Written by Karen Bryan
I thought that the recent BBC article on investing for beginners did not give a balanced view on how to make your savings work harder. It compared putting your money in a savings account paying 0.5% per annum to investing in the stock market at 7% per annum return.
Despite interest rates on savings falling, there are still accounts paying a lot more than 0.5%, e.g. the Coventry Building Society is paying 3.1% on their 60 Day Notice Cash ISA. Plus your savings are guaranteed under the Financial Services Compensation Scheme and there are no fees.
I certainly haven’t seen annual growth of 7% on my stakeholder pension, which is invested in the stock market, over the last 13 years, or in any unit trust we purchased. The Telegraph reported that annual pension returns are luckly to hit 5%. In my opinion, the BBC article should have used the new mid range FSA growth projection of 5% which comes into effect in April next year, when it discussed ten year stock market investments.
This BBC article read more like an advertorial by an investment company, emphasising that investing is for everyone, with the blurb, “the world of investments can seem complicated and beyond our reach, with some people mistakenly believing only the rich can afford to dabble in the stock market, but that simply is not true. Anyone can invest and for as little as £50 per month.”
I thought that there should be an additional line in that sales piece, warning that investors have to be willing to take the risk of losing money for the potential of a higher return.
I was curious as to why the author has chosen such a low figure for the savings account interest and such a high return on the stock market investment. I referred back to the article and discovered that the piece was written by Darius McDermott, the managing director of Chelsea Financial. My initial suspicions were confirmed, the article was an advertorial for stock market investments.
This article had a prominent listing down in the Features and Analysis column on the right hand side of the BBC News Your Money page more than 2 weeks after initial publication. It’s a scandal that the BBC is giving this firm free advertising. I’m furious that my TV licence fee is being used to publish a biased article like this.
I’ve contacted the BBC to complain about their article.