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We are almost there. Christmas is around the corner and my thoughts are already turning towards how the Christmas Turkey will impact on my 2025, – but perhaps I shouldn’t be so disparaging of President Trump and his global tariffs as he has the potential to make 2025 a very good one for investors.
Away from my thoughts about the markets for a moment, I have been starting to prepare for Christmas and I often think about what this means to us in the modern world. The run up to Christmas is usually filled with shopping —searching shops, or Amazon, to find the right gift for the right person. It can all feel like a frenzy of consumerism, and the church can sometimes denounce the emphasis on buying stuff. Yet perhaps a better way of looking at it is that Christmas is a time when we do something that perhaps at other times of the year we forget to do – to give.
When I talk about giving at Christmas, I do not just mean to our family and friends, but through charitable giving to those who need our help. Giving should bring you joy, even if the purse strings are a bit tight right now. It is sad to see that in the UK gifting has declined over the past decade and we recently dropped out of the top 20 nations when it comes to giving money, time or helping strangers. Less than 30 per cent of us give regularly out of our income.
It was interesting to read that the fourth century bishop, St Augustine of Hippo, believed: “If we believe that God has given us everything, then giving will be our way of living.” When we give, we do something ethically very significant — as giving gifts sustains our communal life together. It keeps things in circulation, as they were meant to be. Unfortunately, one could argue that taxation does that in a more systematic way, but gift giving is voluntary, makes us feel good, and creates a relationship between the giver and the recipient. Giving is good for society. It is good for the needy. It is good for the wealthy.
One of the early church fathers, St Basil of Caesarea, preached fiery sermons to his congregations, pinpointing the hoarding of wealth as one of the greatest sins. For him, wealth hoarded turns bad on us, like food stored beyond its use-by date. Holding on to too much wealth is harmful he would preach. “Wealth left idle is of no use to anyone,” he writes, “but put to use and exchanged, it becomes fruitful and beneficial for everyone.”
Following on from his views, you could argue that wealth is meant to be circulated, used — not just to gain more wealth, but to benefit others. In our industry this can be by investment in companies that do the most good whilst looking for a capital return. Whilst Environmental, Social and Governance focussed investing (ESG) has struggled a little in recent years, it does give investors the opportunity to invest for society’s benefit as well as theirs, to help the environment and to look for stronger, fairer and more diverse governance within businesses.
St Basil imagined the generous wealthy giver as a large river that spreads out into tributaries and irrigates the fields, bringing life and health to many. In other words, giving is good for society. He would argue that however much we own, much or little, giving away some of it is good for us. At the heart of the Christian idea of Christmas is the greatest gift of all — where God gave himself to mankind as a crying baby in an obscure town on the edge of the Roman empire. As a result, the Christian celebration of Christmas has always involved the giving of gifts.
Gifting is also important for intergenerational planning, with gifting to family, friends and charity a key part of managing Inheritance Tax (IHT). The value of gifts over £1m made to charity in wills has increased by 33% to £1.1bn from £850m in the last year. It is important to remember that Gifts to UK charities are exempt from IHT and also increase your basic rate income tax band, reducing how much higher rate income tax you pay – rather like a personal pension contribution.
In addition, people who leave more than 10% of their total value of their estates to charity benefit from a lower IHT rate of 36% applied to the remainder of their estates, compared to the standard 40% tax charge. Of course, there is the added benefit here of making donations for philanthropic reasons, as individuals look to make contributions to causes that are dear to them.
Returning then to the day job, it is good to reflect on what has been a very good year for investors, especially those with a strong risk appetite. Global equity markets have pushed on, with a strong lean towards Artificial Intelligence development and spend and central banks have started to cut interest rates. Inflation remains in the background, as do geopolitical risks and government fiscal policy has been a strain. Having said all of this, we are genuinely excited about the opportunities in front of us and as we look forward to a Christmas break with our families, I must thank you for your ongoing trust and support.
This will be my last message for a little while as we take a break, and I will next be in contact on Friday 10th January as we prepare for the new(ish) US President and see what treats he has in store for us. Until then, have a wonderful Christmas, and I trust that 2025 will indeed be a happy and prosperous new year.
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