6% 4.2% 37.0% 30.4% 29.0% teach them about AIC Global Sector Average 11.2% 7.1% 24.4% 22.7% 15.1% money, the better. Past performance is not a guide to future returns. Of course, each Please remember that changing stock market conditions and currency exchange rates will affect the value of the investment in the fund and child is unique any income from it. Investors may not get back the amount invested. and will develop For a farsighted approach call 0800 917 2112 at their own pace. or visit us at www.scottishmortgageit.com A Key Information Document is available by contacting us. Long-term investment partners *Source: Morningstar, share price, total return as at 30.09.18. †Ongoing charges as at 31.03.18. Your call may be recorded for training or monitoring purposes.Scottish Mortgage Investment Trust PLC is available through the Baillie Gifford Investment Trust Share Plan and the Investment Trust ISA, which are managed by Baillie Gifford Savings Management Limited (BGSM). BGSM is an affiliate of Baillie Gifford & Co Limited, which is the manager and secretary of Scottish Mortgage Investment Trust PLC. FE TRUSTNET Cover story 8 / 9 BUILDING A PORTFOLIO WITH MY 10 YEAR OLD My daughter is quite Sweets were more keen on the concept difficult because Haribo of growing her wealth, is a private company, so although I’m suspicious of we eventually settled on her motives.
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