02 May 2025
Investment: What do you know about investment and personal finance?
This month let’s try a quick quiz on investments and personal finance.
Have a go – without Google 😉 – to test yourself!
QUESTIONS
1.What was the annual inflation rate including owner-occupier’s housing costs (CPIH) for the UK as of the end of February 2025?
a) 8%
b) 7%
c) 7%
d) 2%
2. Can you name 2 investment account types that a parent can set up for their minor child without themselves ending up liable for income tax on any interest or income earned above £100?
3. What was Bank of England base rate of interest as of the end of February 2025?
a) 5%
b) 5%
c) 0%
d) 5%
4. What percentage of American Large Cap funds that are actively managed, underperformed the index they used as their benchmark (so their performance was worse than their benchmark) over a period of 10 years (rounded to nearest whole percent)? (as of March 2025).
a) 90%
b) 60%
c) 40%
d) 10%
5. How much is the maximum total contribution that can be made to your pensions in the 2025-26 tax year while benefiting from tax relief (and not facing any tax charge on the contribution).
a) Up to £3,600 if no pensionable income
b) Your total pensionable income in the year.
c) £60,000
d) £220,000
e) £10,000
f) Each of the above – depending on your specific circumstances.
6. What are two potential disadvantages for investors of passive or ‘index-tracker’ funds?
7. Approximately how long does it take for an investment growing at 7% per year to double in value? Which of the following is NOT correct:
a) 100% growth ÷ 7% = 14.3 years
b) 72 / 7% = 10.3 years
c) Nominal doubling doesn’t accurately reflect real spending power of the investment (e.g. after inflation is factored in)
d) Unlikely for an investment to grow in a linear fashion at exactly 7% per year – even if this is a possible average experienced over the longer-term
8. Which of the following is NOT a potential disadvantage of direct investment in property
a) Liquidity risk – difficulty getting your money out
b) Geographic risk – specific to the area where property located
c) Operational risk – management, maintenance and repair costs
d) Market risk – substantial loss of investment value
e) None of the above – these are all risks of property investment
9. Which of the following is NOT included in your estate on death (ignoring for a moment the possibility of transfer to surviving spouse):
a) Home, possessions, jewellery
b) Investments, bank accounts
c) Pensions from April 2027
d) Life Insurance in your personal name
e) Life Insurance written in trust
f) Gifts made out of regular income or lump-sum gifts to others made more than 7 years before your death*
*Yes, there are some important details here around who the gift is made to, what other gifts have been made in the preceding 7, and 14 years.
10. What is the likelihood of a healthy, non-smoker 30 year old woman experiencing a critical illness before her intended retirement age of 65, that may prevent her from working or being able to fully care for herself or others? (Clue: check the stats from our January newsletter)?
a) 3%
b) 13%
c) 37%
d) 53%
How did you find this? Was anything a surprise, or did it make you think differently about something in personal finance?
ANSWERS
For more information on each question see below links – please note that opinions expressed in these links are those of the various authors and do not necessarily represent the views of Hoe Bridge Wealth. In some cases the correct answer will require detailed consideration of your personal circumstances. None of this quiz should be taken as advice on your particular circumstances.
- UK CPIH to February 2025 https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/consumerpriceinflation/february2025
- Child Savings and investments that don’t end up on the parent’s tax return – include Junior ISA, and Junior Pension, as well as savings accounts with limited total funds.
https://www.money.co.uk/savings-accounts/what-is-the-best-way-to-save-for-your-child - Bank of England base rate
https://www.bankofengland.co.uk/monetary-policy-summary-and-minutes/2025/february-2025 - US Large Cap actively managed funds performance vs benchmark
https://www.spglobal.com/spdji/en/research-insights/spiva/#us - Maximum personal pension contribution each tax year without facing a tax charge
https://adviser.royallondon.com/technical-central/pensions/contributions-and-tax-relief/member-contributions-tax-relief-and-annual-allowance/
and also:
https://adviser.royallondon.com/technical-central/frequently-asked-questions/contributions-and-annual-allowance/ - Re-thinking Index Funds and hidden costs
https://www.dimensional.com/gb-en/insights/its-time-to-rethink-index-funds-they-could-be-more-active-than-investors-think - Investment doubling time
https://www.investopedia.com/ask/answers/what-is-the-rule-72/ - Property investment risks
https://www.landgate.com/news/types-of-real-estate-investment-risks - Putting life insurance in trust
https://www.legalandgeneral.com/insurance/life-insurance/guides/life-insurance-trusts/ - Critical Illness Cover
https://www.royallondon.com/insurance/illness-income-protection/critical-illness-cover/
If you want to discuss any of this more click here to get in touch
https://calendly.com/duncan-bw-hoebridgewealth/30min
NOTE: The value of your investment can go down as well as up. None of the above is financial or investment advice and you should speak to me or someone else professionally qualified to give you advice specifically tailored to your circumstances.
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