Have your Black Friday regrets kicked in yet?
Have your Black Friday regrets kicked in yet?
Why resisting the ‘deals’ could be worth more than you think
So, how did you get on over the Black Friday weekend? Did you bag a bargain? Did you treat yourself to a cut price flat screen or maybe even splashed out on a holiday deal?
Did you execute a finely-tuned strategic plan or randomly dash about enjoying the rush?
Whatever your purchasing approach, the numbers that surround the American import - which falls on the weekend after Thanksgiving, a public holiday - are now massive here in the UK too.
Every year there’s an avalanche of wildly differing figures about the shopping frenzy and its financial knock-on. This year, we’ll have spent anything from £275 each to more than £530. So whichever way you slice it, in the last four days we’ve probably blown more than £9.3bn between us.
But while we hate to be the bearers of bad news, those bargains aren’t what they seem. Every year, consumer group Which? does a deep dive into the advertised prices and discounts on thousands of products available online and in store.
Their aim is to work out what proportion of the mega deals advertised in Black Friday sales are available at the same price or cheaper at other times of year.
This year that figure was 99.5%.
No, that’s not a typo. Just 0.5% of the £9.3bn worth of items we’ve just snapped up were a true bargain.
No wonder buyer’s regret is a thing.
There are plenty of reasons to boycott the Black Friday circus, from the personal and financial to the environmental. Around a third of UK consumers do - refusing to buy a single thing on Black Friday out of principle. The number is growing all the time.
After all, it’s the best way to save 100%, they say. A better bargain than anything you’ll find with a Black Friday label.
But what about going a step further and investing the money we could have otherwise blown - often on the latest gadgetry that will get knocked off it’s cutting-edge pedestal within weeks anyway?
“We tend to see Black Friday as a great opportunity for a bargain on the must-have items we’ve coveted all year. It feels like a sensible money-saving approach,” says Sarah Coles, senior personal finance analyst for Hargreaves Lansdown.
However, those bargains may seem less sensible a year down the line, when the Peloton and the paddleboard have spent months gathering dust, and a big chunk of the latest tech has been superseded by something newer and shinier. Even those items that have transformed our lives, like the lockdown dog, are still soaking up our cash like a sponge.
Taking the investment alternative after Friday may feel far less exciting than unwrapping something shiny and new but take a look at the gadgets and gizmos gathering dust around your house before you decide to spend rather than invest this Black Friday.”
But don’t just take our word for it. Let’s crunch the numbers.
We’ll say, for arguments’ sake, that you were at the conservative end of the spending splurges this weekend, snapping up those now, ahem, slightly dubious-looking deals and parting with a total of £300.
For starters, if you haven’t used up your £20,000 IFISA allowance for the current tax year, it’s worth remembering that any interest or investment returns you gain from your £300 could be subject to tax if you decide to save or invest it somewhere other than an IFISA.
There are plenty of IFISA providers out there, and any kind of investing carries some risk, which it's of course vital to understand before you make any decisions. Please remember, easyMoney is not a cash savings account. You may not get back the full amount you put in. Your capital is at risk if you invest. Peer-to-peer investments are eligible for an Innovative Finance ISA which is not a Cash ISA. They are not protected by the Financial Services Compensation Scheme (FSCS). Money invested through easyMoney is concentrated in property and could be affected by market conditions. For the same reason, instant access cannot be guaranteed.
But put that £300 in the easyMoney classic innovative finance ISA, for example, and the target 3.08 per annum rate of return could mean you’re up by the best part of a crisp £10 note by the time Black Friday 2022 has rolled around again - roughly £9.37. Past performance does not guarantee future results.
Think of it as a reward for staying away from the shops and websites for a single weekend if you like. A financial pat on the back for resisting the call of the blow-up kayak you’ll use once before deciding you’re a landlubber through and through.
If that’s not quite enough to counter the shopping buzz though, then feast your eyes on the magic of regular investing and compound interest.
If you could resist that £300 spend for the next five years, not only could you save £1800 but it could be topped by almost £150 as the returns you earn are reinvested and begin to earn money themselves.
Traditionally a big Black Friday spender? If you set aside £500 every year on Black Friday instead of hitting the high street, you could be sitting on a nice little nest egg of just under £3,245 by the end of November 2026.
What very merry Christmas that could be. Not least because there isn’t five years’ worth of Black Friday clutter to clear out while you’re at it.
All the facts and figures presented are accurate at the time of posting.
easyMoney is not a cash savings account. You may not get back the full amount you put in. Your capital is at risk if you invest. Peer-to-peer investments are eligible for an Innovative Finance ISA which is not a Cash ISA. They are not protected by the Financial Services Compensation Scheme (FSCS). Money invested through easyMoney is concentrated in property and could be affected by market conditions. For the same reason, instant access cannot be guaranteed. We do not offer investment or tax advice.
easyMoney is the trading name of E-money Capital Ltd, a company incorporated in England & Wales. Registered office is 5 Fleet Place, London, England, EC4M 7RD (Company No. 04861007). E-money Capital Ltd is authorised and regulated by the Financial Conduct Authority (FCA) #231680.