How do bonds work?

When a government or company needs to raise money, it can issue a bond. As an investor, you lend them a set amount and they agree to pay you a fixed interest rate (called the coupon) every year e.g. 3%. 

After a set number of years (the term), they pay you back the £1,000. This is known as the bond lifecycle: 

1. Issuance – You buy the bond (or a fund that holds bonds). 

2. Interest payments – You receive regular income, typically annually or semi-annually. 

3. Maturity – At the end of the term, the bond is repaid in full. 

Bond prices can also rise and fall in value if traded on the secondary market. FDor example, if interest rates change or the issuer’s credit rating shifts.

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Types of bonds explained

Here are the main categories of bonds you’ll come across: 

• Government bonds (gilts) – Issued by the UK government. Generally considered very low risk, but with lower returns. 

• Corporate bonds – Issued by companies to raise funds. Riskier than gilts, but they usually offer higher interest. 

• Green bonds – Used to fund environmentally-friendly projects. Growing in popularity among ethical investors. 

• Index-linked bonds – Designed to keep pace with inflation, as the payments rise in line with a price index like the CPI. 

• In the US: Savings Bonds, which are government-issued and often used for long-term savings goals. These differ from UK bonds in structure and taxation, and are only available to US citizens.

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Why invest in bonds?

Bonds can play a key role in a well-rounded portfolio. Here’s why: 

1. Income generation – Regular interest payments can provide a steady stream of income. 

2. Capital preservation – Bonds tend to be more stable than stocks, so they can help protect your investment. 

3. Diversification – Adding bonds can smooth out the ups and downs of a stock-heavy portfolio. 

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Risks and disadvantages of bonds

Bonds are lower risk than stocks, but not risk-free. Here’s what to consider: 

• Credit risk – The issuer might fail to pay interest or repay the loan (this is rare with government bonds, more possible with corporate bonds). 

• Interest rate risk – If interest rates rise, existing bond prices can fall. Inflation risk – If inflation outpaces your bond’s return, your real purchasing power can shrink. 

• Liquidity risk – Some bonds can be harder to sell quickly without losing value, especially in a downturn.

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How to invest in bonds (UK)

There are a few ways to invest in bonds as a UK investor: 

1. Bond funds or ETFs – These are collections of bonds bundled together, offering easy access and instant diversification. 

2. Direct purchase – You can also buy individual gilts or corporate bonds through some investment platforms. 

3. Use tax-efficient wrappers – Investing through a Stocks & Shares ISA or a pension (not available with Chip) helps you keep more of your returns. 

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How do I invest in bonds? 

Start by choosing a platform, selecting a bond fund or individual bond, and deciding how much to invest. Funds and ETFs are often easier for beginners.

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Who should consider investing in bonds?

Bonds can suit a wide range of investors, including: 

• Investors approaching retirement – Looking for steady income and capital protection. ‍
• Cautious investors – Seeking lower volatility than stocks. ‍
• Income-seekers – Wanting predictable returns through interest payments. 

If you’re someone with a lower risk tolerance or nearing a major financial milestone, bonds can provide valuable balance in your investment mix.

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Common bond-related terms explained

• Yield – The return you earn from a bond, usually expressed as a percentage.‍
• Coupon – The interest payment a bond pays, often annually.‍
• Maturity – When the bond issuer repays the original amount borrowed.
• ‍Par value – The bond’s face value, typically £100 or £1,000.
• ‍Credit rating – An assessment of how risky a bond issuer is. Higher ratings mean lower risk.
• ‍Bearer bonds – Rare today, these are unregistered bonds where whoever holds the paper owns the bond.
• ‍Duration – A measure of a bond’s sensitivity to interest rate changes.
• ‍Callable bonds – Bonds the issuer can repay early, which can affect returns.

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Investment bonds summary

Bonds are a type of investment where you lend money to a government or company in exchange for interest payments. 

They’re generally lower risk than stocks, making them popular for income, stability, and diversification. While they come with their own risks, like interest rate changes or inflation, bonds can play a key role in your long-term financial plan.

In our next guide, we’ll cover exchange-traded funds (ETFs), what they are, how they work, and why they’re one of the most popular investment choices for both beginners and seasoned investors. 

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FAQs

What are bonds in simple terms? 

Bonds are loans you give to a government or company. In return, they pay you regular interest and repay your money after a set time.

Are bonds a good way to invest? 

Yes, especially if you're looking for stability and income. They may not grow as fast as stocks, but they’re generally lower risk.

How do beginners invest in bonds? 

The easiest way is through bond funds or ETFs on an investment platform. You can also use a Stocks & Shares ISA to invest tax-free.

What are the disadvantages of bonds? 

Bonds carry risks like interest rate changes, inflation, and defaults. Some can also be harder to sell quickly if you need access to your money.

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When it comes to managing your money, understanding the rules surrounding tax on savings interest is essential for making informed financial decisions.

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Understanding savings interest and tax

Savings interest refers to the money you earn from your savings accounts, which can include standard savings accounts, fixed-term savings, and cash ISAs (Individual Savings Accounts).

The interest you earn may be subject to tax, but there are several factors that determine whether you need to pay tax on your savings interest.

Please note that Chip does not offer tax or financial advice, and this should not be considered as a personal recommendation. Tax treatment depends on individual circumstances and may be subject to change in the future.

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Personal Savings Allowance (PSA)

The UK government introduced the Personal Savings Allowance (PSA) in April 2016. The PSA allows most people to earn a certain amount of interest tax-free each year. The allowance you receive depends on your income tax bracket:

• Basic rate taxpayers (20% tax bracket): You can earn up to £1,000 in interest tax-free
• Higher rate taxpayers (40% tax bracket): You can earn up to £500 in interest tax-free
• Additional rate taxpayers (45% tax bracket): You do not receive a personal savings allowance.

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Individual Savings Accounts (ISAs)

One of the most effective ways to save tax-free is through an ISA. There are different types of ISAs — Stocks and Shares ISA, Lifetime ISA (LISA) and Junior ISA (JISA), to name three — but the most relevant for savers are cash ISAs. 

The interest earned in a cash ISA (as with all other ISAs) is completely tax-free, regardless of your earnings, or how much you have saved in your ISA. Each tax year, you can save up to £20,000 tax-free, but most ISA accounts do not have a limit in terms of how much you can accumulate in total over the years. 

Your annual ISA allowance of £20,000 can be placed in just one ISA or can be spread a number of them.

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Do you have to pay tax on your savings?

Whether you have to pay tax on your savings depends on the total interest you earn and the allowances available to you. Here are a some scenarios to showcase these variables:

1. Earning interest below the PSA: If the interest you earn from your savings is within your PSA, you won't have to pay any tax on it. For example, if you are a basic rate taxpayer and you earn £800 in interest, this is within the £1,000 PSA, and no tax will be due.
   
2. Earning interest above the PSA: If your interest earnings exceed your PSA, you will have to pay tax on the amount above the allowance. For instance, if you are a higher rate taxpayer and earn £600 in interest, you will need to pay tax on the £100 that exceeds your £500 allowance. This, as noted in the previous section, is not the case for money saved in an ISA.
   
3. Interest earned in ISAs: Any interest earned within an ISA is tax-free, and it doesn't count towards your PSA. This means you can maximise your savings by utilising ISAs effectively.

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How do you pay tax on savings?

If you do need to pay tax on your savings interest, HMRC will usually collect it automatically. This, however, is not always the case. Here’s how it works:

• Through PAYE (pay as you earn): If you're employed or receive a pension, any tax due on your savings interest can be collected through the PAYE system. Your tax code will be adjusted to reflect the interest earned and the tax due.
  
• Self-assessment tax return: If you complete a self-assessment tax return, you’ll need to include the interest earned on your savings. HMRC will calculate the tax that is due and notify you of both the need to pay tax, and when it needs to be paid by.

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When do you pay tax on savings?

Tax on savings interest is generally due at the end of each tax year, which runs from April 6th to April 5th of the following year. If HMRC collects the tax through PAYE, adjustments will be made throughout the year.

For those filing a self-assessment tax return, the deadline for submission and payment is usually January 31st following the end of the tax year.

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How to maximise your tax-free savings

To maximise your tax-free savings, it’s essential to understand how to strategically utilise your annual annual allowance, and put your money in accounts that will earn you the highest amount of interest.

1. Utilise your ISA allowance: Ensure you make the most of your £20,000 ISA allowance each tax year. Even if you only have a small amount to save, using your ISA can, potentially, provide you with tax benefits over the longer term.
   
2. Monitor your interest: Once you have maxed out your ISA allowance, keep track of the interest earned across all your savings accounts to ensure you stay within your PSA.
   
3. Consider high-interest accounts: If your savings are substantial, explore high-interest accounts and ISAs to maximise returns while minimising your tax liabilities.

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Conclusion

Whether or not you have to pay tax on your savings in the UK depends on your individual circumstances. This should not be seen as tax advice and you should seek independent advice if unsure on your tax status.

‍The PSA provides a buffer for tax-free interest, and ISAs offer a valuable means of saving without tax implications. By understanding and utilising these allowances and tax-free savings accounts, you can maximise your tax-free savings.

What is pension drawdown? 

Pension drawdown is the overarching term for taking income directly from your invested pension pot, and since the 2015 Pension Freedoms, almost all new drawdown arrangements are set up as flexi‑access drawdown (the modern, unrestricted version of drawdown).

Introduced as part of those reforms, alongside the ability to take up to 25% of your pot tax‑free, it allows retirees to choose how much income they withdraw each year while keeping the remainder invested.

Pension drawdown is a method of taking a retirement income from your pension pot as you need it, whilst keeping the rest invested with the aim of generating further growth.

Instead of receiving a fixed income for life, you decide how much income to withdraw and when. This differs from purchasing an ‘annuity’, where you hand over your pot in exchange for a guaranteed income (we’ll cover this option in another guide).

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How does flexi-access drawdown work? 

Flexible pension drawdown works by moving your pension funds into a specific ‘drawdown’ account that allows for variable withdrawals.

1. Move your funds: Not every pension scheme offers drawdown directly. Many older workplace schemes are designed only to build up savings, not to pay it out flexibly in retirement. If your current provider does not support flexi-access drawdown, you will need to transfer your pension to a modern provider or a Self-Invested Personal Pension (SIPP) that does. 
2. Take your tax-free cash: When you move money into drawdown, you are typically entitled to take 25% of the pot as a tax-free cash lump sum, up to a maximum of £268,275. This cap was introduced when the Lifetime Allowance was abolished in April 2024. For most people with pension pots below around £1.07 million, the 25% figure will still apply in practice. You can take this all at once or in stages. . For example, if you have a £100,000 pot, you can take £25,000 immediately tax-free. The remaining £75,000 stays in the drawdown account.
3. Invest the rest: The remaining 75% of your pot stays invested in the stock market, bonds, or other multi-asset portfolios. The goal is to achieve investment growth that helps replenish the money you withdraw, ideally outpacing inflation.‍
4. Set your income: You then choose how to withdraw from the invested 75%. You can set up a regular monthly payment (like a salary), take occasional lump sums for holidays or big purchases, or take nothing at all for certain years. Crucially, every penny you withdraw from this part of the pot is treated as taxable income whenever you take it.

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Investment risks and sustainability

The defining feature of drawdown is that your income is not guaranteed. It is linked directly to the performance of your underlying investments, which means your pension pot can rise or fall in value.

• The sequence of returns risk: This is the danger of a poor market performance occurring just as you start your retirement. For example, iIf your portfolio drops by 20% in year one, and you continue to withdraw your planned income, you are selling assets at lower prices. This depletes your capital much faster than expected and makes it difficult for the pot to recover even if markets bounce back later.‍
• Risk of withdrawing too much: Because there are no guarantees, you need to choose a sustainable withdrawal rate. Historically, many people referred to the ‘4% rule’ (withdrawing 4% of your pot annually), but more cautious approaches such as a 3% withdrawal rate may offer an extra layer of protection against running out of money.

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Is a drawdown pension a good idea?  

Drawdown can be a good idea for those who want control over their pension pot and are comfortable with some investment risk during retirement, but it isn’t the right choice for everyone.

Pros:

• Income flexibility allows you to reduce withdrawals when you can rely on other income to cover your expenses, or take more when your expenses are high or unforeseen. 
• Potential for growth on your remaining invested pot, giving you the potential to keep up with or even outpace inflation. 
• Death benefits, any money left in your pot when you die can usually be passed on to beneficiaries. Learn more.

Cons:

• Your income is not guaranteed, as the invested value of your pot can move up as well as down depending on investment performance.
• There is a risk that your pot could run out during your lifetime, unlike an annuity, which can provide a guaranteed income for life.

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Do you need financial advice? 

Deciding how to withdraw your pension is one of the most complex financial decisions we make in our lives. Because of the risk involved, taking regulated financial advice can be a good idea if you’re feeling unsure about your options.

An advisor can help you stress-test your retirement plan by modelling different scenarios and seeing how this would affect your pot. They can also help you navigate the tax  considerations involved in taking income, helping you avoid unexpected bills and ensuring you don’t accidentally breach your allowances. 

You can also take advantage of MoneyHelper’s free, government-backed Pension Wise service, which helps explain your options for withdrawing money from your defined contribution pension.

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Drawdown death benefits 

One of the benefits of pension drawdown is that any remaining pension savings can usually be passed to your beneficiaries when you die.

• If you die before age 75, any money can typically be inherited by your beneficiaries tax-free. They can take it as a lump sum or as an income.

• If you die after age 75, your beneficiaries can still inherit the remaining pot, but they will normally pay Income Tax on any money they withdraw at their own marginal rate.

It is worth noting that the government has announced plans to bring unspent pension pots into your estate for inheritance tax purposes from April 2027. If this change comes into effect, the tax treatment of inherited drawdown pots would change significantly.

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Annuities 

The main alternative to flexible drawdown is buying an ‘annuity’. This is where you give all, or part of, your pension pot to an annuity provider to purchase a fixed, guaranteed retirement income. 

Annuities are a much lower risk option than drawdown, as it guarantees an income for a fixed period or the rest of your life. You don’t, however, get the same potential growth benefits you could get from a drawdown pot. Read our annuities guide for further information. 

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What is growth investing?

Growth investing targets companies that investors believe have the potential to grow faster than the broader market. 

These are often newer companies or those operating in rapidly expanding industries like technology, renewable energy, or healthcare innovation.

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Key characteristics of growth investing

• Emphasis on capital appreciation over income (e.g. dividends).
• Companies often reinvest profits to fuel future growth.
• Share prices tend to be more volatile but can offer higher returns over time.
• Commonly priced higher relative to earnings (higher P/E ratios).

Growth investing is typically more suitable for investors with a longer time horizon and a higher risk tolerance, as the payoff often comes from future potential rather than current earnings.

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What is value investing?

Value investing involves identifying companies that appear to be undervalued by the market. 

These are stocks trading below their intrinsic value based on fundamental analysis (like cash flow, earnings, or book value).

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Key characteristics of value investing

• Focus on finding stocks perceived as mispriced.
• Often includes established companies with stable earnings.
• Generally provides dividend income as well as capital growth.
• Less volatility, but potentially slower returns.

This strategy may appeal to more conservative investors looking for steady returns and lower downside risk.

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Examples of Growth and Value Investing

To better understand how these strategies play out in practice, consider how growth and value investors might view the same market differently.

Growth

• A growth investor may be drawn to a fast-growing technology firm that has yet to post consistent profits but is expanding rapidly, reinvesting all earnings into product development and market share. 
• Despite a high valuation relative to current earnings, the investor believes the company’s future potential justifies the price. Sectors like software, green energy, or healthcare innovation often fall into this category.

Value

• In contrast, a value investor might look for a well-established consumer goods company with stable earnings, consistent dividend payouts, and a share price that appears low relative to its earnings or book value. 
• The belief is that the market has temporarily mispriced the company, possibly due to short-term concerns, and that the share price will eventually recover as fundamentals prevail.

Both strategies can be applied using individual stock selection or through diversified investment funds, which pool companies with similar characteristics. 

Many UK investors use index funds or ETFs tailored to either value or growth styles as a simple way to gain exposure while mitigating individual stock risk.

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The Key Differences Between Value and Growth Investing

While both growth and value investing aim to build long-term wealth, they differ in philosophy, risk profile, and timing.

Growth investing is forward-looking. It relies on the market eventually rewarding companies for their innovation and rapid expansion. This often means accepting higher volatility and short-term uncertainty in exchange for the potential of above-average returns.

Value investing, on the other hand, is based on the premise that markets can misjudge a company's worth. By purchasing undervalued companies with strong fundamentals, value investors aim to benefit as the market corrects itself. 

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How to Decide if Value or Growth Investing Is Right for You

Choosing between growth and value investing depends on several personal factors:

• Investment goals: Are you aiming for long-term capital appreciation, or are you seeking steady income and lower volatility?
• Time horizon: Growth investing usually requires a longer time frame to ride out market swings. Value investing may suit those with a medium to long-term horizon looking for more stable returns.
• Risk tolerance: If you're comfortable with market fluctuations and are focused on potential gains, growth may appeal to you. If you prefer less risk and more predictability, value could be a better fit.
• Behavioural tendencies: Some investors struggle with holding onto volatile growth stocks through downturns. Understanding your emotional response to risk is just as important as the numbers.

In reality, many investors find a blend of both strategies provides balance, with growth driving long-term returns and value offering stability.

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Growth and value investing summary

Understanding the core principles of growth and value investing helps lay the foundation for a more thought out and tailored investment strategy. 

While growth investing seeks to capitalise on future potential, value investing focuses on capitalising on perceived mispricings today. Each has its strengths and trade-offs.

By aligning your personal goals, risk tolerance, and time horizon with the appropriate strategy, or combination, you can build a more resilient investment portfolio.

In the next guide, we’ll explore how you can begin to put these strategies into practice through building passive income, a key step in creating financial freedom and long-term wealth.

AstraZeneca, the FTSE 100’s largest company, is powering towards a potential £200 billion valuation this year.¹ The pharmaceutical giant is regaining momentum as tariff concerns fade, with robust earnings and promising clinical trial results reigniting investor confidence.

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What’s driving AstraZeneca’s recent growth?

• Pipeline momentum: Positive trials in new treatment for high blood pressure Baxdrostat, as well as multiple new regulatory approvals across oncology, cardiovascular and rare disease therapies. 
• Strong financial results: Total revenue was up 9% in H1 2025 to £21.3 billion, operating profit rose 23% to £5.46 billion, and pre-tax profit rose 26% to £4.96 billion. 
• Regulatory clarity in China: Investigations into the company’s tax and insurance practices are nearing resolution, with fines expected to be minimal.
• Tariff risk under control: Reassurance on the impact of US trade policy, with tariffs seen as manageable. 

If AstraZeneca continues to post strong earnings results and investors continue their vote of confidence, hitting the £200 billion valuation before the end of the year could be within reach.¹ 

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Why does this matter?

As the FTSE 100’s largest company, solid growth from mega-cap stocks like AstraZeneca is enough to have a positive impact on the whole index. 

Although one stock's growth doesn’t indicate a trend for other stocks in the FTSE 100, it does show us how strong innovation and earnings (even in the face of adversity) can continuously drive value and resilience. 

For long-term investors, AstraZeneca’s rally reinforces the case for focusing on high-quality companies with a history of long-term growth often found in market-cap weighted indexes like the FTSE 100 or S&P 500. 

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Where does Chip come in?

With Chip, you can invest in index funds like the FTSE 100, which track the price of huge companies like AstraZeneca. Companies move in and out of the underlying index based on their market cap (value of total shares), so you can be sure you’re always investing in the 100 most valuable stocks. 

Open a Stocks & Shares ISA or General Investment Account, choose your funds, and you’re away!

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Sources

¹TheMotleyFool

The AI boom is fuelling a resurgence in ambitious “moonshot” bets, as early SpaceX backers’ huge returns and falling valuations for traditional software companies force tech investors to embrace riskier and more capital-intensive dealmaking.

Ideas once considered outlandish, from nuclear fusion to melding humans with machines, are gaining attention from venture capital firms that even a few years ago would never have touched start-ups in such sectors.

“The world definitely has changed,” said Matt Robinson, partner at VC firm Accel. “Look inside any VC’s office and the kind of companies they are discussing over the last couple of years has transformed.”

Excluding the giant sums ploughed into AI start-ups, global investment in “deep tech” — companies whose products are rooted in big scientific or engineering advances — has exceeded $150bn since the start of 2024, more than the $133bn in the entire decade to the end of 2019, according to Dealroom.

Ambitious founders in Silicon Valley are cheering a return to greater risk-taking from investors, after an extended stretch following the dotcom bust in which VCs became preoccupied with backing predictable enterprise software companies.

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“The most profitable [start-ups] to invest in were all software businesses on the internet for a period of time, when the internet was new and growing,” said Max Hodak, co-founder of Science, a brain-computer interface start-up. “That sucked a lot of oxygen out of physical hardware because it’s harder . . . Was that totally healthy? Probably not — but we’re back.” 

Hodak, who also co-founded Neuralink alongside Elon Musk, argues that VCs’ interest in software was itself a “detour” from the hardware ventures that helped Silicon Valley emerge decades ago. 

“The original ‘OG’ venture capital built the railroads. This is really the magic of capitalism,” he said. 

This year’s deep-tech investments have not yet surpassed 2021’s peak, which was propelled by battery and electric vehicle deals for the likes of Rivian and Northvolt — many of which turned sour, highlighting the risks involved in moonshot dealmaking.  

But the extraordinary volumes of capital flowing into AI model companies are spurring a rise in bets that could revolutionise how data centres are powered or even put them into space, as well as reviving interest in other science-fiction ideas that AI promises to bring closer to reality.

“There is a feeling of turning the oil tanker,” said one VC executive specialising in “frontier” tech of the sense among investors that they have to move beyond software-as-a-service.

“But it’s such a different thing to underwrite a quantum computing company to something where you’ve had such a strong set of benchmarks that you could put in a spreadsheet.”  The AI infrastructure boom in particular has created new markets and customers for all kinds of wild ideas.

“Today there is almost a ‘why now’ for everything,” Robinson said. “You used to be able to say, this one goes in the too-hard bucket. And I don’t think you have that option any more.”

AI-powered simulations are already slashing the cost of experimenting in areas such as fusion and space tech, lowering the upfront spending requirements that have traditionally been associated with hardware ventures. 

AI is “really transforming what you can do ‘in silico’ before you do it in the physical world,” said Carina Namih, investor at London-based VC Plural. “That is driving a massive acceleration in those deep-tech fields. So the capital intensity to get those returns has really changed.”

But the timeline to cashing in those returns remains uncertain. Raising capital for moonshot ideas may be getting easier but the path to commercialisation is often just as hard as the initial tech breakthrough. 

Alphabet’s X lab popularised the idea of moonshot investments more than a decade ago, when Google’s parent company created an incubator for long-shot ideas that traditional investors rarely backed. It has produced both hits — such as Waymo, the self-driving car venture now valued at $126bn — and misses including Loon, which had hoped to deliver internet access to remote areas via high-altitude balloons before it was shuttered in 2021. 

But even Google’s starry-eyed approach to innovation is now becoming more grounded. In a recent interview with Fast Company, Alphabet’s “captain of moonshots” Astro Teller said X now spent more time studying the business case and technical feasibility of its latest ideas, which include Bellwether, an AI-driven forecasting system aimed at predicting natural disasters. 

Moonshot investors concede there is no traditional valuation metric that can win over an investment committee when it comes to ideas like putting data centres or biology labs in space. Writing a speculative cheque is often the only way to see which science project might turn into the next SpaceX.

Some of this year’s biggest deep-tech deals outside of AI include space start-ups Sierra Space, Axiom Space and Iceye, as well as fusion start-ups Helion, Proxima and Inertia. 

“One of the things everyone considered very difficult about the space industry, until now, was there was a very high barrier to entry,” said Ariel Ekblaw, chief executive of space architecture R&D lab the Aurelia Institute and an investor in space tech, noting that in the AI era, “entire products . . . can be rebuilt in a day”. 

The wealth created by the SpaceX IPO is fuelling a fear of missing out among “people who did not get invested in that first wave”, Ekblaw added, predicting this would spark a “Cambrian explosion of new start-ups” targeting the space industry. Founders Fund, for example, turned a roughly $600mn investment in Musk’s rocket, satellite and AI group into a stake worth more than $50bn at the company’s initial public offering, according to PitchBook estimates. 

Ekblaw predicts that falling launch costs will unlock new applications for the space industry, from energy to in-space manufacturing. 

“There is a real need for more orchestration of solar power in orbit between space assets that enables high-power activities . . . that were not happening before,” she said. “The corollary to that is space-to-ground, which is profoundly more efficient green energy and you can do it even at night.” 

Start-ups such as Overview Energy and Reflect Orbital are planning to float giant mirrors in orbit that would reflect sunlight back to Earth, while Florida-based Star Catcher raised $65mn in May to build a power grid in space using “optical power beaming”. 

“We are going to see a maturation of the space industry, like we did with commercial aviation,” said Ekblaw. “We are in the early stages of that transition.” 

Bouncing sunlight around in orbit might seem like less of a daunting investment prospect for portfolio managers whose software stocks have been hammered by this year’s “SaaSpocalypse”, which wiped away hundreds of billions of dollars in market value. Some of those losses were recouped after last month’s earnings reports from the likes of Salesforce.com showed a potential uplift from AI.

AI model companies such as Anthropic could end up swallowing much of the market served by today’s traditional software companies, according to Bejul Somaia, partner at Lightspeed Venture Partners.

“On the applications side, one of the biggest and most difficult things to underwrite right now in software-only businesses is durability and differentiation,” he said. “Where will the models end?” 

As AI threatens to destroy many of the “moats” that traditional software incumbents have relied on to protect their businesses, many tech investors now argue that venture capital must also reinvent itself for a new, less certain era in the tech industry. 

“In category after category, the terminal value we once counted on no longer holds,” Hemant Taneja, who heads VC firm General Catalyst, wrote in an essay in July. “For an outcome to matter now, founders must build far bigger companies than before.”

Hodak, who is preparing to bring to market Science’s first product — a retinal implant that can restore sight — bristles at the “moonshot” label. 

“Just because it’s a big ambitious goal, I don’t think it needs, in the psyche of the popular imagination, to mean it’s unlikely,” he said.

“The original moonshot worked. We did in fact leave a flag on the moon.” 

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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.

Jasaun Knight remembers the first time he operated a PC using only his brain.“The experience of controlling a computer with my thoughts, moving a cursor around the screen and playing games, was mind-blowing,” said the 35-year-old American. “It was like telekinesis.

I felt I had a superpower.”Knight is one of fewer than 200 people worldwide who have been implanted with a brain-computer interface (BCI) — a device that detects neural activity and translates it into digital commands.

BCIs have the potential to restore speech and movement to people who have lost them through injury or disease. If the technology becomes safe and affordable, it could turn computers and artificial limbs into more direct extensions of the human body, reshaping the relationship between people and machines.

Companies developing BCIs have already raised more than $1bn in 2026, according to PitchBook data, compared with $1.56bn in the previous four years combined.

Neuralink, founded by Elon Musk a decade ago, is the best-funded, having raised more than $1.3bn in seven rounds. But dozens of competitors are pulling in substantial investments as they pursue a range of approaches to connecting computers to the nervous system.

“The field is advancing rapidly as investors move into neurotechnology, though it has already been well characterised and validated in academia,” said Michael Mager, chief executive of New York start-up Precision Neuroscience, which made Knight’s implant. “We in industry are now taking this transformative technology and making it into products that will have a broad impact.”

The most ambitious companies are developing “invasive” devices inserted through a surgical incision in the skull. Some, like Neuralink, have electrodes that penetrate the brain and are designed for long-term use. Others, including Precision Neuroscience, are developing thin, flexible BCIs that sit on the surface of the brain without piercing it.

Knight received his device during surgery for brain cancer as part of a clinical trial that lasted a few days.

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“I didn’t feel anything physically in my head,” he said. “Once you get the hang of it, your thoughts control what’s happening on the computer screen with no effort at all. ”Another area of research involves non-invasive systems placed on the scalp, which avoid the need for surgery altogether.

However, although they can be useful for diagnosis and research, the brain signals they receive are weakened by passing through the skull, and the devices are not yet sensitive enough to convert thoughts into dependable computer instructions. “All the hype and the funding is going into implantable BCIs,” said Damien Coyle, director of Bath University’s Institute for the Augmented Human.

“With non-invasive techniques the spatial resolution of signals is not so good, but they have a lot of scope for development over the next few years, for example to modulate brain activity. ”US companies including Synchron, Blackrock Neurotech, Axoft and Merge Labs benefit from deep American venture capital markets and a Food and Drug Administration that executives regard as more responsive than regulators in Europe.
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But a cluster of innovative BCI companies is emerging in Europe, among them CorTec in Germany, Onward Medical in the Netherlands, Spain’s InBrain, and Neurosoft and Ability Neurotech in Switzerland.

“The advantages of a European location lie in our deep engineering and precision manufacturing heritage as well as our talent in neuroscience,” said Frank Desiere, CorTec chief executive.

However, he added that Europe “has a real gap in late-stage funding and scale-up capital, as well as a fragmented reimbursement landscape”, and that the continent lacked a regulator “guiding and consulting manufacturers like in the US”.

The company has chosen US sites — the University of Washington and Mayo Clinic — for the first clinical trials of its BCIs.

Meanwhile, the industry is also growing rapidly in China following Beijing’s designation of BCIs last year as a nationally strategic sector, with a roadmap to create two to three “world-class” companies by 2030.

Several provinces have launched investment funds and industrial zones, backed start-ups and supported hospitals running clinical trials.

Private investors have followed suit. In the first half of 2026, VCs poured Rmb7bn ($1bn) into the broader neurotech sector across 60 investments, according to ITJuzi data.

Roughly a dozen Chinese companies are working on invasive BCI devices, according to a tally by the FT, with a much larger number developing non-invasive applications.

One leader in the field is NeuroXess, founded in Shanghai in 2021, which is developing flexible implants to treat severe neurological disorders.

Analysts say China has a strong advantage with its large patient population for clinical trials and regulatory support for accelerating the technology’s development.

Most BCIs work in one direction, reading signals from the brain and turning them into electronic commands. But some companies are developing systems that can also send signals back, creating a two-way exchange between brain and machine known as closed-loop stimulation.

CorTec is among them. “It’s like having a dialogue with the brain, adapting our therapy to the individual signals of the patient,” said Desiere. “In strokes we target the motor cortex, reading and stimulating the cells there so that they fire together. Neurons that fire together wire together.

”One of neurotech’s biggest opportunities may come when BCIs converge with another rapidly advancing field: prosthetics. Artificial limbs have been around since ancient times but developments in sensors, materials, batteries, motors and software are making them lighter, more capable and easier to control.

Bristol-based Open Bionics makes arms fitted with sensors that detect movement in a user’s remaining muscles and transmit the signals to the prosthetic hand.
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While the investment climate has fluctuated during the company’s 12-year existence, its revenues have grown at a compound annual rate of 60 per cent since 2018.Yet even the most advanced artificial hands lack much of the dexterity and sensation of the biological original.

The technical capability to build a hand that replicates many natural movements already exists, according to Joel Gibbard, Open Bionics co-founder and chief executive. But the systems used to control them remain “very, very rudimentary” — a problem BCIs have the potential to resolve.

Researchers hope a direct link to the brain could eventually provide the missing interface — and, if signals flowed both ways, restore a sense of touch.Meanwhile, Open Bionics is embracing the superhero associations of its technology.

Its Hero Arm offers children designs based on characters from franchises including Black Panther and Metal Gear through licensing agreements with companies including Disney.“There are technical limitations for today, but what people think about for the future is inspired by movies and science fiction,” said Gibbard.

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Back in New York, Knight, a former insurance agent who is now training as a software engineer, is considering a new career in neurotech — helping to develop the kind of systems he helped test.“After my experience,” he said, “I’d probably be a perfect candidate.”

Every month, the Office for National Statistics (ONS) releases the latest figures on the UK labour market from its Labour Force Survey (LFS). While this data is obviously important news for job seekers and politicians, it is also one of the most closely watched days in the calendar for investors. 

The Unemployment Rate represents the percentage of the labour force that is without a job but is actively seeking work. It’s important to note that this figure doesn’t include everyone who isn’t working. Students, retirees, and those not looking for a job are classified as ‘economically inactive’. 

When investors are interpreting unemployment figures, they’re typically looking for three things:

1. The headline rate: Is this figure going up and down? 
2. Wage growth: Are pay packets getting bigger?
3. Vacancies: Are companies trying to hire?

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Why do investors care?

For investors, employment data is a key economic health indicator and can be a key catalyst for other key indicators. It can have a direct effect on interest rates, consumer spending and inflation. 

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The link to interest rates

This is the biggest reason the markets care about jobs data. Unemployment is a key data point for the Bank of England Monetary Policy Committee when determining their base rate of interest, which determines the cost of borrowing for other banks. 

If unemployment is low: businesses are in greater competition over staff, pushing wages higher. When wages increase, so does consumer spending, and inflation can follow suit. The Bank of England may raise interest rates to stop the economy from ‘overheating’. Higher rates are tougher on borrowers, and cause markets to dip as debt becomes more expensive. 

If unemployment rises: this suggests a potential slow down in the economy, and the Bank of England may cut interest rates to try and stimulate growth. Lower rates are often welcomed by markets and investors, as they make borrowing cheaper and encourage spending.

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The link to corporate profits

The UK economy is heavily driven by consumer spending, and this has strong links to employment.

When jobs are safe (low unemployment): People buy cars, book holidays and subscribe to services. This pushes profits up for consumer goods and services companies like airlines, high-street shops and restaurants.

When jobs are at risk (high unemployment): Consumers tighten their fists and generally stick more to essential spending. In this environment, consumer essentials suppliers like supermarkets and utilities tend to show more resilience, whilst higher end discretionary spending like luxury goods and leisure suffer.    

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The ‘good news is bad news’ conundrum

Drawing a clear link between job growth and a robust economy can be tricky, and the stock market's reaction to positive employment data is not always consistent. 

This often happens due to inflation fears. If the job market is doing ‘too well’, investors’ inflation fears deepen, and predictions of Bank of England rate increases can dampen market spirits. Markets prefer a stable number that shows a strong economy, without being so strong inflation fears creep in. 

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Read our full guide on economic indicators investors should watch out for.

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