This week in MoneyWeek magazine: what “growth stocks” are and where to find them; Britain’s crippling public debt problem; and a cheap way into private equity.
Plus, making money while doing good; how the budget’s hidden measures will affect your finances; and are holiday homes the new buy-to-let?
We’ve our usual collection of news, views and comment, too; a roundup of the best share tips from the rest of the financial press; small business; investing for income; and six pages of how to spend it once you’ve made it. Sign up to MoneyWeek magazine now and you can get the magazine delivered direct to your door, along with full access to the MoneyWeek website and the iPhone and smartphone app.
Tapping into growth
There are many schools of investing, but two of the most well-known are value investing and growth investing. Value investing means looking for bargains – good companies whose shares, for one reason or other are, are trading cheaply when valued using metrics such as the price/earning ratio or price/book ratio. Growth investing means buying the share of companies which, while that may not be “cheap” on traditional valuations, are growing earnings more quickly than their peers. Growth investors hope the share price will grow along with the earnings.
At MoneyWeek, we tend to favour value investing over growth. “Give us a beaten-down bargain over a hot flash-in-the-pan tech stock any day”, says Matthew Partridge in this week’s cover story. But there’s no denying it, “the past decade has been great for growth investors”. So how can you tell which companies will continue to grow, and so which ones to buy? Matthew explains it all, and picks the best investments to buy now.
Britain’s public debt timebomb
Recently, the Bank of England warned that the double-digit rise in personal loans looked “dangerous” that, in the event of another recession, banks could lose a lot of money. But the central bank worrywarts are fretting about the wrong thing, says James Ferguson of the Macrostrategy Partnership. It’s not household debt they should be worrying about, it’s public debt. Despite austerity, were still up to our eyeballs in the stuff. The trouble is, things don’t look like getting much better any time soon. Read what James has to say here.
A cheap way into private equity
The private-equity sector has seen contrasting fortunes in the last five years, says Max King. Some funds have quadrupled their investors’ money; others have lost a large part of their investment. By contrast, listed “fund of funds” private-equity vehicles have performed more consistently. Max looks at two that, on current valuations, look like bargains. Find out what they are here.
A new fund for our model income portfolio
Over the last few months, David C Stevenson has been building a couple of “model portfolios” for investors wanting to generate a “robust, growing income”. He has two portfolios: one is a balanced, defensive portfolio for cautious investors; the other is for the more adventurous investor. This week, David has a fund that invests in renewable technologies that could fit into either portfolio. Find out what it is here.
Turn a profit while doing good
When it comes to ethical investing, many people don’t want to just chuck their money at a fund manager to put into big stocks, they wat to get a bit nearer the action, and see exactly where their money goes. The ultimate example of this, says David C Stevenson, is the “micro-finance” movement. “The idea is that you lend money to a micro-finance institution that in turn lends the money to ordinary folk in the developing world for practical projects that generate returns for investors.” David takes a look at one such scheme that’s bringing solar power to rural Africa on a personal scale.
How the Budget will affect you
Now the dust has settled on what many have branded “the boring Budget”, Ruth Jackson looks between the lines of the chancellor’s speech to find out just how it will affect your finances.
The “new buy-to-let”
Given how aggressively the government has targeted buy-to-let investment in recent years, you could be forgiven for wanting to turn your back on the whole thing and simply sell up, says Sarah Moore. One alternative is to let your property out to holidaymakers instead, and benefit from the associated tax breaks while you still can.
Elsewhere, John Stepek explains why, despite its flaws, you should still pay attention to the cyclically adjusted price/ earnings (Cape) ratio. Matthew Lynn loks forward to the inevitable bitcoin crash; and Simon Wilson asks if the best way to solve the Irish border problem is to just fudge it.
There’s our usual pages of luxury spending at the back, too – Chris Carter looks at three of the best places around Britain at which to soak up the festive spirit; we have the best properties on the market for £600,000; and we’ve a roundup of some of the best Christmas gifts for adults, and for children too.
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