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Mind over money: How to overcome savings procrastination
2 min read
Intermediate
Money Mindset & Lifestyle

We all know that saving is important, yet for many, actually doing it can feel like an uphill battle. Why is it so hard to set aside money, even when we know it’s in our best interest?

To get to the bottom of this oft-experienced conundrum, let’s explore the psychological reasons behind savings procrastination and look at evidence-backed ways to conquer it.

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Present bias: The now vs. later dilemma

At the root of savings procrastination lies a cognitive quirk known as present bias, which causes us to prioritise immediate rewards over long-term gains, even when the latter are objectively better.

This is why many of us would rather have £100 today than £120 in a year, despite the fact that waiting would yield more value. Present bias tricks our brain into opting for immediate spending, undermining our ability to save for future goals.

A classic illustration of present bias is the famous Stanford marshmallow test. Conducted in the 1970s by psychologist Walter Mischel, the experiment offered children a choice: eat one marshmallow now, or wait 15 minutes and receive two marshmallows instead.

The test revealed a lot about self-control and delayed gratification. Some children managed to wait for the second marshmallow, while others quickly gave in to the temptation.

Interestingly, follow-up studies found that the children who were able to wait for the second marshmallow tended to achieve better life outcomes, including higher academic achievement and greater financial success.

This experiment encapsulates how present bias works in real life. When faced with the choice of spending or saving, some of us act like the children who opted for immediate gratification, preferring money now, even though we know we could benefit more by saving for the future.

Understanding this bias can help us recognise why we struggle with saving and give us the insight we need to build better financial habits.

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Loss aversion

It is natural for us to experience what’s known as loss aversion, where the pain of losing money feels stronger than the pleasure of gaining it. When we save, it may feel like we’re sacrificing our current spending power, even though we’re setting ourselves up for future financial security.

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Choice overload

With so many savings options out there—ISAs, pensions, investments—it’s easy to become overwhelmed and opt, instead, for doing nothing at all. Choice overload can create decision paralysis, stopping us from taking any meaningful action toward saving.

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Optimism bias

Another common mental block is optimism bias. This is where we overestimate how well things are liable to go in the future.

We might assume that, as soon as we get that promised raise, it’ll be the perfect time to start saving, or to think that a future version of yourself will be better placed to handle difficult financial decisions, which can lead to continuous delays.

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Evidence-based strategies to combat saving apathy

Understanding the psychology behind why we put off saving is only half the battle. To make the most of your money, it’s key to apply practical strategies that will break through these barriers.

1. Embrace automation

One of the most effective ways to beat procrastination is to remove the element of choice altogether. Set up automatic transfers to move a portion of your income to a savings account on payday.

2. Visualise your future self

Research shows that vividly imagining your future self can help counteract present bias. By creating a mental connection with your future self, you’re more likely to make decisions that benefit you in the long run.

3. Start small

Large, long-term financial goals can feel overwhelming. To combat this, use the goal-gradient hypothesis, which shows that people are more motivated when they see progress toward their goal. Start with small, achievable savings targets to build momentum.

4. Use mental accounting

Take advantage of mental accounting, a tendency to mentally separate funds for specific purposes. By creating separate savings accounts or "pots" for different goals, you reduce the likelihood of dipping into your savings.

5. Make saving tangible

Using visual feedback can make the abstract concept of saving feel more real. Tracking your savings progress visually can provide immediate rewards and encourage consistent contributions.

7. Simplify your choices

If you’re overwhelmed by myriad savings options, streamline your choices to reduce cognitive overload. Start with just one or two savings accounts or products to get the ball rolling. You can diversify later as your savings grow.

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Building a path to financial wellness

The key to overcoming savings procrastination is to focus on progress, not perfection.

Each small step you take toward saving, no matter how small, is a win. Celebrate your achievements along the way and be patient with yourself as you form new habits.

By understanding the psychological forces behind procrastination and using these strategies, you’re not just building better savings habits, you’re changing your relationship with money.

This shift in mindset can make a world of difference in your financial future.

Chip on the BBC: A shout-out for our Prize Savings Account
2 min read
Accounts & Products

You may have seen Chip’s Prize Savings Account featured on BBC Morning Live and how it stacked up against some big names in Prize Draw Accounts. For those of you who don’t know, it’s our easy-access account with a free monthly prize draw, you can get started with £100 which will earn you 10 entries.

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Your savings could earn you tax-free cash prizes every single month. It’s a fun way to grow your money while having the chance to win up to £50,000!

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How Does It Work?

  • Save money — Every £10 in your account = 1 prize draw entry (minimum average balance of £100 required)
  • Automatic entry —  The more you save, the better your chances‍
  • Win tax-free cash — No tax, no fees, just free money!

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What Can You Win?

  • A share of £75,000 in prizes
  • £10,000 grand prize every month
  • +6,500  winners of £10 every month

Please note prize pools can change.

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Why It’s a Game-Changer

  • Tax-free winnings — Keep 100% of your prize money
  • No fees — It’s free to enter and we don’t take any fees‍
  • Instant access — Withdraw your cash at any time

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The next grand-prize winner could be you!

If you love the idea of saving with a chance to win big, this account is a no-brainer. It’s perfect for anyone who wants an exciting, effortless way to grow their money.

You can learn more about the Chip Prize Savings account here.

So, download the Chip app and deposit to get started today. Good luck!

Risk, returns, and investment strategies
2 min read
Intermediate
Investing basics

Understanding investment risk tolerance

Your risk tolerance refers to how much risk you are comfortable with. A high risk tolerance means you're more comfortable with the idea of losing money, and a low risk tolerance means you're less comfortable. 

Generally, there is a trade-off between risk and reward in investing. That means asset classes that historically have yielded the biggest returns, have the most potential for volatility.

For example, the equities markets have outperformed lower risk bonds long-term, but typically fall further during bad market days. 

If you decide you want to pursue higher risk investments, ask yourself, "Would I be happy seeing a significant drop in the value of my investment during volatile periods?”

Maybe look at risk through the lens of your day to day life. Do you often take risks? Would your close friends and family describe you as a risk taker? 

It’s also important to consider:

  1. Investment time horizon – How much time do you have to invest? What stage of life are you in? If you have longer, you might be able to cope with some volatility, as long-term there’s a much greater chance your investment will yield greater returns than losses. 
  1. Financial situation – How much would a fall in your investment affect your standard of living? (this is known as your financial capacity for loss). It’s recommended that you save 3-6 months of essential living expenses in cash as an emergency fund, and clear any outstanding high-interest debt before you consider investing. 
  1. Liquidity needs – How much cash do you need access to in order to meet immediate financial needs. It might be a good option to keep some of your investments in something that’s easier to liquidate (sell) if you may need access to the cash in the near future. 

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How to calculate Return on Investment (ROI)

ROI is a simple way to see how much money you’ve made (or lost) on an investment, relative to what you put in.

To work it out, subtract the cost of your investment from the final value, then divide by the cost. Multiply that number by 100 to get a percentage.

ROI = (Final Value - Initial Investment) / Initial Investment × 100

It’s a handy tool for comparing different investments, but keep in mind it doesn’t factor in things like time or fees.

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Investing Strategies

There are a number of strategies you can use when investing, that suit a variety of risk tolerances and investment horizons.

Not all of these strategies cater to a long-term strategy, so keep that in mind when choosing what’s right for you.

You also don’t have to stick to one strategy. Depending on your risk tolerance, you could combine conservative and speculative strategies, as a weighting of your portfolio – similar to the way you diversify using asset classes. 

Growth Investing Strategy

Growth investing focuses on putting your money into companies that are expected to grow faster than average – think up-and-coming tech companies or innovative startups.

These companies often reinvest profits to fuel growth, so you might not see big dividends, but the share price could rise significantly over time.

This strategy tends to suit investors with a higher risk tolerance and a long-term outlook.

It can be rewarding, but also more volatile, especially if markets dip or the company doesn’t live up to expectations. How do stocks work?

Value Investing Strategy

Value investing is like bargain hunting. You're looking for companies that are deemed ‘undervalued’ by the market – quality businesses going for less than what they’re really worth.

The idea is that over time, the market will catch on, and the stock price will rise.

It’s a more patient, long-term strategy and usually involves digging into the specifics of a company (like earnings, assets, and debt).

This approach has been championed by legendary investors like Warren Buffett.

Index Investing Strategy

Index investing is a low-maintenance, low-cost way to invest by investing in a whole market index (like the FTSE 100 or S&P 500), rather than picking individual stocks.

You’re spreading your risk across hundreds of companies, which helps balance out the ups and downs of any single stock price.

It’s a popular strategy for beginners and long-term investors who want steady exposure to the market without trying to ‘beat’ it. 

Pound-cost Averaging Strategy

Pound-cost averaging means investing a set amount of money regularly, regardless of whether the market is up or down.

Over time, this helps smooth out the price you pay for investments and can reduce the impact of volatility.

You end up buying more units when prices are low, and fewer when prices are high, as the same amount is invested each time.

It’s a great way to build a habit of investing and avoid trying to time the market (which even the pros struggle to get right).

Momentum Investing Strategy

Momentum investing is about chasing market trends. You buy investments that have been going up in value, with the belief that they’ll keep climbing (for a period of time).

This strategy relies on trends and market psychology, rather than company fundamentals. It can be potentially profitable in the short term, but it also comes with higher risk, prices can fall just as quickly. It’s not regarded as a long-term strategy, and it’s important to have an exit plan.

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Understanding Stock Market Basics

The stock market is, simply put, a place where buyers and sellers trade shares in public companies. When you buy a share, you’re buying a small piece of that company.

Stock prices move up and down based on how investors feel about a company’s future, as well as broader economic news.

Our next guide dives deeper into the basics of the stock market. 

What is an investment time horizon?
2 min read
Beginner
Portfolio building

Understanding investment time horizons

Investment time horizons will vary depending on where you are in your investing journey, your strategy and typically, your age. These timelines are not necessarily fixed, and horizons may evolve over time with changing market conditions, retirement and tax rules, and your goals. 

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Short-term investment horizon

Short-term investing is any holding period up to five years. These investments wouldn’t be appropriate for higher risk assets like stocks, as immediate market downturn could derail your progress towards a short-term goal without giving your portfolio the necessary time to recover. 

Lower-risk investments like short-term bonds, money market funds, or high interest savings accounts allow you to focus on capital preservation, and aim to outpace inflation, without the potential for big price swings.

These might be suitable for investors who need easy access to their cash, such as those approaching retirement. 

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Medium-term investment horizon

Medium-term investing is any holding period up to ten years. These investments have some time to ride out the ups and downs of the market and potentially benefit from compounding returns. 

A balanced allocation between higher risk assets like stocks and funds, and lower risk assets like bonds and money market funds can offer some protection whilst aiming to outperform inflation and generate some growth. Investors could tailor their approach to a more aggressive or defensive strategy based on their risk tolerance and goals. 

Read our full guide on aggressive and defensive investing strategies. 

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Long-term investment horizon

Long-term investing is any holding period of more than ten years. These investments have the most time to ride out the ups and downs of the markets, so investors may want to consider a higher portion of equities in their portfolio to take advantage of this. 

Goals associated with long-term investments are typically retirement or setting money aside for your family to inherit. You aren’t just putting money away, you’re planting a seed for the long-term, on the belief that the global economy will grow over a long period of time. 

Read our full guide on retirement and long-term investing. 

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How to plan your investment goals

Aligning your investment horizon with your goals, risk tolerance and capacity for loss is essential; and not doing so could be costly.

For example, trying to build your entire retirement fund in five years isn’t likely to be successful, and going all in on higher-risk assets might leave you overexposed to risk, and potentially worse off than you’d be if you just focused on preserving capital.

It might feel tempting to speculate when markets are moving in a positive direction, but the ‘fear of missing out’ on a good stock market rally often kicks in before a market bubble is about to burst.

So, make a plan for each investment and stick to it as making too many decisions can be a costly mistake for investors trying to reach a specific goal. 

See our full guide on behavioural investing and common mistakes.

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Investment time horizon summary

Short-term goals (under 5 years) prioritise capital preservation, favouring lower-risk assets like bonds and savings accounts. Medium-term horizons (up to 10 years) allow for a balanced approach, mixing stocks and bonds to achieve growth while managing risk.

For long-term goals (10+ years), such as retirement, investors might take on more risk with a higher allocation to equities, allowing maximum time for growth and to recover from any market downturns.

Aligning your goals, risk tolerance and capacity for loss with the correct time horizon can potentially prevent costly mistakes, like taking on too much risk for a short-term need or being too conservative for long-term growth.

Soho House founder Nick Jones: ‘We were never trying to be exclusive’

2 min read

I am familiar with Café Clement before I arrive for lunch. All summer long Instagram has delivered me images of the restaurant’s Thames-side terrace as if it was feeding a foie gras goose. Within weeks of opening in June, Café Clement had become one of the most sought-after reservations in London, welcoming a stream of A-listers from Stanley Tucci to Paul Mescal and Adele.

Its lure should perhaps be no surprise.

The restaurant is part of the new St Clement hotel — the latest project from Nick Jones, founder and former chief executive of Soho House and one of the most influential people in global hospitality.

Source: St Clement Hotel

With Soho House, which he founded in 1995, Jones is credited with upending the traditional private members’ club model and creating a new form of casual exclusivity that prioritised cultural cachet over wealth or class.

He is celebrated for his eye for design and an instinctive understanding of how a venue should make people feel, with a unique ability to bring together decor, staffing, music, food, drink and membership to produce the desired effect.

Under his stewardship, Soho House grew from a single venue to a global empire, spanning dozens of “Houses”, health clubs, restaurants, workspaces and a range of home furnishings.

While critics say it sacrificed exclusivity for growth, the company floated on the New York Stock Exchange in 2021 (a $2.7bn take-private deal was agreed in August last year), before Jones stepped down as chief executive in 2022 following treatment for prostate cancer.

The glitzy St Clement — a 90-room, 15-suite new-build hotel, with two restaurants and a health club (the site is expected to be fully open in the coming weeks) — is his first project since.Inside, at the top of a plush, curved green staircase, Café Clement’s hostess greets me and notes a request for a quiet table, before leading me towards the back of the restaurant.

Jones’s assistant, Sophie, arrives to say that he will join me shortly (I am 10 minutes early for our midday lunch). She returns moments later to ask if I would mind moving to a different spot.

“Nick really likes this table,” she says, directing me to the core of the restaurant and a curved banquette along the back wall. From here we will not only see guests arriving at the entrance to our left, but also the terrace to the right, and the entire dining room, which soon fills with people who have IMDb pages or honours bestowed by the monarchy.

Jones, 62, with greying blond hair, bright blue eyes and wearing a navy pinstriped bomber jacket, arrives soon after. “I’m a bit nervous,” he says with a smile, taking a seat. He is speaking at the FT Weekend Festival in two days’ time. “The FT is making me nervous this week.” A server comes over to ask if we’d like drinks; I opt for a glass of champagne, while Jones orders a Bad Belze beer. “We’re launching it here with Daniel Craig,” he says. “It’s his beer.”

His eyes move around the room, and I ask what he looks for when he comes into a restaurant.

“If the lighting is right, the music is right, the team is smiling. If there’s anyone I need to quickly say hello to,” he says. “And you look at the customer . . . If the customer is laughing, they’re deep in conversation, they’re not looking around thinking ‘where the hell is my food’, you don’t need to go up and ask if everything is all right. That’s the worst thing anyone can say in a restaurant, because you should be able to radar it.”

Jones, who grew up in Surrey, has calibrated his radar over decades. Severely dyslexic and struggling at school, he worked behind the bar at his local rugby club from the age of 13 and joined Trusthouse Forte, the hospitality conglomerate, at 17.

He tells a story of a chef throwing a sack of potatoes at his belly, ordering him to peel them and calling him a very British expletive. But he loved it. “I was a shy teenager . . . I went to private school, I had a posh voice, I suppose, and I went into an industry where there was no one from private school,” he says. “The kitchen was full of people from different continents and different backgrounds.”

Our server stops by to ask what we’d like to eat. We’ve not looked at the menu, so she suggests some snacks to get started — zucchini fritters, crostini and a parmesan custard. Jones interviews every member of staff here as the final stage in the job application process.

“Anyone who runs a hotel should spend five minutes with the people you’re going to employ,” he says. “It creates a connection and people know they’re being taken seriously.”

I ask what he looks for at that stage. “When you’re customer-facing, you haven’t got long to make an impression,” he says. “So you need to have an instant sort of feelgood factor.”His instincts haven’t always been so acute. Jones left Trusthouse Forte after eight years to launch his own venture, a trio of ill-fated restaurants called Over the Top, at which customers chose a base meat and paired it with different toppings named after famous mountains.

“There were so many things wrong with it,” he laughs. He eventually converted the Soho location, a corner site on Old Compton Street and Greek Street, into Cafe Boheme, a French-style all-day brasserie that opened in 1992.

He abandoned the gimmicky menu and “did the opposite”, opting for a more romantic, Parisian style. Cafe Boheme was social and frothy, and critically, at a time when most venues in Soho, the hub of London’s creative, media and artistic scenes, shut down at 11pm, was open until 3am on weekends. It was a hit.

Our snacks arrive — a reminder that, while the restaurants Jones launched under the Soho House umbrella were more about what is now called “vibe dining”, there is a serious chef behind Café Clement, Danny Bohan, who has worked alongside Rowley Leigh, Rose Gray and Ruth Rogers, most recently as the head chef of The River Cafe, where he spent 20 years.

The piles of zucchini fritters and tomato and anchovy crostini are light and moreish, but it is the bowl of parmesan custard (a Leigh recipe, Jones tells me) that steals the show: a silky flavour-bomb topped with a dollop of caviar and served with a side of salted crisps.

We order our mains: I go for the turbot while Jones chooses the chicken casserole and some sides for the table, including the house “crinkles” (hand-cut chips). I’ve heard good things about the gruyère soufflé, so that’s on the docket too, as well as two glasses of Muscadet.

Jones was eventually offered the lease on the Georgian townhouse above Cafe Boheme, and opened it as a members’ club, starting with the creatives who had become regulars at his restaurant. A 25-person committee, mostly from film and television, recruited the first 500 members.

Jones called the venue Soho House because it was a house in Soho. Why make it a private club? “Because it had a small door,” he says. “I thought public restaurants should have a bit of frontage. It was as simple as that.”

The opening coincided with a political and cultural shift in London: the rise of New Labour and Cool Britannia, and an optimistic rebranding of British identity. It arrived as the traditional establishment fractured, making way for an influential, youth-driven creative class — and Soho House became its de facto headquarters.

Over the next three decades, Soho House grew from Greek Street into a multinational network, with houses from New York and Berlin to Mumbai and Hong Kong, spawning an aesthetic — low lighting, mid-century-style furniture, vintage pieces and rich fabrics — that became a hospitality genre in itself.

Today there are 50 clubs in 19 countries and about a quarter of a million members. (Since returning to the UK in August, Meghan, Duchess of Sussex has been spotted at Soho Farmhouse in the Cotswolds, where the Beckhams are regulars. The club keeps its membership lists private, and photography and video recording are banned inside.)

As our main dishes arrive, so does Jones’s wife, Scottish broadcaster Kirsty Young, who is also having lunch here today. “Is he saying anything interesting?” she jokes, before heading to her table.

My turbot is beautifully cooked: soft, flaky and basted with butter. The crinkles — thick-cut, furrowed chips — were Jones’s addition to the menu. “I said, ‘Danny, I make these things at home, with an old crinkled chopper’ that Kirsty got me for Christmas one year,” he says, before describing a Blumenthalian method of boiling, freezing and frying, “but without perfection. They have to be a bit messed up.”

The dining room is heaving now, and with plenty of food on the table, I ask Jones about previous comments he’s made that he wanted Soho House to feel warm, and not too popular. “I always said I wanted it to be like a warm bread roll,” he says. “So it’s not cool but it’s still very relevant.” Can you control that? “You can try . . . when you open a place, everyone wants to go there, but you’re in it for longevity.”

Source: Soho House

Critics of Soho House say that it felt less exclusive as the company expanded — exacerbating the “friction between people with cachet and people with cash”, as the FT’s Janan Ganesh wrote. “We were never trying to be exclusive, we were trying to be inclusive,” Jones says. “We went into cities where you find 5,000 members who are interested, like-minded people.”

Is a membership model not inherently exclusive? “Without naming names, you had the most famous actor in the world in one corner, and a struggling one yet to get their first part in the other,” he says. “You had the same with artists. And we had the under-27 membership fees [typically discounted by around 50 per cent] . . . I think that’s inclusive.” (Fees vary by location and use. The annual cost for a member in London with access to all global houses is £4,500, or £2,500 if under 27 years old).

“[Soho House] has been around a long time,” he adds. “There are going to be moments where people have different perceptions.” He says his replacement, the current CEO Andrew Carnie, has found the right balance of expanding the brand globally and keeping it warm.

Soho House’s parent company traded publicly for four years before it agreed to go private last year.

Asked whether he would go public again, knowing what he knows now, Jones pauses to consider his response. “Probably not,” he says. “We did it for the right reasons, which was expanding growth. It was certainly tougher than I expected.” He says the business “didn’t quite fit” the quarterly public-market system, which inevitably changes culture. “Your washing, clean or dirty, is hung out to dry every quarter.”

Were there decisions he made then that he wouldn’t make now? “Personally, when I ran Soho House, because I love creating — I did The Ned, Mollie’s, Pizza East, Chicken Shop — in hindsight, even though I love those places and they stand alone in their own right, I probably should have just focused all my time on Soho House.” Did he ever feel spread too thin? “At times when we were opening seven, eight houses in a year — yes.”

The soufflé arrives — a twice-baked beauty sitting in a pool of thick, creamy sauce. Jones, the consummate host, hands me a spoon. “Take this and scoop up some of the sauce,” he insists. It is delicious.

Jones was diagnosed with prostate cancer in the summer of 2022. He stepped away from Soho House that autumn, following successful treatment.

“I was very lucky. I self-screen,” he says. “I had an MRI, then a biopsy. I had a pretty serious, aggressive tumour and something had to happen.” He describes the period when he didn’t know whether it had spread into his bones or other organs: the sleepless nights contemplating how many more years he might have to hold his grandchild, see his children, wife and friends.

Cancer changed his priorities. “What I didn’t want was to continue to be on a plane every day,” he says. He wanted to spend time with people and enjoy days off without jet lag (he cooks Sunday lunch for his family each week).

“I didn’t really have a next step for what I was going to do,” he says. “Even though I didn’t want a life of running around the world on planes and opening houses, I still love this business.”

The opportunity to work on the St Clement came through property developer Mark Wadhwa, with whom he collaborated on Soho House Berlin and other projects. Jones describes the undertaking as “creating a luxury hotel for today”.

“It’s got to feel friendly and relaxed. When the Savoy was built,” he says of London’s first luxury hotel, a nine-minute walk from our table, which opened in 1889, “everyone was in tails and bowler hats and high heels and dresses. Now people are in cashmere T-shirts and trainers.”

He credits his designers, Alex Eagle and Sophie Hodges, for pushing him in a new direction. I ask how much of the granular stuff he is involved in. “Probably too much,” he says. “I like detail. I think customers notice details. They notice a sense of generosity.”

Source: Soho House

He thinks about what he would want as a guest — and what he sees annoys guests, like lengthy check-in procedures and putting a card down for the minibar. Guests should not be charged for a KitKat. (Other new hotels in London have pushed basic rates above £1,000 per night. Entry-level rooms at the St Clement start around £600-£800, with chocolate included.)

He says he is not a control freak, however. “I think to get the best results, you want to listen to everyone’s opinion and then make a decision. What you don’t want to do is make a decision to try and keep all the people who’ve given you an opinion happy.” Does anyone challenge him? “Yes.” What does he have bad taste in? “I’m not allowed to choose the music here.”

Jones is also not at the hotel every day: “I’m a recovering workaholic.”For dessert, we order the chocolate mousse for two, but Ewan Venters, the executive chair of Paul Smith, formerly of Fortnum & Mason’s parish, briefly distracts Jones, so I steal a bit more than my fair share. Its name is an understatement: the pudding is the handsome progeny of a mousse and a fondant, warm and gooey, and served with a scoop of custard ice cream.

With lunch over, Jones offers me a tour of the hotel, starting with Bobbi’s Bar, the late-night, speakeasy-style venue on the ground floor that he modelled after a character he created.

“I fit it to this person who is very social, and everyone loves going back to Bobbi’s apartment,” he says. “It’s always full of interesting people. There’s a DJ playing vinyl and it’s sort of Bobbi’s bangers. People start singing.”

This, I realise, is how Jones designs. “You have to put the slight story behind it,” he says, “to be able to refer back to when you’re doing something to make sure it fits.”As we walk through the various hotel rooms and encounter the final bits of construction under way, Jones warmly greets and chats to the builders, housekeeping staff, chefs and photographers we encounter, while showing me the views, finishings and furnishings he’s most proud of.

With the tour complete, we say our goodbyes. He has an afternoon of interviewing prospective staff ahead. I zip back to the office, resisting the urge to Instagram any of the evidence.

Understanding the Base Rate
2 min read
Beginner
Rates, Tax & Economics

The Bank of England Base Rate, also known as Bank Rate, holds significant influence over the UK's financial landscape, impacting borrowing costs, mortgage rates, and savings interest. 

It's important to understand the Bank of England Base Rate and how it affects your financial decisions. In this guide, we'll explain what the Bank of England Base Rate is, how it influences interest rates, its impact on the economy, and why it plays a role in influencing spending and inflation.

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What are Interest Rates?

Interest rates refer to the percentage charged or earned on borrowed money or invested funds. 

Lenders charge interest on loans as compensation for the risk and opportunity cost of lending money, while savers earn interest on their deposits as a reward for entrusting their funds to financial institutions. Learn more about interest rates.

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What is the Bank Rate?

Bank Rate, often referred to as the Bank of England Base Rate, is the key interest rate set by the Bank of England. It acts as a tool for controlling inflation and stabilising the economy. 

The Bank of England assesses economic conditions and adjusts Bank Rate accordingly to support the government's inflation target and ensure economic stability.

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How Bank Rate Affects Your Interest Rates:

Changes in Bank Rate have a ripple effect on various interest rates throughout the economy. Here's how it influences your financial decisions:

  • Mortgage rates: Bank Rate influences the cost of borrowing for banks, impacting the interest rates they offer on mortgages. When Bank Rate rises, mortgage rates tend to increase, making borrowing more expensive. When Bank Rate decreases, mortgage rates may go down, providing potential savings for homeowners.
  • ‍Savings interest rates: Bank Rate also affects the interest rates offered on savings accounts. Higher Bank Rates generally result in higher savings interest rates, potentially increasing the returns on your savings. Lower Bank Rates may lead to reduced savings interest rates.

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How Changes in Bank Rate Affect the Economy:

Changes in Bank Rate have a significant impact on the broader economy. Here are some key effects:

  1. Borrowing costs: Changes in Bank Rate directly influence the cost of borrowing for individuals, businesses, and financial institutions. Higher rates increase borrowing costs, potentially curbing spending and investment. Lower rates encourage borrowing and stimulate economic activity.
  2. ‍Inflation: Bank Rate plays a crucial role in managing inflation. When inflation is rising, the Bank of England may increase Bank Rate to reduce spending and control price increases. During economic downturns, lowering Bank Rate can encourage borrowing and spending, boosting economic activity.

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Why Does Bank Rate Influence Spending and Inflation?

Bank Rate influences spending and inflation primarily through its impact on borrowing costs. When borrowing becomes more expensive due to higher interest rates, individuals and businesses may reduce their spending, leading to a potential slowdown in economic activity and inflation.

Lower interest rates make borrowing cheaper, encouraging spending, investment, and economic growth. How do interest rates affect inflation? 

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Bank Rate Summary

Understanding the Bank of England Base Rate is crucial for making informed financial decisions in the UK. The rate directly affects interest rates on mortgages and savings, impacting borrowing costs and potential returns. 

Changes in Bank Rate have far-reaching effects on the broader economy, influencing spending, investment, and inflation levels.

Open Banking Explained
2 min read
Intermediate
Savings Strategies & Tips

What is Open Banking?

Open Banking is a set of rules that require banks to let you share your financial data with authorised providers, such as money management apps or websites.

By doing so, you can give these providers read-only access to your spending transactions, regular payments, and account balance. 

The idea behind this is to make it easier for other organisations to use your data to personalise their products or provide suggestions on areas where you can save.

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How is Open Banking Used?

Open Banking has paved the way for a variety of useful ‘money management’ websites and apps. These can use your financial data to offer you a personalised service or make recommendations on ways to save based on your spending habits. 

For example, automatic savings apps analyse your current account data, such as your available balance, and calculate how much you can afford to save. The app then moves the calculated amount into a savings account automatically.

Additionally, Open Banking has made online payments more convenient and secure. Certain online retailers can now connect directly to your bank, eliminating the need to fill out your card details. 

HMRC also offers a ‘pay by bank account’ Open Banking option for a number of tax bills, such as self-assessment tax returns, Capital gains, and Stamp duty. Learn more here.

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Is Open Banking Safe?

With all the data being accessed and payments being made, it's natural to wonder if Open Banking is safe. 

As long as providers are authorised and have the relevant FCA permissions, they can only access data needed for the service you’ve signed up to.

This means that if you've asked a provider to look at your current account with one bank, they wouldn’t be able to look at your credit card details with that bank without your permission.

Moreover, all providers must comply with data protection rules, including UK GDPR. Before you sign up, the provider should tell you which data they will use, how long they will keep it, and what they will do with it. 

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How does Open Banking work?

Each provider will ask for your consent to access your information when you sign up. They will then send a request to your bank, which will process and share your details through secure technology called application programming interfaces (APIs). 

APIs simply allow two providers to ‘talk’ to each other and pass on the information you’ve given permission to share, such as your bank balance and regular payments.

You can also withdraw your permission at any time. Additionally, providers are required to get renewed permission from you every 90 days, which gives you the opportunity to rethink whether you want to continue using that provider.

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Open Banking Summary

In conclusion, Open Banking is generally considered to be a safe and convenient way to share your financial data with authorised providers. 

With the variety of useful apps and websites available, it can help you manage your money more effectively and make online payments more secure. Remember, if you’re unsure about anything, always ask before giving access.

Markets respond to conflict in the Middle East: what it means for you
2 min read
Beginner
Investing strategies

We’re going to take a moment to comment on how events in the Middle East have impacted financial markets. This is a constantly evolving situation, so what you read here reflects the situation as of 12:00 GMT 13 March 2026. 

Before we start: What this could mean for your day-to-day 

Here’s a quick summary of the headlines that outline some of the knock-on effects of what a prolonged conflict might mean. ‍

The fuel & bills effect: Regional tension spikes oil prices, which is important, as it's a direct link to higher costs at the petrol pump and potentially stickier energy bills at home. (This Is Money)

Shopping basket surcharge: Rerouting ships to avoid hotspots adds weeks to journeys and millions to freight costs. This eventually makes everything from electronics to your weekly food shop more expensive. (Retail Gazette)

Mortgage & interest rate link: If costs stay high, inflation becomes harder to "kill off." This makes the Bank of England less likely to cut interest rates, meaning those cheaper mortgage deals could stay out of reach for longer. (BBC)

When conflict erupts, and geopolitical events intensify, the reaction can be swift. Institutional investors try to assess potential impacts on global trade, energy prices, and broader economic stability. That uncertainty can lead to short-term volatility.

Energy markets tend to be particularly sensitive to developments in the region because of the Middle East’s importance to global oil supply.1 Even the possibility of disruption can influence prices and investor sentiment, and because energy affects all walks of life, the reaction is global.

As a result, stock markets have seen fluctuations over the last 12 days, reflecting a familiar pattern: geopolitical news triggering short bursts of market movement.

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Why markets often react this way

Financial markets are forward-looking and like certainty. When unforeseen events occur, whether it’s conflicts, elections, or diplomatic developments, this can make the economic outlook suddenly unpredictable.

In the short term, this presents itself as volatility in our investments.

But historically, markets tend to process these events relatively quickly. Once the immediate uncertainty fades or events become clearer, investors usually shift their attention back to economic fundamentals like corporate earnings, growth forecasts, and central bank policy.2

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Volatility is part of the investing journey

While it can feel unsettling, volatility is a completely normal part of investing.

Even in strong market years, markets regularly experience temporary dips or fluctuations. These moments often reflect the market adjusting to new information, such as shifting interest rate forecasts, unexpected corporate earnings reports, or sudden geopolitical developments like we’ve seen this week.

Importantly, many geopolitical shocks in the past have caused short-term market reactions but had limited long-term impact on global equities.3

For long-term investors, these periods are simply part of the journey.

Keeping perspective as an investor

When headlines dominate the news cycle, it can be tempting to react quickly. But long-term investing usually benefits from staying focused on the bigger picture.

Market history shows that reacting to short-term volatility can sometimes do more harm than good. Instead, many investors focus on maintaining a diversified portfolio and continuing to invest consistently over time.4

This approach helps smooth out the ups and downs that naturally occur in markets.

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Final thought

While global events can influence markets in the short term, long-term investing is about staying committed to your goals, through both calm and uncertainty.

Ultimately, your portfolio should be centred on the future, not the news cycle. By staying consistent and zooming out, you’re ensuring that when the dust settles, your long-term financial plan is still on track.

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Sources:

1International Energy Agency (IEA) 2Vanguard 3J.P. Morgan 4Fidelity

What is liquidity and why it matters to investors
2 min read
Intermediate
Economic context

What is liquidity?

In finance, liquidity describes how quickly you can sell an asset and turn it into cash at a similar market value.

Assets with liquidity, like publicly traded shares, can usually be sold almost instantly. Illiquid assets, like property or rare collectibles, may take weeks, months or even longer to sell. 

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Understanding how liquidity works

Imagine you own a watch. If it’s a popular brand and model, you can likely sell it quickly at a fair price. This is a liquid asset. But if it’s a niche, custom-made piece, you may struggle to find a buyer willing to pay a reasonable amount, making it illiquid. 

In investing, the same principle applies. A company’s shares listed on a major exchange are easy to sell due to high demand. But a privately held company share may be hard to sell, even if it’s valuable, due to low market interest. Understand stock market basics. 

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What is market liquidity?

Market liquidity refers to how easily assets are bought and sold in a particular market. A liquid market has lots of participants and more stable prices. 

In contrast, an illiquid market sees fewer transactions, and more volatile prices.

For example, major stock exchanges in the UK (like the London Stock Exchange) tend to be highly liquid, whereas niche bond markets or alternative investments may not be. 

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How to measure liquidity

Liquidity isn’t just a feeling, it can be measured using specific indicators. These include:

  • Bid-ask spread: The smaller the difference between buying and selling price, the more liquid the asset. 
  • Trading volume: Higher volume generally means more liquidity.
  • Turnover ratio: How frequently an asset is traded relative to its total number of outstanding units.
  • Time-to-cash: How quickly an asset can realistically be sold. 

In broader financial markets, indicators like the Liquidity Coverage Ratio (LCR) are used by institutions to assess liquidity under stress. LCR is the minimum amount of highly liquid assets that financial institutions are required to hold by international regulations.

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Understanding how liquidity varies across asset classes

Not all investments are equally easy to buy or sell. Liquidity can vary significantly depending on the type of asset, and understanding these differences can help investors make smarter choices based on their goals and time horizon. 

  • Cash and cash equivalents, such as savings accounts or money market instruments, are the most liquid assets. You can typically access your money almost instantly, with little to no loss in value.
  • Publicly traded shares, like those listed on major stock exchanges, are also highly liquid. They can usually be bought or sold quickly during market hours, with plenty of buyers and sellers ensuring fair pricing.
  • Government bonds are generally considered liquid, especially in developed markets. However, they may be less liquid than shares depending on the issuer, maturity and market conditions.
  • Real estate is a classic example of an illiquid asset. Selling a property can often take months, involves significant transaction costs, and can be heavily influenced by market conditions. 

At the far end of the spectrum, private equity, venture capital and collectibles (like fine art) are among the least liquid investments. They may take years to exit and often have limited secondary markets.

For new investors, starting with more liquid assets provides greater flexibility, especially if you need access to funds in the short term.

As you gain experience, you might explore less liquid opportunities, but it's important to understand the trade-offs in advance. Learn about passive and active investing. 

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How can liquidity affect investment strategies?

Understanding what liquidity is helps influence investors with making investing decisions based on their own personal financial situation. This could include:

  • Portfolio design: Investors may avoid illiquid assets if they anticipate needing cash soon. What is portfolio management?
  • Risk management: Liquid assets are easier to sell in a financial crisis, such as a recession.
  • Returns: Illiquid assets sometimes offer higher potential returns to compensate for added risk, this is known as the liquidity premium.

New investors should balance liquidity needs with return goals, especially if they’re building emergency funds or planning for short-term goals. 

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Liquidity and investing summary

Liquidity plays a central role in how markets function and how investors manage risk and opportunity.

Whether you're buying your first shares in an ETF or considering diversifying into alternative assets, understanding liquidity helps you make informed, confident decisions. 

In the next guide, we’ll explore economic indicators investors should know, diving into how market data can signal future trends and help guide your investment strategy, 

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