It’s back – Get up to 80,000 Avios points when you open an ISA or SIPP via Nutmeg

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• RK says:

  13 Mar13 March 10:57

  As StewartR has said there are other investments out there that generate a greater return 8-10% and preserve your capital

  With the return you can buy Avios or anything else and reinvest your capital

  I generate minimum 8% per annum

  • StewartR says:

    13 Mar13 March 11:15

    People need to think about what is happening here.

    You invest with Nutmeg and
    A) If you buy ETF or Investment Trusts or actual stocks and shares – Nutmeg charge you a dealing fee i.e. Nutmeg makes money.
    B) You pay an annual Fund Management Fee to NutMeg i.e. Nutmeg makes money.

    Nutmeg makes money if you put money into their service whether you make a positive, neutral or negative return. Doesn’t matter to them, they don’t care – they’ve made their money. The airmiles they give us back are small change/marketing expense.

    It ONLY makes sense to put your capital at risk if the following conditions are met:
    1. You beat the rate of inflation.
    2. You grow your capital greater than the cost of the miles you BOUGHT (you aren’t getting them for free) assuming 0.7p/mile
    3. You don’t take on excessive risk to achieve #1 and #2.

    That is only to break even on the cost of the airmiles!!!!

    A market down turn going to come (not if but when). History tells us it will be minus 20-30% when it does appear. I wouldn’t put my money with anyone unless I was getting at least 5-10%.

    8-10% is what you should be getting and certainly should have been achievable in 2017. S&P 500 returned ~18.5% last year.

    Return is everything in investing. 10% is not twice as good as 5% its many many many times better.

    If those returns above are normal/expected … then this is a bad investment. The airmiles certainly do not cover the lost capital.

    #rantover 🙂

    • Genghis says:

      13 Mar13 March 11:21

      Nice post 🙂

    • Nick says:

      18 Mar18 March 00:31

      Great, thanks, totally agree. But do you have any hints/pointers for where to start/look for those of us who aren’t (yet) as privileged as you?

  • Mr(s) Entitled says:

    13 Mar13 March 11:35

    You are half right

    + StewartR has brought a welcome perspective to the comment section in his post above and below.

    – You cannot get 8-10% and preserve capital. It is always at risk. The debate is the amount of risk based on your assumptions and the probablity thereof but not the existence of risk.

    • Mr(s) Entitled says:

      13 Mar13 March 11:37

      This was meant to be in reply to RK’s comment.

      • RK says:

        13 Mar13 March 19:14

        Capital can be preserved in different types of investments, granted stock and shares cannot be guaranteed

        But as a wider portfolio of investments. There are investments out there which preseve capital and generate a 8-12% return

      • Mr(s) Entitled says:

        14 Mar14 March 13:04

        Stocks and shares are the same thing.

        You understand that even cash at the bank is at risk right? Even the bit insured by the Gov is at risk, albeit small.

    • StewartR says:

      13 Mar13 March 11:53

      Very fair comment … i should not have used the term “preserve capital” – bad choice of words on my part. I appreciate preserve capital means something quite different in context of investing.

      What I was trying to make clear to people is that the miles are not free. i.e. you are not parking your $$$ with Nutmeg for a period of time and getting a free hand out of miles. You are in fact buying the airmiles from Nutmeg and taking on a risk (a large risk IMO giving the apparent returns and current stage of the market cycle) that you might not make enough money back to cover the cost of the miles + the erosion of capital caused by inflation. It is very possible at the end you’ll be up a few airmiles and down in Net Worth.

      Investing only makes sense if you’re getting sufficient reward for the risk you are taking. Miles in this case (IMO) doesn’t look like sufficient reward when the rates of return described above.

      For sake of argument … 🙂

      Full ISA allowance = £20k. You would get 20,000 miles for that back. @ 0.7p/mile they would be worth £140. Let’s assume inflation = 3% = £600 out of the original £20k. Roughly speaking that means you need make a return with NutMeg of at least £740 or 3.7% just to break even. And that prices in zero risk. You are taking a risk here … and you do need to be paid for putting your capital at risk. I would want 5% MINIMUM for putting my capital at risk given the current age of the bear market (volatility is up … projections are suggesting 2018 are going to be mid to high single digit returns for the market). 5% + 3.7% = 8.7%. If i wasn’t getting that … I wouldn’t put my 20k with NutMeg.

      Need to make people aware that this isn’t your typical mile chasing post. There is more going on here.

      • Mr(s) Entitled says:

        13 Mar13 March 12:15

        In short: Anyone thinking about making an investment decision based upon the availability of Avios should think again.

        While collecting points can be a fun pastime, dont bring your SIPP into it. It’s far too an important a decision.

      • AndyW says:

        13 Mar13 March 13:02

        Agreed, the old Virgin ISA deal was in comparison a much better punt. £100 a month, so averaging in, you were far more unlikely to take a large hit to capital.

        If you were going to invest with Nutmeg anyway, great, but investing 80k for £800 of airmiles doesn’t seem sensible to me, especially since Nutmeg portfolios tend to be quite UK focused, and given Brexit uncertainty UK markets have been having a fairly torrid time (in comparison to most of the developed world).

      • Stevie G says:

        13 Mar13 March 18:54

        Some great posts StewartR. Thankyou

• Nigel Williams says:

  13 Mar13 March 11:44

  So unless you have a chunk of capital to throw in to make the reward worthwhile, it is better going for the Virgin ISA as a newcomer (Even more so if Nutmeg does not allow transfers in).

  • LuckyJim says:

    13 Mar13 March 12:04

    The Avios return is negligible relative to the risk and lost opportunity of investing in a better fund. It really should not be a factor in your decision.

    The Virgin offer is a much better deal – 8000 miles for a £900 investment only tied up for 12 months. You are very unlikely to lose money on that.

    • StewartR says:

      13 Mar13 March 12:13

      Agree 110%.

      • Sussex bantam says:

        13 Mar13 March 12:33

        I always feel very uncomfortable when HfP promotes this offer. This isn’t buying printer ink or Lego – an investment strategy is vital for us all and I’m not sure avios should feature in that strategy. I wish HfP would point that out more strongly

        StewartR makes strong well rounded points in his post. I would add that using your ISA in this way also has the opportunity cost of using up your ISA allowance for the year. For many people the ability to invest 20k tax free is the cornerstone of their investment strategy and shouldn’t be given away for a few avios

    • Mr(s) Entitled says:

      13 Mar13 March 12:25

      It’s a sad indictment upon the level of financial understanding in this country that Rob can link to a hotel aggregator that offers Avios and people are up in arms because they may or may not be the cheapest way to access hotels.

      Link to Nutmeg and it doesnt attract the same scrutiny.

      If you are devoting more time to researching hotels and investments your priorities are skewed and your hotel savings are being eaten alive by your investment fees and/or performance (or lack thereof).

• Sundar says:

  13 Mar13 March 18:35

  There is no right or wrong approach.
  Personally, in the past I have benefited from Virgin ISAs in the past converting those to Spire Elite bonus points 🙂 Some folks over here are well aware of the route.
  Past couple of years, I havent gone down the route of miles for ISA, instead focussing on valuing growth of portfolio.
  Fees( Loads of proof/research supporting this) are always a deterrent to Portfolio growth (and thereby returns), but factor it in your investment decisions and you can ( Note : Can not Will) come ahead.
  Any bonus (miles, magazines etc) should be considered as the cherry on the cake and not taken into the equation ( as then your valuations get skewed as that becomes a variable influencing your decision-making).

• CV3V says:

  13 Mar13 March 22:13

  Just to add, read closely what StewartR has posted, take the time to research your investment. All you need to do is Google ‘best performing funds over 10 years’, compare that with the returns offered by Nutmeg.

  I am 4 months into investing in a stocks and shares ISA, my portfolio is up 8%, the best performing fund is up 16% on average (monthly contributions lower the overall average growth, the first investment is up 20%) while the poor performers are up about 2%, 4 months in and one stock market ‘crash’ which is now long forgotten. But the aim of this isn’t short term gain, its long term compounded growth and saving towards a retirement pot.

  • Peter says:

    13 Mar13 March 22:33

    Great post – and thanks to everyone for considering this so carefully and for such great advice/opinions

  • Rob says:

    14 Mar14 March 08:41

    Past performance is no guide to future performance. In fact, I expect negative correlation because bond funds will have seen huge gains over 10 years but as soon as interest rates rise bond prices will automatically fall so that the yields keep in track.

  • CV3V says:

    14 Mar14 March 09:47

    My point, similar to other comments, is that people should do a like for like comparison between self-investing (on a platform such as Cavendish) and using Nutmeg. Measuring the return versus a high interest savings account may not be a good measure given your cash is at risk and other ISA funds are doing much better in the current bear market. My own experience is based on funds in various sectors and not bonds. Everyone is expecting a fall in the markets, and how will a Nutmeg ISA perform in such an event where previously in a bull market it was returning just 2 – 4%. Also, as others have said, a lot us of spend more time researching hotel rooms and not investments where our cash is at risk.

• luckyjim says:

  18 Mar18 March 21:06

  I thought there was a problem with my browser when I saw this article pinned to top of the page. It seems this is being actively promoted regardless of the fact it is an awful deal and readers could end up losing thousands for the sake of a few Avios.

  It should at least be made clear that this is, in effect, an advertisment and not a regular HfP article.

  Very dissapointing.

This article is closed to new posts. Discussion continues in the HfP Forums.