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Where should we invest to beat inflation?

My wife and I hold stable, full-time, well-paid positions, and we have two children. We’re interested in increasing our investments in the stock market, but the current market conditions are a bit overwhelming. In the face of persistent high inflation, what types of stocks should we consider for our investment strategy?

Dan Squires, head of sales at broker Saxo UK, says there are ways to invest in the stock market without leaving yourself too exposed. There are interesting investments that look and feel like stocks but give much more diversification, such as low-cost thematic exchange traded funds (ETFs), which typically have much lower fees than funds and can be bought and sold just like an equity.

Examples of ETFs that have performed well recently include semiconductors ETFs, such as the five-star rated VanEck Semiconductor, which has returned 105 per cent over the past three years, uranium ETFs that focus on investing in new nuclear development, such as Global X Uranium, or those investing in Japan, such as iShares MSCI Japan GBP Hedged.

Berkshire Hathaway shares have been performing very well, as has Pershing Square Holdings, which is the UK-listed vehicle of top hedge fund manager, Bill Ackman.

Headshot of Dan Squires, head of sales at Saxo UK
Dan Squires, head of sales at Saxo UK © Handout

The alternative would be to buy classic inflation hedges, which typically means real assets such as commodities, property and bonds. Many UK property stocks combine growth and high dividends. Specialist student accommodation is an interesting area, given that student numbers have grown far faster than the availability of rental property. You could have a look at Empiric Student Property, which has returned around 25 per cent over the past three years and pays a 3.5 per cent yield.

The classic inflation hedge is gold, but with the UN COP28 climate summit signalling huge investment in new nuclear, we feel uranium is an interesting alternative. UK-listed Yellow Cake simply buys and stockpiles the metal, giving you a “pure play” but in the form of an equity and it has done very well. 

Continuing the real asset theme, a favourite long-term investment of mine is Greencoat UK Wind, which owns wind turbines all over the UK, receives semi-guaranteed income from the grid, and pays out most of its earnings as highly reliable dividends.

We believe everyone should invest in what they know so perhaps it’s time to ask yourself what real-life insights you have that could lead to a good investment. In today’s environment, I have noticed the trend for rating and ranking everything, so have bought Trustpilot in my self-invested personal pension (Sipp). Diversification is really the only free lunch in investing.

My estranged partner won’t pay his share of the rent

My partner broke up with me, moved out of our London flat, and refuses to pay his share of the rent. We weren’t married and I can’t afford to cover both. Am I trapped by the rental contract or do I have options?

Lisa​​​​ Payne, associate at Wilsons solicitors, says that as you are not married, you are classed as cohabitants. Our current legal system does not provide you with the same protection as it does for married couples. Hopefully, reform is on the way, but much will depend on the next general election and family lawyers continuing their campaign to ensure that cohabitants have similar protection to married couples. 

Headshot of Lisa​​​​ Payne, associate at Wilsons solicitors
Lisa​​​​ Payne, associate at Wilsons solicitors

Until then, I would suggest you refer to the terms of the current tenancy agreement with your landlord. I assume that your tenancy agreement is an assured shorthold tenancy. If it is in joint names, you are both liable for the rent despite one of you leaving the property. 

The landlord can choose to pursue either one, or both, of you for any unpaid rent, but you would have a claim for any of the 50 per cent share of the rent that your partner did not pay. However, if you are the only named tenant, you are solely responsible for the rent and so your ex-partner can leave the property without any liability. 

If you get on well with the landlord there may be the option to review the monthly rent, or they may be willing to agree a payment holiday or sign up another joint tenant. 

If there is no chance of reconciliation with your partner, you may need to bring the tenancy to an end under the terms, so you can find a smaller, more affordable property. You should review the tenancy agreement and check how long is left of the initial fixed term — or whether the fixed term has ended and the tenancy is continuing on a periodic basis (in line with the frequency with which the rent is paid). 

The tenancy agreement should also set out the notice period you must provide to the landlord to end the tenancy. You can usually leave at the end of the fixed term without giving notice, or alternatively you can give a month’s notice if the fixed term has expired.

Our next question

I’ve recently sold some properties in my buy-to-let portfolio as it has become too time-intensive and, given the increasingly onerous tax regulations and the unachievable rent increases I had to make to cover mortgage payments, it felt no longer a viable investment. I now have about £500,000 to invest which I’d prefer to keep in property-related investments rather than equities. What alternative options are out there where I can hold a diverse portfolio that will generate decent returns and won’t take up too much of my time?

You should, however, check the agreement to see whether it provides for a longer notice period and to establish how notice should be given. For instance, to whom and where does notice need to be sent? Can it be sent by email, or does it have to be sent by post?

If the terms are not variable and you do not want to serve notice to leave and end the tenancy, because this may be a very suitable property for you, you have other options. Assuming your ex-partner is a joint tenant, you could approach him to try to resolve the interim period (reminding him of his legal obligations under the tenancy). 

You haven’t mentioned if you have a cohabitation agreement with your ex-partner, but if so, this is exactly the situation that such an agreement would deal with. I often advise cohabitants to enter into a cohabitant agreement for this very reason.

The opinions in this column are intended for general information purposes only and should not be used as a substitute for professional advice. The Financial Times Ltd and the authors are not responsible for any direct or indirect result arising from any reliance placed on replies, including any loss, and exclude liability to the full extent.

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