Here’s how this works…
Each week, we will introduce you to one new investing term that you’ll need to know if you want to start investing.
Then we’ll provide a summary of the past week’s financial news and explain why it’s relevant to you as a beginner investor and, more importantly, how you can use this knowledge to your advantage.
So, let’s get cracking!
TERM TO LEARN
THE INCREASING VALUE OF AN ASSET DUE TO THE INTEREST EARNED ON BOTH A PRINCIPAL AND ACCUMULATED INTEREST.
You deposit money into an account that earns interest.
After the first period, you earn interest on your initial deposit.
In subsequent periods, you earn interest on:
1. Your original deposit.
The interest you’ve earned already.
This creates a snowball effect, where your money grows faster over time as you earn ‘interest on interest’.
Let’s say you deposit £100 in an account that earns 10% interest annually:
Year 1: £100 + (10% of £100) = £110
Year 2: £110 + (10% of £110) = £121
Year 3: £121 + (10% of £121) = £133.10
Notice how the amount earned increased each year, even though the interest rate stays the same.
INVESTMENT NEWS FOR BEGINNERS
Kevin Warsh can’t single-handedly reverse the debasement trade.
The market recently reacted to the news that President Trump was nominating Kevin Warsh to be the next head of the Federal Reserve (the Fed, which is the central bank of the U.S.). For a long time, many investors have been worried that the U.S. dollar is losing its value because the government is in so much debt ($37 trillion). To protect themselves, they have been buying things like Gold, Silver, and Bitcoin. This is called the ‘debasement trade’. When Kevin Warsh was nominated, the prices of gold, silver, and bitcoin crashed because investors think that Warsh will be tough on the dollar and try to make it stronger. However, one person cannot fix this alone. Even if Warsh wants a strong dollar, the massive amount of government debt and political pressure to keep spending money means the debasement trade (buying gold/bitcoin) is likely not over.
Why this matters to you…
Debasement is a fancy word for making something worth less. If the government prints too much money or has too much debt, each individual dollar buys less (inflation). This news explains why people sometimes buy digital gold (Bitcoin) or physical gold instead of just holding cash.
The recent market reaction to this news shows how quickly so-called safe investments like gold can drop in price (gold fell 9% and silver crashed nearly 30% in a single day). It’s a lesson that even safe havens can be risky in the short term.
It also marks a potential attitude shift in the market. Investors are moving money out of metals and back into the U.S. dollar because they have renewed hope that the currency will be managed better.
What you need to do…
Don’t panic-sell/panic-buy. The crash in gold and bitcoin was a knee-jerk reaction. The underlying problems (like national debt) haven't gone away. If you own these assets, don't let a one-day price drop scare you into making a permanent decision.
Learn about ‘crowded trades’. When everyone is doing the same thing (like buying gold because they are scared of the dollar), the trade becomes crowded. If a tiny bit of news suggests the trend might change, everyone tries to sell at once, causing a massive crash. As a beginner investor, be careful of following the crowd when prices are at record highs.
FTSE 100 sets new record despite metals meltdown.
On February 2, 2026, the FTSE 100 (an index representing the 100 largest companies on the London Stock Exchange) hit an all-time high, closing at 10,341 points. This was surprising because the commodity sector (companies that deal in natural resources like gold, silver, and oil) had a very bad day. Usually, because the UK market has many large mining and oil companies, when metal prices fall, the whole index falls. However, this time, other sectors like pharmaceuticals (AstraZeneca, GSK), retail (JD Sports), and banking stepped in to save the day.
Why this matters to you…
This is a perfect example of why you shouldn't put all your eggs in one basket. Whilst mining stocks were crashing, healthcare and travel stocks were rising. Because the FTSE 100 is a mix of different industries, the gains in one area cancelled out the losses in another.
The FTSE 100 is known for its ‘blue chip’ companies (huge, established businesses). Beginner investors often look to these because they are seen as more stable. This news shows that even when a major sector (like mining) struggles, these large companies can keep the market resilient.
What you need to do…
In the UK, companies like AstraZeneca and Shell have a massive impact on the index because they are so large. A beginner investor should learn who the top 5 companies in their index are, as their performance can move the entire market.
Focus on the long term. Records are broken frequently. While a new record sounds exciting, for a long-term investor, it's just one day in a decades-long journey. Avoid the urge to chase the high by buying more just because it's at a record, or selling in fear because metals are melting down.
The markets global managers are targeting in 2026.
For the past few years, the biggest US technology companies (like Apple or Microsoft) have been the most popular and profitable investments. However, experts now believe this trend might be changing. They think other areas of the world and different types of companies are starting to look like better opportunities because they are cheaper to buy and have a higher potential for growth. Specifically, smaller US companies, emerging markets, South Korea and Japan.
Why this matters to you…
Stocks can be ‘expensive’ or ‘cheap’. Right now, US stocks are considered expensive (you pay a high price for every $1 of profit), while markets like South Korea and the emerging markets are cheap (you pay less for the same profit).
Politics affects your money. For example, new government policies in the US, South Korea, and Japan are directly creating investment opportunities.
What you need to do…
Look into ‘Small-Cap’ funds. You don't need to pick individual small companies. You can buy a US Small-Cap index fund or ETF, which spreads your money across hundreds of these smaller businesses.
Consider Global Funds. Instead of just buying a US fund, look for a Global or International fund that automatically invests a portion of your money in places like Japan, South Korea, and the emerging markets.
Don't chase yesterday's winners. Just because big US companies won in the last 5 years doesn't mean they will win in the next 5. This is a reminder to look forward, not backwards.
Thanks for reading this 19th edition.
It’s shaping up to be a wild week in the markets (when isn’t it, these days!), so here’s your 30-second cheat sheet on what’s going to be moving your money in the next week.
We’re currently flying blind because the US government shutdown has officially cancelled this Friday’s big Jobs Report, leaving investors to trade without their usual map.
At the same time, we’re seeing a historic crash in precious metals like Gold and Silver, which have taken a massive nosedive recently.
All eyes are also on the ‘AI Trade’ as tech giants like Google and Amazon report earnings, alongside weight-loss drug leaders Eli Lilly and Novo Nordisk.
Between the government silence and these huge corporate updates, the mood is definitely volatile.
So expect some bumpy headlines and big moves as the market tries to find its footing.
See you next week!