Welcome to The Monthly Compound — my personal recap of what happened in the world of money and investing from the last month, and most importantly, what I am doing about it.
The 60-second summary
📈 Equities: Global markets were mixed in July. Strong earnings supported shares, but inflation, energy prices and uncertainty over interest rates created volatility.
🇺🇸 US shares: The S&P 500 slipped slightly as investors questioned whether expectations around artificial intelligence had moved too far ahead of profits. Technology and semiconductor shares saw some of the sharpest moves.
🇬🇧 UK shares: The FTSE 100 performed strongly, helped by energy companies, banks and dividend-paying businesses. It was another reminder of the diversification benefits of holding markets beyond the US.
🌏 Asia: Asian markets were volatile, particularly those heavily exposed to semiconductors and the AI boom. Strong long-term potential remains, but valuations and concentration risks became harder to ignore.
🏦 Interest rates: The Bank of England and US Federal Reserve both held rates steady. Policymakers remain cautious as they balance slowing growth against persistent inflation risks.
📉 Inflation: UK inflation continued to ease, but energy prices remain a risk. The final stage of returning inflation sustainably to target may prove difficult.
🤖 Theme of the month: The AI reality check
July marked a change in tone. Investors became less willing to reward every company linked to AI and began demanding clearer evidence that huge levels of spending would produce profits.
The AI story is far from over, but July showed that even a transformative theme can become overpriced.
My portfolio
📈 Equities: The foundation of my portfolio. This month, I invested around 86% of my available investment capital into low-cost index funds, giving me ownership of thousands of companies across the world. Despite volatility throughout July, I continued to buy more.
🍷 Fine Wine: My alternative investment allocation. This month, around 12% of my investment capital went towards continuing to build my fine wine portfolio. Wine valuations remained steady throughout July.
₿ Bitcoin: A small, higher-risk allocation. This month I invested around 1% of my available investment capital into Bitcoin, while ensuring it remains a controlled percentage of my overall portfolio. Bitcoin remained pretty flat throughout the month, and is still considered to be trading at a discount.
💹 Growth: During June, my total personal portfolio wealth de-creased by -0.72% compared with June. This equated to around a £2000 loss despite being supported by continued contributions. However, the AI sell-off was so intense it wasn’t possible to maintain positive growth by the end of the month, even with a strong UK equity performance.
Chart of the month: FTSE 100 breaks new ground
The FTSE 100 performed strongly in July because its heavy exposure to oil companies, banks and other established dividend-paying businesses worked in its favour. Rising energy prices boosted major oil stocks, while banks benefited from resilient earnings and the prospect of interest rates remaining higher for longer. Strong results from several large consumer companies also helped push the index towards fresh record highs. (Source: Routers)
One of the main reasons I personally like UK equities is the income they generate. The FTSE 100 contains many mature, profitable businesses that return a meaningful share of their earnings to investors through dividends, making the UK market particularly attractive for long-term income alongside capital growth. However, the key is not to draw those dividends right now, instead, reinvest them so that you build your wealth more quickly over time.
Lesson of the month: Diversification earns its keep
July was a useful reminder that different parts of the market rarely move in the same direction at the same time. US technology struggled, parts of Asia were extremely volatile, yet UK equities performed strongly.
That is exactly why I do not try to predict which country, sector or theme will lead next. I spread my money across global markets, continue investing through volatility and let diversification do its job.
One difficult month does not change the strategy. In fact, months like July are often when the strategy proves its value most clearly.
Why?
Because when some parts of the market fall while others hold up, diversification reduces the damage. Regular contributions also allow you to buy more assets at lower prices, while reinvested dividends continue compounding in the background.
July may have produced a small overall loss, but it also showed that you did not need to predict the winning market in advance. UK equities helped offset weakness elsewhere, and the long-term plan kept me investing rather than reacting emotionally. Never take your eye off the prize - consistency always wins.
The Compounder
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