68 Saturday December 4 2021 | the times
Money
£50 contactless limit is
enough, customers say
O
nly 14 per cent of Lloyds Bank
customers have chosen to set
their contactless limit above £50
in another sign that the Treasury’s new
£100 limit is not particularly welcome.
The most popular choice among
those who opted to set their own limit
between £30 and £95 was £50, picked by
25 per cent of customers; 20 per cent set
it at £30, the tap-and-pay limit before
April 2020, and about 15 per cent stuck
with £45, the limit that was in place
until October 17.
Santander has given customers the
option of setting limits between £5 and
£95. Customers must have a Master-
card credit or debit card from the bank
and can set their limit via mobile or
online banking.
Rishi Sunak, the chancellor, said a
higher limit would encourage consum-
er spending after the lockdowns. It was
also seen as a symbolic break from the
EU, which limits contactless payments
to about €50. Yet critics say the lower
limit protected customers from fraud
and that it shouldn’t be possible to
spend large amounts without some
kind of extra verification.
Meanwhile, 50,000 customers of the
digital bank Starling have set their ownSpectacular tech is not
what we need right now
T
he Invesco EQQQ Nasdaq
100 ETF tracks the tech-
heavy Nasdaq index and
holds Amazon and Tesla.
It’s up 766.9 per cent over
ten years versus a gain of 274.3 per
cent from the L&G International
Index trust, a global market tracker.
And with these spectacular returns,
why would you invest in anythingelse? Well, you should consider
alternatives because now is not the
time for spectacular. Growth stocks,
which tend to favour young
companies that are poised to expand
and increase profitability (think
Tesla), have been driving global
markets for a decade, but their time in
the sun may be about to end.
What you want now are mature,sensible businesses with steady but
not enormous growth rates that pay
dividends. And this means value
stocks, where you are buying into
a company at a lower price in the
hope that it will go up.
The reason you want to move from
spectacular to steady is inflation.
At present valuations, fast-growing
names are very expensive: Tesla costs
$1,151 a share. And if interest rates
rise, Tesla’s shares may well fall
because its earnings will be reduced
by the rising prices of raw materials.
Value stocks tend to be far sturdier
in this tough economic environment.
They are generally profitable now
(and have real earnings) while growth
companies are usually counting on
profits in the future, which can be
dramatically reduced by inflation.
Granted, value stocks have
performed terribly for a decade or
more, but it has been a different story
in the past year.
Consider funds such as Schroder
Global Recovery, which has
increased 23 per cent in the past
12 months after losing 9 per cent the
year before, and Ninety One Global
Special Situations, which made
16 per cent last year having lost
14 per cent the year before. The
shares in the companies that they
hold, which include carmakers,
miners and airlines. might even rise
in value as their growth company
counterparts fall.
Growth fund managers would
probably tell you that most of those
value industries are doomed: oil firms
will drown as renewable energy
sources become cheaper and more
prevalent, and bricks and mortar
retail will die of ecommerce-itis.
But I’m not sure. Oil companies
still have a good few years of profits
ahead of them while the world
transitions to renewables, and banks
may become more profitable if
interest rates go up.
Despite this, it looks as if investors
are still set in their growth ways. The
most-bought stocks on Hargreaves
Lansdown’s platform last week were
all growth: Rivian, the heavily loss-
making electric-car maker, and its
US peers Tesla and Lucid. Scottish
Mortgage Investment Trust, another
growth fund, remains popular, as does
the US tech company Nvidia.
The data firm Morningstar said
growth funds continue to curryfavour. Funds buying technology
stocks have had an estimated
£171 million poured into them since
April. Similarly, Fundsmith Equity,
a large fund investing in growth
shares such as Meta (the owner of
Facebook) and Microsoft, has had
£809 million of investment since May.
If you can’t bear to give up the
growth spurt, pick those companies
that are making profits and may
even pay dividends. Funds such as
Rathbone Global Opportunities,
which holds Amazon and the
software giant Adobe, and TB
Evenlode Global Equity, which holds
Mastercard and Alphabet (the owner
of Google) could be good bets.
If you’re not too bothered about
inflation and don’t like tinkering with
your investments that much, it is
reasonable to stay put, as long as you
are aware that your portfolio may
take a short-term hit as the effect of
rising prices and cost of living hits
home.
For everyone else, switching some
of your money into value stocks is
a good way to shield your cash from
the worst that inflation can bring.
But don’t leave it there too long,
because once inflation retreats, value
may not be where you want to be
long-term.Tech v global shares
Source: FE fundinfoPerformance %2017 18 19 20 21020406080100120140160180200220240Invesco EQQQ Nasdaq
100 UCITS ETF
L&G International
Index Trust%David
Brenchley
Get rich slowlyowly
limit with the most popular choice
being £50.
A poll of more than 2,000 readers of
The Times and The Sunday Times found
that 45 per cent wanted a contactless
limit of £50 or less, and a poll by bank-
ing trade body UK Finance this year
suggested that 20 per cent of people felt
that the existing £45 limit was too low,
while 62 per cent said it was about right.
“There is no significant demand fromconsumers — including contactless
users and non-users of contactless — to
increase the single-value limit above
£45,” UK Finance concluded.
Santander said: “Enabling customers
to set their own contactless limit gives
them more control when it comes to
managing their payments and enables
them to use the higher contactless
limit if they want, in a way that works
best for them.”
George Nixon20%
of Lloyds customers
chose a limit of £30