Investing for your family: How to set you and your children up for financial success

SUSANNAH STREETER: Hello, and welcome to Switch Your Money On. I’m Susannah Streeter, Head of Money and Markets here at Hargreaves Lansdown.

SARAH COLES: And I’m Sarah Coles, the Head of Personal Finance.

SUSANNAH STREETER: It’s good to be back in the broom cupboard after a summer holiday with the family. I can’t quite believe I’m saying that, but although it’s lovely to be around them a lot, it’s also quite nice to get away from it all.

SARAH COLES: Yes, it’s also nice to go about five minutes without anybody asking for something, so our break away was lovely, but once you’d factored in about 50 meals a day for the teenagers, it was ruinously expensive.

SUSANNAH STREETER: I know, kids are priceless, but they’re also blooming expensive. And that’s not going to stop when they leave home. With three kids, we’ve had to really plan ahead to try and offer the support that they need at any of life’s milestones.

SARAH COLES: Yes, that’s something that my parents did for me, and I really feel the pressure to do the same for my kids. But we’re not alone in this, so we did some research in May, which found that one in three people have either given significant chunks of money to their family or they plan to, and that’s what we’ll be covering in this episode of the podcast, which we’re calling ‘Investing in Your Family’.

SUSANNAH STREETER: And I’m pleased to say you’ll be hearing a few wise words from my dad a bit later in the programme.

(Recording plays): I’ve encouraged them to be aware of the value of money, that it doesn’t grow on trees, and very often, if you want money, you go out and earn it.

SUSANNAH STREETER: Along with a comedy moment from our cut-price childhood camping trips in a video we’ve recorded. We’ll also be speaking to Didi Ager, a financial adviser with HL. Great to have you on the podcast, Didi. So when you’re advising parents, is this something that tends to come up a lot?

DIDI AGER: Yes, parents are always very keen to support their children, although it doesn’t work out as they expect, because if they’re falling short in their finances, that tends to become their first priority.

SARAH COLES: Well, it’ll be great to get an idea of what people can do a bit later in the podcast, and we’ll also be speaking to Helen Morrissey, our head of pensions research, about the role of pensions in passing wealth on and when it might not be a good idea to give money away.

SUSANNAH STREETER: And Sophie Lund-Yates, our Lead Equity Analyst, will be chatting about some of the companies that your children might be interested in, plus Emma Wall, our head of investment research and analysis, will be exploring this from the point of view of funds. But first, it’s worth catching up with the latest snapshot on the labour market in the UK.

Although the blast of cold air from higher interest rates is starting to be felt in the jobs market, with unemployment ticking up, because wage growth is so strong, another rate hike from the Bank of England looks likely in September. Annual growth in regular pay was 7.8% in April to June this year. That’s the highest since comparable records began in 2001. The picture painted by these jobs numbers is adding up to be a stagflation scenario, with prospects for a big spurt of growth slim while inflation risks staying stubborn.

SARAH COLES: Yes, and something else to emerge in the figures was that the number of people inactive because of long-term sickness has increased to a record high, and with painful waits for treatment not set to be cured any time soon, that fight for labour is going to continue.

SUSANNAH STREETER: With real wages moving higher again, consumer spending is expected to stay more upbeat than expected, which bodes slightly better for companies selling discretionary goods – items we might want but we don’t necessarily need – and, with a bit more money in their pockets, parents might be more swayed by pester power from the kids for the latest must-have trainers. But an awful lot of people are still feeling a significant squeeze, and this is where inter-generational gifting comes in, and I’m not talking a pair of socks or chocolate selection pack here, but significant sums of money to help with big life events.

SARAH COLES: Yeah, so research carried out for HL by Opinium shows that some people are particularly likely to be making gifts, so for some it’s because they’ve managed to get into a position where it’s just more feasible, so that’s one reason why those on higher incomes are twice as likely to give gifts. It’s also one reason why almost half of investors have gifting in their plans. Retired people are also slightly more likely to have given gifts, or plan to, and this is likely to include those who’ve worked hard to build their assets and are now keen to use them to help their family. They may also be keen not to pay more inheritance tax than they need to.

SUSANNAH STREETER: Those who own their own property outright are more likely to be gifting, at 44%. This isn’t necessarily just about inheritance tax. The fact that they don’t have monthly rental or mortgage payments to worry about means it may be more affordable. Plus, they’re likely to appreciate how owning their home has affected their own finances and be keen to help other family members benefit too. However, this isn’t just about what people can afford. For parents, the fact they can see life is likely to be tougher for their offspring means they’re even more keen to give gifts. 48% of parents with children in the household have given gifts, or plan to, despite the fact their income is likely to be pulled in more directions while they’re bringing up a family.

SARAH COLES: And the survey also asked people what they were giving this money for, and among those who were giving gifts for specific reasons, some trends emerged. So the most common reason to give a gift is to help people with a property purchase, which 12% of people have done, so often family members appreciate how hard it is for younger people, trying to save for their deposit while paying exorbitant rents, so they will give them a hand onto the property ladder.

SUSANNAH STREETER: The joint-second most common reason is to help pay for university. There’s a growing gap between maintenance fees and the cost of living for students, which an awful lot of families are helping to fill. From September, when the rules change, it will mean more students will eventually pay off their loans in full, which is likely to put even more pressure on their loved ones to pay as much of their university costs as possible.

SARAH COLES: Yes, and weddings also make second place, so with the average wedding costing more than £20,000 it’s easy to see why people need help if they’re going to start married life without significant debts. So one odd anomaly of the inheritance tax rules is that they allow specific gifts for weddings to be given and they fall out of your estate for inheritance tax purposes straight away, so it means parents can give up to £5,000 to a child; grandparents or great grandparents can give £2,500 and anyone else can give £1,000. And this can be combined with your annual exemption of £3,000, so technically parents could give £8,000 each to their child and it would fall out of their estate immediately.

SUSANNAH STREETER: Inheritance tax considerations make fourth place, and with inheritance tax thresholds frozen, it may well be something that more people consider in the coming years. Fifth place is school fees. If grandparents are paying the fees, this has tax advantages too. If the fees come out of their income, and they aren’t forced to eat into their capital, then as long as they document it carefully, it will count as a regular gift from income and will fall out of their estate immediately for tax purposes.

Of course, this is just a brief glimpse of very complex rules, and you can take advice if you’re not sure how you’re impacted. Don’t forget that as ever, tax rules change and the benefits depend on your individual circumstances.

SARAH COLES: However, families aren’t just helping one another build for the future. A minority are also protecting them from the intolerable pressure that rising prices has put them under, with some helping them pay off debts and some supporting them through a personal problem. These aren’t overwhelming numbers of people, but it is a notable trend. It can be really difficult to put money away for your loved ones when you have so many demands on your income, but there is the chance that your offspring may already have some money set aside for them that you’ve no idea about, in a Child Trust Fund.

SUSANNAH STREETER: They were launched in 2005, but applied to all children born on or after the 1st of September 2002 until the 1st of January 2011, but how much you received to put into your Child Trust Fund depended on your household income and when you were born, but in April 2022, the average market value of a matured account that was not transferred or withdrawn was £2,203, a sum not to be sniffed at.

SARAH COLES: Yes, it’s quite an impressive amount of money, but the problem is that there’s £1.7 billion that’s just sitting unclaimed in these matured Child Trust Funds, so if you’ve lost track of your child’s Child Trust Fund, you can track it down through the government website. As long as you have parental responsibility for the child, you can hunt it down through the Government Gateway.

SUSANNAH STREETER: It’s certainly going to help if there’s already a pot of money saved for your kids, but what if you’re starting from scratch? Well, this feels like a very good time to bring in Didi Ager, a financial adviser with Hargreaves Lansdown. So Didi, why do you think it’s so common for parents to want to help their children with life’s milestones?

DIDI AGER: Yeah, that’s a very good question. We all want the best for our children and also to feel that we’ve laid the best foundations for them to give them the best start in life. It might be either saving or investing to cover the costs of university, buying a first house, getting married or for something later in life. We all want to know that we’ve done the best we can for our kids, so often when people are seeking advice, they’re keen to set up some kind of savings plan for their children.

SARAH COLES: Of course, at the moment, our finances are under so much pressure, so is this actually a realistic prospect for people?

DIDI AGER: Yeah, that’s a very good point. At the moment, there are obviously lots of demands on family finances and it can be difficult to free up big sums of money for this sort of thing. If you try to do too much, it’s easy to feel that it’s something you just can’t afford. However, putting too much pressure on your finances, instead of doing that, you can start with regular savings of whatever you have to spare. It can be as little as £25 a month, and by looking to save little and often for children, you’d actually be surprised by how much that can add up to over the years.

SUSANNAH STREETER: So what about for those parents under a lot of pressure? Is there a role for grandparents to step in?

DIDI AGER: Yeah, there’s absolutely a role for grandparents. They’re able to contribute to investments for their grandchildren, so if as a grandparent you’re worried that your children are too stretched to start putting money aside for their children, it can be incredibly helpful if grandparents start putting money aside for their grandchildren. Often, when parents come for advice, they’re asking for help with investments of monies that have been built up by the grandparents, and in some cases, they’ve been able to build a nest-egg of tens of thousands of pounds, which can make an enormous difference.

SARAH COLES: What kind of things can people do for their family?

DIDI AGER: Well, you’re never too young to hold investments, and you can save or invest for children through things like Junior ISAs and pensions. Often parents consider putting money aside until the children are 18, and then the more immediate costs, like university, take priority, but it’s really important not to overlook the opportunity, at that stage of the child’s life, to help the then young adult develop a savings habit.

So one of the things I did with my children was to transfer money to my then 18-year-old, and then I actually sat with her while she transferred it into an ISA, just to make sure it didn’t go somewhere else, and that helped to get her to build and get into the habit of regular investment, and then watching it grow helped to incentivise her to stick with it. So for those who qualify, it may make sense for them to support their child to pay into a Lifetime ISA and save for a first property once a child’s reached 18.

SUSANNAH STREETER: That’s definitely one way parents can make a major difference to their children. Are there any ways they can use a Junior ISA to help children get interested in investment?

DIDI AGER: Yeah, absolutely. It’s a very interesting question. So money can be a taboo subject in many, many families, but I’d always encourage people to be open and talk to their children about their savings. And it’s not a case of teaching the children about economics or world politics, but just letting them see what they have in the Junior ISA and explaining to them that the money’s invested, and there are all sorts of ways of introducing the topic in an interesting way to a child. So one of the ways we did it at home, we always used to have an International Night with our children where they tried food from different countries, and as part of that conversation we started talking about the countries and then ultimately investing in them. We also talked about the banking sector in the aftermath of the financial crisis in 2008/2009, and the investing opportunities during the recovery that ensued. Children are also very interested in the future of the planet, so for obvious reasons, so it's easy to talk to them about investing for good.

SARAH COLES: So there’s obviously an awful lot you can do with your children. What do you think is the most valuable thing people can do to support their family?

DIDI AGER: I’d definitely say parents should talk to them about money. It often ends up, as I said, being such a taboo subject in families and we don’t want to talk about money in front of the children, but they should be part of the conversation so that they understand it’s okay to talk about money. It’s also vital to talk to them about their investments, so that they can see that sometimes they fall in value as well as rise, and that way the children can get more comfortable in the long run with the fact that investments go up and down. And the biggest risk in the long run that you can take is to take no risk at all, so helping children to get to grips with the short-term ups and downs will stop them being afraid of investing.

SUSANNAH STREETER: Thanks Didi, there is certainly plenty to think about there, and you mentioned pensions as an option, so this feels like a good time to bring in Helen Morrissey to explain a bit more about how that can work, so Helen, what’s the situation when it comes to passing on your pension to loved ones?

HELEN MORRISSEY: Thanks Susannah. So you can pass on your pension to loved ones when you die depending on what type of pension you have, so if you’ve got a final salary scheme – by this I mean where your pension is determined by how long you have worked for your employer and what your final/average salary was – then your spouse or your partner will usually receive a pension after you die. If you have children, then they may also receive a pension depending on whether they’re still in full-time education, so it is worth checking the rules in your particular scheme. Now the rules on who can be a beneficiary is usually much stricter in a final salary scheme than in a money purchase one.

SARAH COLES: What about if you are in a money purchase scheme?

HELEN MORRISSEY: If you do have a money purchase scheme, and this is one where your pension is determined by how much you have contributed and long-term investment performance, then you have a few different options. So if you die before taking an income from your pension, then this can be passed to your beneficiaries. Now if you die before the age of 75, then this will be paid out free of income tax as well as inheritance tax under current rules. If you’ve begun taking an income from your pension, then if you are in income drawdown, then this can again be passed down to beneficiaries who can continue taking an income or receive a lump sum. Now again, if death occurs before the age of 75, then this will be income tax free. If death occurs after 75, then income tax is payable, and please remember that tax rules can change.

SARAH COLES: So how would you name your beneficiaries?

HELEN MORRISSEY: So this shows the huge importance of keeping Expression of Wish forms up to date. Now these forms allow you to name who you would like to receive death benefits, and the administrators and trustees of the scheme will refer to them when dealing with your pension. Now if these aren’t kept updated, then there is a risk that your benefits could be paid out to an ex-partner, for instance, rather than your current one and this can cause huge financial pressures, so it’s vitally important that you revisit these forms following any key life events that you have, such as a marriage or a divorce, to make sure the right person benefits.

Now I must also mention that pensions are generally free of inheritance tax, but it depends on whether they’ve been set up under discretion or direction. So with discretion, you can tell the trustee or administrator who you would like to receive your benefits. Now they will bear this in mind, but are under no obligation to follow this instruction. Now in this case, benefit will be free of inheritance tax.

Now if the scheme is set up under direction, the trustee or the administrator has to follow your instructions. Now this means that the pension remains part of your estate and benefits could be liable for inheritance tax.

SARAH COLES: Thanks Helen. Really important there to highlight the importance of keeping those forms up to date. What other things do you think people need to keep in mind when looking to pass on money?

HELEN MORRISSEY: So there’s a few things that people really need to keep in mind. The first is to only give what you can afford, so giving gifts during your lifetime is a great way to cut your tax bill, but you do need to be confident that you’re giving away money that you’re not going to need later. It won’t help your family if you’ve given away so much that you need to ask for help later, and it could actually undermine family relationships.

The second thing I’d say is to consider insurance for any potentially exempt transfers. Now if you give larger gifts and you don’t live for at least another seven years, they can be brought back into your estate for inheritance tax purposes, so it’s worth considering a life insurance policy to cover your entire potential tax liability, including these gifts. Now this should be written in trust so it does fall outside of your estate, so there would be no IHT to pay on it.

SARAH COLES: Yeah, those are both incredibly important things to factor in, but is there anything else?

HELEN MORRISSEY: Yeah, there are a couple more, so it’s really important not to try and beat the system, and by this I mean things like trying to give away your home before you die but continuing to live in it, for instance, because it won’t be counted as having been given away at all, so you’ll have paid for all the legalities of swapping ownership without any benefit. Meanwhile, if you buy into a scheme that puts your home into a trust to avoid IHT, again there’s no guarantee that these schemes will work because the taxman may consider them to be tax avoidance, so you need to be careful.

Finally, consider the downsides of any solution that fits within the rules, so for example, if you release equity from your home, it could cut your IHT bill. However, you need to factor in the up-front costs and the ongoing interest, and if you don’t live for seven years, you could save far less than you expect, but if you live for much longer you could end up spending more on equity release than you would have done on IHT. Similarly, you might go down the route of investing in the Alternative Investment Market. This may help you cut your IHT bill, but they are smaller, newer companies and they are higher risk, and they should only be considered as a small part of a large and diverse portfolio, and only then if they suit your circumstances and your attitude to risk.

SUSANNAH STREETER: Thanks, Helen. Definitely some food for thought there, so let’s stay with investing and bring in Sophie Lund-Yates. So Sophie, before we get stuck into specific stocks, what are the main things people should consider when they’re thinking of investing for kids?

SOPHIE LUND-YATES: Hi Susannah, this is a great question because it’s really important to remember that investing for children does carry some different elements compared to investing for adults. Now the first and perhaps most obvious one is that investing for children gives you a much larger time horizon, and by that I mean there’s a lot longer before the money from that investment is needed, and this means there’s more time to grow the pot of money over time, and of course, always remember that as the stock market fluctuates, there’s a risk you can get back less than you invest, and because of that it’s important to remember the golden rule of investing, which is to remember to diversify – so making sure you don’t put all your eggs in the same basket and spread risk by not being overly invested in one type of asset, area or sector.

Susannah Streeter: Okay, good reminders there, but now you’ve been looking at a tech name haven’t you? Why’s that?

SOPHIE LUND-YATES: I have, indeed. So one of the things with having longer to invest is that you can take on a bit more risk because you have longer for ups and downs to even out, and with that in mind, I think Meta could be worth consideration. So Meta of course is the parent company behind Facebook, Messenger, Instagram, and WhatsApp, and because of that, a massive 3.1bn people use one of Meta’s apps every single day, and in turn, that means advertisers scramble to pay to promote their businesses or services with Meta, which creates tens of billions in revenue every single quarter. But while that core business carries on, Meta has some plans for exciting growth in the future, and this is where the added risk comes in. Plans for the so-called Metaverse, the virtual reality universe, are thin on detail and, along with other moon shots, are costing Meta a fortune. Now these ambitions have spooked investors in the past and this could happen again, but over the long term, the potential rewards are substantial. As I said though, this does carry more risk.

SARAH COLES: So that’s a really interesting one. So what about like a good, old-fashioned bank?

SOPHIE LUND-YATES: Yes, spoiler alert, my second stock this week is HSBC, and there are a couple of reasons for that. So banks’ fortunes have tended to track the wider economy, so when things have gone well so do they and vice versa. Now that’s an attractive position when you consider investing for children, where ups and downs have room to be smoothed. Now looking to the present, as most of our listeners will know, at the moment banks are doing well from higher interest rates because it improves the profitability margin between lending and borrowing. Now HSBC in particular has high exposure to the Chinese economy, which has long-term growth potential, in my opinion. Now in the shorter-term, the bank should benefit from the reopening of China’s economy more so than other banks, because of that exposure.

SUSANNAH STREETER: Anything else that stands out for HSBC at the moment?

SOPHIE LUND-YATES: Yeah, so I should also point out that the sale of HSBC’s Canadian business at the end of last year improved its so-called CET1 ratio, which is an important measure of a bank’s capitalisation, and an improvement here gives it more flexibility, including the ability to pay dividends. Dividends can be a very useful tool to help grow the worth of your investment over time when they’re reinvested, and HSBC’s current forward dividend yield, which looks at the next twelve months, is 9.1%, which is quite a bit higher than average. Please remember that no dividend is ever guaranteed and yields are variable and not a reliable indicator of future income.

And in terms of things to keep in mind, HSBC is more exposed to political risk in Hong Kong and China and there’s also the risk of Chinese borders being closed again, which would hurt performance. So while I think HSBC is an interesting option, these things shouldn’t be forgotten.

SARAH COLES: Finally, you’ve got a name which might surprise people when you talk about investing for children because it concerns alcohol, so tell me, why do you think Diageo is worth considering?

SOPHIE LUND-YATES: Well, it’s a big part of the focus I was talking about when it comes to diversification. Stocks like Diageo offer geographical diversification in one company, so the drinks company sells its famous products like Guinness, Smirnoff and Johnnie Walker, and a host of others, all over the world, and strong brand power is what sets Diageo apart. While food-sellers are more likely to see margins come under pressure as customers trade down to own-brand options, that same behaviour doesn’t impact our preferred booze in the same way. The way I’d phrase that, if we walked into a bar and a non-branded vodka was on display, we’d probably steer clear.

SUSANNAH STREETER: I suppose that depends on how much you like vodka, but how can strong brands add up over the longer term for a younger person’s investments?

SOPHIE LUND-YATES: You’ve got a point there, but very strong brands do feed into a more reliable dividend too, and in terms of specifically where Diageo has potential in a younger person’s account is the fact that it could be a robust compounding option. So-called compounders aren’t going to shoot the lights out with growth, usually because they’re mature companies, but they can offer steadier, less exciting returns which, when left alone to accumulate over a longer time period, see the benefits of compound growth, which has exponential properties. Of course, as ever, please remember no returns are guaranteed.

And the biggest risk where Diageo is concerned is its valuation. The market has high hopes for the group, with a price-to-earnings ratio of 20.3, and this adds pressure for Diageo to perform, and the other thing to keep in mind is the risk of smaller start-up brands muscling in on Diageo’s market share, which isn’t something I’m overly concerned about right now, but it is a dynamic to monitor.

SARAH COLES: Thanks, Sophie. There’s lots of interesting companies to watch in there. Of course at this stage I should add that investing in individual companies isn’t right for everyone. That’s because it’s higher risk, so your investment depends on the fate of that company. If that company fails, you risk losing your whole investment, and if you can’t afford to lose your investment, investing in a single company might not be right for you.

SUSANNAH STREETER: You should make sure you understand the companies you’re investing in and their specific risks. You should also make sure any shares you own are part of a diversified portfolio. Don’t look at ratios in isolation. It’s important to look at the bigger picture when evaluating a company’s prospects.

SARAH COLES: So let’s turn our attention to funds, and for that I spoke to Emma Wall, HL’s Head of Investment Analysis and Research, to give us the funds perspective.

(Music plays).

SARAH COLES: Emma, you’re starting with a Total Return Fund. Can you explain a bit about them?

EMMA WALL: That’s right, and hello, Sarah. Total Return Funds are more conservative than funds that invest fully in company shares, so they normally invest in a mix of investments including shares and bonds and commodities and currencies, and this could help provide modest growth for your investment portfolio over the long term, and help shelter your money when stock markets fall, but they are unlikely to keep up with stock markets when they rise quickly. Our pick in this space is the Troy Trojan Fund, which aims to grow investors’ money steadily over the long run, while limiting losses when markets fall, though there are no guarantees. It invests in a mix of investments, including shares, bonds, commodities and currency, and it also includes some of the world’s best-known companies with highly recognisable brands.

The fund has the flexibility to invest in higher-risk smaller companies, and while the fund contains a diverse range of investments, it is concentrated, which can be a higher-risk approach.

SARAH COLES: That’s great. So your second pick is slightly different, isn’t it? It’s an Emerging Markets Fund.

EMMA WALL: Yes, absolutely, and we think that’s good for long-term growth, like you’re trying to achieve, in a JISA wrapper. So there’s no place quite as diverse as the emerging markets, so from big Asian countries like China and India, to Brazil and Mexico in South America, these countries offer a lot of potential as part of a portfolio for investors looking for long-term growth opportunities. But it could take them time to fully develop, so the risks are greater and there can be high levels of volatility.

SARAH COLES: So what do you actually like in this space?

EMMA WALL: So our pick in this space is the iShares Emerging Markets Equity Index. It invests in a broad spread of companies based across emerging countries, including China, India, Brazil, South Africa, and Taiwan. As a tracker fund, it simply aims to track the performance of the broader emerging stock market, rather than trying to outperform it. We think this is a convenient way to invest in emerging markets and could be used as a way to diversify a long-term, global investment portfolio focused on growth, such as you might want to do in a JISA.

SARAH COLES: Now we know younger people are particularly interested in ethical investment. Can you explain a little bit about this?

EMMA WALL: Yes, and that’s why our third pick is a Responsible Investing Fund. So Responsible Investment Funds give you the chance to make money in a way that’s in line with your principles. So some avoid investing in certain areas that do harm, like tobacco producers and weapons manufacturers or even alcoholic drinks makers, and other Responsible Investment Funds invest in companies that have a positive effect on society, from those that treat their employees well to those that create clean energy through wind farms or solar panels.

SARAH COLES: Can you tell us about a fund that you like in this area?

EMMA WALL: Yes, so we like the Legal & General Future World Developed Index Fund. This is a fund that invests in broad developed stock markets while also being mindful of environmental, social and governance issues, otherwise known as ESG issues. It aims to track the performance of the Solactive L&G ESG Developed Markets Index, which means it won’t invest in tobacco companies, pure coal producers, makers of controversial weapons or persistent violators of the UN Global Compact Principles.

We think an Index Tracker Fund is one of the simplest ways to invest, and this could be a great addition to a broader investment portfolio aiming to deliver, once again, that long-term growth in a responsible way.

SARAH COLES: Thanks, Emma. There’s plenty of food for thought there. I should add that, like all investments, the value of funds will rise and fall in value so investors can get back less than they invest. Investing in these funds isn’t right for everyone. Investors should only invest if the fund’s objectives are aligned with their own, and there’s a specific need for the type of investment being made. Investors should understand the specific risks of a fund before they invest, and make sure any new investment forms part of a diversified portfolio.

In terms of emerging markets, the specific risks for these investments mean a longer term investment outlook is essential.

(Music plays).

SARAH COLES: So that was Emma Wall talking to me on the 17th of August 2023, and there’s loads for people to consider there.

SUSANNAH STREETER: You’re listening to Switch Your Money On from Hargreaves Lansdown. And unusually this time, before we go, I wanted to introduce my dad. We’ve been talking recently about his approach to supporting his family, and I wanted to share a bit of Jeff’s interview with you. It’s all about how he saved and invested for our family – me and my sisters and my mum of course – partly by taking an awful lot of camping trips when we were younger.

(Music plays).

(Recording plays): I’ve encouraged them to be aware of the value of money, that it doesn’t grow on trees, and very often, if you want money, you go out and earn it. We didn’t have sort of package holidays, so we used to go camping. We had the Trangia stove to cook on and I ran out of methylated spirits. I didn’t know what methylated spirits was in French, and I went to the shop to try and find out what it was, and we were doing all this miming, trying to mime what methylated spirits was in French.

SUSANNAH STREETER: So Sarah, I’ve specifically asked you not to listen to the whole of that video, so my question to you is: what do you think we were given at the campsite shop, after my dad tried to mime ‘methylated spirits’ to the French shop assistant? Was it:

A: a bottle of cognac

B: a gas stove or

C: a rubber ring?

SARAH COLES: Well, I’m gonna guess that it’s a bottle of cognac, because I do know you like heading down to that bit of France.

SUSANNAH STREETER: Actually, my favourite tipple is a bottle of red from the Medoc. Anyway, let’s listen to my dad for the answer.

(Recording plays): And they gave me a blow-up ring with a duck on the front. I’ve always been used to planning ahead and budgeting, and I hope I’ve passed that on to my family, secure in the knowledge that, if push comes to shove, there’s always a bit of money which I can help my family out with.

SUSANNAH STREETER: So kudos to my dad for not being afraid to mime for our dinner at a French campsite in the 1980s. I did plan ahead after that and got a combined Honours degree with French to save future embarrassment!

SARAH COLES: So that’s an extreme length to go to. So when it comes to passing on knowledge, and in the spirit of the entire podcast, what actually is ‘methylated spirits’ in French?

SUSANNAH STREETER: It is, in fact, ‘alcool à brûler’, whereas ‘rubber ring’ is ‘anneau en caoutchouc’. Not quite sure what happened there. I think it’s something to do with maybe the accent.

SARAH COLES: Well, thank goodness we’ve got Google Translate now.

SUSANNAH STREETER: Thank goodness. Well, that’s all from us for now, but before we go, we do need to remind you that this was recorded on August the 21st 2023, and all information was correct at the time of recording.

SARAH COLES: Nothing in this podcast is personal advice. You should seek advice if you’re not sure what’s right for you. Unlike the security offered by cash, investments, and any income they produce will rise and fall in value, so you could get back less than you invest.

SUSANNAH STREETER: Yes, this is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment.

(Music plays).

SARAH COLES: And this hasn’t been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication.

SUSANNAH STREETER: Non-independent research is not subject to FCA rules prohibiting dealing ahead of research. However, HL has put controls in place, including dealing restrictions, physical and information barriers, to manage potential conflicts of interest presented by such dealing.

SARAH COLES: You can see our full non-independent research disclosure on our website for more information. So all that’s left is for me to thank our guests, Didi, Helen, Sophie, Emma, Jeff of course, and our producer, Elizabeth Hotson.

SUSANNAH STREETER – Thank you so much for listening. We’ll be back again soon. Goodbye!