As market conditions fluctuate, proactive financial strategies can make all the difference between safeguarding one's wealth and witnessing a potentially significant decline in assets.
This article aims to provide a comprehensive overview of wealth management strategies in the face of uncertainty to help you navigate financial challenges.
Diversify Investments
This means spreading your investments across a variety of asset classes, such as stocks, bonds, and real estate. The main objective of diversification is to mitigate risk and stabilize potential returns. In the face of financial uncertainty, diversification can serve as a buffer, protecting your portfolio from sudden market downturns. If one asset declines, the other assets may perform well and compensate for the loss. In essence, diversification is the financial equivalent of the saying, "Don't put all your eggs in one basket." It's a prudent approach to investing, particularly during volatile market conditions.
Establish an Emergency Fund
This fund acts as a financial safety net, protecting you from unexpected expenses or income losses. The fund should ideally have enough money to cover three to six months of living expenditures. Keeping this fund in a highly liquid account, like a savings account, is recommended for easy access during emergencies.
With this buffer, you can have peace of mind, knowing that you are financially prepared to weather unexpected storms. Whether it's a sudden job loss, medical emergency, or significant repair costs, an emergency fund ensures you have the financial resources to handle these without jeopardizing your long-term financial goals.
Rebalance Portfolio Regularly
This involves realigning the proportions of your assets to ensure they still match your desired risk level and financial goals. Market conditions can cause certain assets in your portfolio to gain or lose value, shifting your portfolio away from its target allocation. By rebalancing, you are essentially selling high-performing assets and buying more of the underperforming ones, which aligns with the principle of 'buy low, sell high'.
This practice helps keep your investment strategy on track, mitigating risks and capitalizing on market changes. Keep in mind that rebalancing should be done periodically, such as annually or semi-annually, and not in response to short-term market fluctuations.
Long-term Perspective
Maintaining a long-term perspective is fundamental for effective wealth management, especially during periods of market volatility. While short-term market fluctuations can be unnerving, resisting the impulse to react hastily is important. Instead, focus on your long-term financial goals and resist swaying from your planned investment strategy based on short-term market dynamics.
Remember, the market has historically recovered from downturns, and temporary declines may provide buying opportunities for patient investors. Engaging a financial advisor can provide valuable counsel, help keep your emotions in check, and guide you in making informed decisions that align with your long-term financial objectives.
Avoid Overreacting
Making drastic changes to your investments during times of market volatility can be quite tempting. However, overreacting can often lead to decisions that may disrupt your long-term financial goals. Develop and stick to a disciplined investing plan, regardless of market conditions. Making rash judgments based on short-term market swings might cost you money and undermine your financial strategy.
Instead, strive to remain calm and composed, making rational decisions based on your long-term objectives and risk tolerance. Consult with your financial advisor before making significant decisions, particularly during periods of market uncertainty.
Final Thoughts
Financial planning is a dynamic process that requires regular attention and adjustments, especially amid economic uncertainty. Incorporating the proper strategy into your financial planning can go a long way in safeguarding your wealth and achieving your financial goals. It's important to remember, however, that every individual's financial situation is unique, and the best approach to wealth management will depend on personal circumstances, financial goals, risk tolerance, and life stage.
When immediate financial needs arise, quick and easy loans can be a beneficial tool. They provide immediate financial relief and are typically easy to apply for. While these loans can be a saving grace in emergencies, they should only be used wisely and sparingly, as they often come with higher interest rates.
As inflation rises and food prices continue to climb, many households across the UK have made the decision to go without broadband this year.
According to a survey conducted by Citizens Advice, up to one million individuals have canceled their broadband subscriptions in the past year due to the high cost of living, attempting to save money, and as part of their debt consolidation. The charity suggests that these individuals could have benefited from cheaper social tariffs or special low-cost packages. However, watchdog Ofcom has issued a warning, stating that 4.3 million eligible people are missing out on these deals.
In response to the situation, the government has collaborated with Ofcom and the industry to introduce a variety of products to the market, aiming to encourage the uptake of social tariffs. These affordable options are available in 99% of the UK and start from as low as £10 per month, according to the government's statement.
To simplify the process for benefit claimants signing up for social tariffs, a broadband eligibility checker has been introduced, and major providers such as Sky and Virgin Media have already joined the initiative.
Despite these efforts, Ofcom's findings reveal that the adoption of social tariffs remains very low, with only about 5% of eligible individuals taking advantage of them. However, this percentage has quadrupled since January of the previous year.
Citizens Advice conducted a survey of 6,000 people, which indicated that those receiving universal credit were six times more likely to have discontinued their broadband services in the past 12 months compared to non-claimants. Moreover, the charity expressed concern that the problem could worsen, as benefit claimants were four times more likely to fall behind on their broadband bills.
Ofcom reports that one in three households in the UK struggles to afford communication services, and they have called on companies to do more to promote social tariffs. Dame Clare Moriarty, the chief executive of Citizens Advice, stated the need for the watchdog to hold firms accountable and improve the uptake of these tariffs. She pointed out that people were being priced out of internet access at an alarming rate, and social tariffs should serve as the industry's safety net.
Other campaigners also highlight the fact that internet access has become an essential utility for day-to-day life. Those who cannot afford data face challenges in managing benefits, applying for jobs online, and benefiting from cheaper online prices, further exacerbating their financial difficulties.
The government claims that its job centre staff regularly guide claimants to relevant information on social tariffs, and individuals can access computers for their job searches at local job centres. Citizens Advice shared the story of Rob, a 63-year-old who has been unable to afford broadband since 2012. Rob explained that not having internet access at home significantly hampers his job applications and limits his access to services such as his GP, online help, and shopping.
The government highlights various measures it has taken to assist those who find broadband unaffordable. In June, after negotiations with the government, leaders from major broadband and mobile operators agreed to a set of public commitments aimed at supporting customers facing difficulties paying their bills.
However, the Digital Poverty Alliance, echoing the concerns of Citizens Advice, notes that while the uptake of social tariffs is slowly improving, it still falls far short of the levels necessary to ensure digital inclusion for all households. The organisation argues that even with an affordable social tariff, households in severe poverty may still struggle to afford essential connectivity.
This cost-of-living crisis has emerged from a perfect storm of factors, including the fallout from COVID-19, the war in Ukraine, and disruptions to the global supply chain. As a result of all of this, it is thought that fraud could become a bigger issue in the coming months and the Financial Ombudsman has already reported a sharp increase in complaints.
Types of Fraud
There are many different types of fraud to be wary of with cases currently on the rise. These include criminals posing as a customer’s bank and getting them to move money to a “safe” account as well as people buying items online but not receiving the goods that they order. Cryptocurrency scams are also increasingly common, and it is thought that these are mainly driven by social-media-based scams that take advantage of people looking to make money quickly (something many are trying to do during the cost-of-living crisis).
Another type of fraud to be wary of that is not online is MOT fraud. From 2021 to 2022, there were 1324 cases of MOT fraud and this can result in dangerous cars being on the UK roads putting all road users at risk. MOT fraud involves either qualified MOT testers not doing their job by giving certificates to vehicles that should have failed or even cars that have not been tested. In some cases, there are examples of MOT testers taking bribes for certificates. This is why you should always research testing centers ahead of getting your MOT and book MOT online from a trusted tester.
What Can Businesses do?
So, what can businesses do to prevent fraud from being an issue during the cost-of-living crisis? Preventing fraud will involve having robust processes in place, providing staff training, and using high-quality cybersecurity products to prevent cyber-attacks. You can also conduct regular audits to identify any potential vulnerabilities and to ensure that all processes are watertight and secure. Business owners should also pay attention to the news and look out for the latest scams.
The cost-of-living crisis is creating a serious issue for both individuals and businesses in 2022 and it could be a tough period ahead for many. Not only is the cost-of-living crisis stopping people from spending, but it is also having a knock-on effect in terms of fraud and scams. It is important to educate yourself and be wary in the months ahead so that you know what the common scams are and what steps can be taken to protect yourself.
The action, which was announced on Wednesday, will see those living on the Isle of Man pay some of the lowest electricity prices across the British Isles unless other governments follow suit.
People on the Isle of Man had been bracing for a 70% rise in tariffs, adding an additional £500 to the average annual household bill from the autumn.
However, under the government’s deal, the increase will instead be added to customers’ bills over an extended period of time from April.
In a comment, the Isle of Man’s Treasury minister, Alex Allinson, said: “The aim here is to flatten the curve on the cost of living increases and give households a degree of certainty and time to adjust to what may be a longer-term set of challenges.”
“Providing a loan with a 20-year repayment means that the costs of record electricity prices expected this winter can be factored into bills over a much longer period, cushioning consumers from what would be, for many, crippling price rises.”
The price freeze will be funded via a £26 million loan by the government to the island’s electricity provider, Manx Utilities. This loan will then be repaid over 20 years. However, the loan still requires formal approval by the Isle of Man’s legislature.
“The aim here is to flatten the curve on the cost of living increases and give households a degree of certainty and time to adjust to what may be a longer-term set of challenges,” Allinson explained.
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On Wednesday, it was reported that inflation has now reached a record high of 10.1%.
Online campaigning organisation 38 Degrees said the support the petition has received demonstrates how desperate people are for additional government help.
In a comment, 38 Degrees Strategic director Ellie Gellard said: “More than 118,000 people are backing Gordon Brown’s call for an emergency budget to help hungry kids and stop families from freezing this winter.”
“38 Degrees’ polling shows two out of three people support all the measures he has put on the table to take control of this crisis – including extra help for eight million vulnerable families and cancelling the energy price rise.”
“Britain is so much better than our leadership right now. While PM frontrunner ‘do nothing’ Liz Truss keeps families in the dark about whether any lifelines are coming, the message from the British public is clear: act big and act now.”
The UK is currently suffering through a cost-of-living crisis, where rent, bills, food, and more are at an all-time high. In fact, 89% of adults in Great Britain, around 46 million people, report having increased living costs over the past few months, despite cutting back on essentials.
With money inevitably on our minds, the question remains - is there something we can do to protect our finances? Let’s take a look at five insurances that can help ease the burden and anxieties of the cost-of-living crisis.
1. Income protection insurance
With the cost-of-living crisis, many have found themselves living paycheck to paycheck. So, if this income were to disappear, such as by falling ill, this might lead to serious financial trouble, which is an understandable and valid anxiety during such trying times.
Group income protection insurance will pay out monthly sums to employees who are off work long-term for sickness or illness. Though you will probably be eligible for statutory sick pay to begin with, this is only available for 28 weeks. Thus, income protection insurance will effectively continue payments after those 28 weeks, so you can focus on getting better rather than worrying about money.
2. Life insurance
Life insurance will pay a lump sum to your dependents in the case of your untimely passing. This will ensure that your loved ones are financially protected if you were to sadly die, which is even more important during such financial instability.
3. Vision and dental cover
Eye tests and new glasses can be expensive, even though it is an essential part of our lives. The same can be said for trips to the dentist, especially if you can’t access a dentist surgery that has NHS dentists. In some cases, going to the optician or dentist is an emergency, so it can’t be avoided - but it can equally be a lot to pay out of pocket.
To make sure your optician and dentist trips are not extortionate, or so expensive you avoid going altogether, look into vision and dental cover. If you already have health insurance, you might be able to simply add it as a bolt-on to your existing policy.
4. Critical illness cover
If you were to fall critically ill, and thus need to adapt your home, have attentive care, and still need to have the funds to live on, critical illness cover can help. It will pay out a lump sum that will give financial support towards the cost of living and other costs dictated by the illness at hand.
5. Mental health cover
Many studies have found that the cost-of-living crisis has been, and will continue to be, harmful to the mental health of our population. This is because financial insecurity has real-world implications, which can lead to anxieties over being able to provide for oneself and one’s family.
Thus, even if you have all the financial insurances listed above, it is important to make sure you have mental health cover too. Though mental health services are free on the NHS, they typically have extremely long waiting lists, and it goes without saying that forking out for expensive private therapists won’t exactly ease financial burdens or worries.
And there you have it - five types of insurance that can take a weight off your mind during this time by protecting your finances.
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Inflation is rising at its fastest rate in 40 years, and this has led to interest rates hitting their highest level in 13 years at 1.25 per cent – as of July 2022. It is widely understood that the increase in money supply during lockdown coupled with skyrocketing energy and fuel prices have been the main contributors to the current levels of inflation. Both of these factors have hurt business growth this year. Below, we explore how these factors affect businesses.
Interest rates
Interest rates refer to the amount a borrower is charged for borrowing a sum of money. When they rise, businesses will find it difficult. Consumers will have to pay more money on their debt in these situations, which usually leads to them having less disposable income. As a result, your business might find it harder to sell your products or services – especially if you deal in luxury goods. Naturally, if interest rates fall, businesses will discover that customers can spend more. The other issue with rising interest rates is that they make it harder for businesses to acquire loans, which in turn impacts how much they might invest in new ideas and projects. It’ll make any loan you take out more expensive and it’ll typically take longer to pay back, which in turn makes individuals and organisations think twice about their long-term outlook.
Inflation
Inflation can also impact businesses negatively. It refers to the rise in the cost of goods: if inflation occurs slowly, it can be good for business as it encourages consumers to spend in the present. However, sharp inflation can hurt businesses. When inflation soars, the cost of living rises, and employees will ask for higher wages to help them afford essentials. As such, businesses will have to pay higher salaries. But it also affects supply chains too. Businesses will have to pay more for the raw goods needed to make their products or carry out their services. When all of these impacts are combined, businesses will find that they’re spending significantly more money each month.
What steps are businesses taking to cut costs?
When interest rates and inflation rise, businesses usually have to take steps to cut costs. For instance, if a business is interested in purchasing a fleet of vehicles, it’ll look through car lease deals rather than making outright purchases. However, if more dramatic cuts are needed, a business might make the unenviable decision to lay off some of its workforce. This decision can damage the reputation of a company and limit future growth as the business downscales. It’s a tough decision that’s usually made when other, less drastic, cuts have been made without success.
Rising interest rates can create a difficult financial period to navigate. Consumers will find it hard to make ends meet each month, while businesses will see their revenue fall. But by taking sensible steps to cut costs and find innovative ways to increase revenue, your business can survive and thrive in the future.
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BP saw underlying profits reach $8.45 billion (£6.9 billion), a figure which is more than triple the sum it made at the same time last year and its second highest figure ever.
In a statement, BP chief executive Bernard Looney said: "Today's results show that BP continues to perform while transforming."
"Our people have continued to work hard throughout the quarter helping to solve the energy trilemma – secure, affordable and lower carbon energy."
"We do this by providing the oil and gas the world needs today – while at the same time, investing to accelerate the energy transition."
The news of BP’s record-high profits comes as energy consultant Cornwall Insight warned regular gas and electricity bills in England, Wales and Scotland could reach £3,615 in January.
Cornwall Insight’s principal consultant, Craig Lowrey, commented, “While the rise in forecasts for October and January is a pressing concern, it is not only the level – but the duration – of the rises that makes these new forecasts so devastating.”
“Given the current level of the wholesale price, this level of household energy bills currently shows little sign of abating into 2024.”
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The pandemic has been the catalyst for the world becoming increasingly cashless and in recent years, increasing numbers of young people have been using “buy now pay later” platforms, been subjected to crypto scams and exposed to financial misinformation on social media. These threats are inherently unique to Gen Z and didn’t exist ten years ago.
In order to help combat these risks and support and equip young people with the knowledge and skills necessary to build a healthy relationship with money, we need to make conversations about money and finances more real, relatable and practical.
Teaching young people financial literacy has the potential to empower them, giving them greater financial security and confidence and improving social mobility. With research suggesting that 67% of young people do not feel confident planning their financial future, this has never been more important.
Here are 5 top financial tips for Gen Z:
1. Be careful when using money lending platforms
Over the last few years, money lending platforms have become increasingly prominent, being an available payment option on most online retailers. These platforms make it considerably easier for young people to fall into debt without realising it, as they can use them as the default payment when making purchases from a wide variety of online stores. Unlike normal purchases, “buy now pay later” schemes enable young people to impulse-buy without having the upfront funds needed – this can lead to unsustainable debt and risks impacting young people's future credit scores. If young people aren’t careful they can get trapped in a cycle of buying items they can’t afford.
When it comes to money, being able to manage it well is part of a healthy lifestyle. Many of us can be tempted to make impulse purchases, especially when access to “buy now pay later” schemes is so easily available, but it’s really important to have a plan to pay off the debt. It’s also worth setting yourself spending limits so you only buy what you can afford to pay back.
2. Use discounts
As the cost of living rises, discounts have never been more important for young people – yet many don’t use them to their advantage. Numerous high street brands offer student concessions through platforms such as UNiDAYS. When buying your next pair of trainers you should use these websites to save you money.
3. Keep learning
It’s important to familiarise yourself with financial terms and to increase your knowledge of financial products and services, such as pensions, savings accounts and investments. There are many ways in which you can do this, such as through online learning, or by following personal finance influencers on TikTok, YouTube or Instagram. But don’t forget, it’s really important that you do your own research – if an offer for cryptocurrency sounds too good to be true, it probably is. And consider whether the ad featuring a celebrity influencer that’s encouraging you to invest your money is real or if it’s been faked.
4. Budgeting
Whilst it sounds obvious, saving and setting a budget have never been more important. However, whilst it can be hard to keep track of your spending, there are numerous apps which are great and do the hard work for you. Nowadays, many mobile banks highlight your spending patterns, meaning you can work out where you need to be more frugal to save money over the year. Budgeting is also great as it takes away any element of surprise (for example the pandemic, recessions etc), helps you plan ahead, and gives peace of mind regarding your finances, helping to reduce anxiety.
5. Use comparison sites
Customer loyalty doesn’t always save you money. But there are some great deals from providers if you are willing to search for them. By using comparison sites you can save money on everything from energy bills to phone contracts. A little time spent researching could save you significant money and stop you from overpaying on bills.
About the author: Sharon Davies is CEO of Young Enterprise, a national financial and enterprise education charity that helps young people learn to earn and look after their money. Learn more at www.young-enterprise.org.uk.
The energy company posted a £1.3 billion profit in the first six months of the year, up from £262 million during the same period last year. The record surge has been fueled by higher revenues from its oil, gas, and nuclear assets.
On Thursday, British Gas said it expects a further surge in profits this year amid rising energy prices, which has seen the company reinstate its dividend payout. Shareholders are receiving a dividend of 1p per share at a time when many households are struggling to pay record-high energy bills.
Since the outbreak of the Ukraine war at the end of February, gas prices have reached their highest level, with worse yet to come for consumers. In January, it is understood that the UK’s energy price cap could reach £3,850 per year.
In response to Centrica’s results, CEO Chris O'Shea commented, "We are very aware of the difficult environment many customers are facing and we will continue supporting them.”
The ONS put June’s inflation figure partly down to a 42% year-on-year increase in petrol prices.
Last month, average petrol prices stood at 184p a litre, up 18.1p since May alone. Diesel, meanwhile, increased by 12.7p to 192.4p a litre.
Food and non-alcoholic drinks were up 9.8% in the year to June, the highest rate since March 2009.
Grant Fitzner, chief economist at the Office for National Statistics (ONS), commented: “Annual inflation again rose to stand at its highest rate for over 40 years.”
“The increase was driven by rising fuel and food prices, these were only slightly offset by falling second-hand car prices.”
“The cost of both raw materials and goods leaving factories continued to rise, driven by higher metal and food prices respectively.”
“These increases saw raw materials post their highest annual increase on record, with manufactured goods at a 45-year high.”
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Deliveroo said growth in group sales by gross transaction value (GTV) dropped sharply to 2% on a constant currency basis in Q2, compared with 12% in the previous three months.
The company said it believes the drop “reflects the impact of increased consumer headwinds” and predicted the decline to impact sales across the entire year. The company forecasted annual sales growth of between 4% and 12%, a significant decrease from the previous 15% to 25% guidance.
In a comment, Deliveroo said, “management is confident in the company’s ability to adapt financially to a rapidly changing macroeconomic environment, through gross margin improvements, more efficient marketing expenditure and tight cost control.”
The move by Deliveroo marks the latest sign of consumers cutting back on non-essential spending amid the cost of living crisis, which is putting huge pressure on many households.
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