finance
monthly
Personal Finance. Money. Investing.
Contribute
Newsletter
Corporate

With a total valuation of more than $9 trillion, the European real estate market has caught the eye of new and seasoned investors alike. When you think of real estate investments in Europe, prominent cities, such as Berlin, London, and Paris, instantly come to mind. However, foreign investors have plenty of opportunities to reap the benefits of emerging markets in Central and East European countries. Despite the economic turmoil of 2020, the region recorded a total of €9.7 billion in real estate investment transactions. That figure is projected to skyrocket in the coming years.

We’ll dive deeper into the hottest new European markets for foreign real estate investments in the following sections. Let’s get started.

1. Georgia (Tbilisi)

Georgia’s real estate sector has witnessed significant growth over the last few years. The development of state-of-the-art projects, such as David Kezerashvili’s Vake Plaza in Tbilisi, propels the industry further.

Situated close to the city centre, Vake is an upscale neighbourhood in Tbilisi known for its fine dining restaurants and tranquil ambience. It’s also the area with the highest density of ex-pats, making it ideal for investors from foreign countries.

The university district of Saburtalo is another neighbourhood that’s grabbing the attention of investors. It’s a more affordable alternative to the sky-high real estate prices in Vake. However, it is essential to pay attention to investment advice by David Kezerashvili. According to the real estate developer, investor, and former Defence Minister of Georgia, the country’s real estate sector is prone to government interference.

The absence of a proper legal framework makes it difficult for developers to gain complete control of their projects. Also, that leads to an abundance of conflicting information at local, state, and federal governments.

Kezerashvili believes that the market presents an ocean of opportunities to foreign investors despite these limitations. But he advises investors to be prepared to navigate through a bureaucratic system plagued with remnants of Soviet policies.

2. Poland (Warsaw)

Poland is one of the top contenders as a relatively stable and safe market for real estate investments. In 2020, the country dominated the CEE real estate investment market with total recorded transactions worth €5.6 billion. It’s the third-best result in Poland’s history. However, it’s worth noting that buyers and investors are prioritizing the industrial sector over other markets, such as housing. The retail industry has seen a surge of alternative assets, such as open-air shopping centres and retail parks. It’s understandable considering the changing shopping preferences of consumers due to the pandemic.

There’s also been a rise in the demand for high-rises and luxury residential properties in Warsaw. Warsaw's thriving business sector and relative political stability have turned it into a lucrative market for investors.

According to a recent report by PwC, there’s also an increased interest in acquiring assets that can be repurposed and repositioned. It’ll help investors pivot when market forces change due to economic downturns, political conflicts, etc.

3. Hungary (Budapest)

Sustained economic growth and low unemployment rates have led Hungary’s capital to become the fastest-growing housing market globally. The city has particularly benefited from foreign companies opening new offices and luring potential investors.

According to Adam Ilkovits, CEO of a leading brokerage firm in Budapest, seasoned investors choose to buy properties on the outskirts of the business district. These areas offer more potential for appreciation, thus resulting in higher resale values. If you’re looking to invest in the housing market right now, Hungary is one of the most rewarding markets.

4. Czech Republic (Prague)

Economic growth in Czech Republic’s capital has created a class of thriving high-net-worth individuals with an eye for high-end properties. The so-called ‘nouveau riche’ focus on buying luxury properties that enhance their social status. If you’re looking to venture into the luxury housing market, Prague would be a great place to start. Experts believe that the growth of the premium housing segment will continue in the coming years.

The Way Forward

While the CEE real estate market is showing signs of growth, it’s expected to suffer minor blows due to the Russian invasion of Ukraine. The increased cost of construction materials combined with supply chain disruptions will escalate property prices.

Irrespective of the market you choose, you must have a clear idea of the underlying risks of foreign real estate investments. Also, you should have a deep understanding of government policies and legal regulations in that specific market.

Foreign exchange fraud is a collective term referring to any scheme that intends to defraud traders through deception, convincing investors of high returns by trading on the forex market. In essence, the foreign exchange market is a zero-sum game, wherein one person experiences gains while another suffers from losses.

We all know by now that online investments are pretty risky. This is especially true in the foreign exchange landscape. There is an abundance of forex scams online, initiated by scammers who get their confidence from the Internet's anonymity. Identifying a scam from a legitimate forex trading activity is imperative to protect yourself from financial ruin.

Aggressive forex brokers

Recovery from a forex scam can be arduous and slow for its victims. Before you become one, it is best to recognize the typical warning signs. Legitimate forex traders are not aggressive when marketing their expertise or service to prospective investors. On the other hand, if a few forex brokers or companies persistently contact you whom you do not know personally, it is best to proceed with caution. If you are interested in forex trading, seek references from people you know.

Exaggerated claims of high returns

A classic indicator of a forex fraudster is exaggerated claims of massive returns on modes investments. It is most likely a scam if you are promised guaranteed high returns. The success of your investment is highly dependent on a highly volatile market. You may receive returns quickly, or you may not. But a company that purports consistently high returns is giving you false claims because it is not feasible in the foreign exchange trading market.

High spread offers

The standard spread ranges between two to three points in USD/EUR. Be cautious when approached by a forex trader that offers up to seven points spreads. Bear in mind that major currency pairs have a price of four decimals.

Use of complicated jargon

Forex scammers take advantage of their knowledge of the forex exchange market by using complicated jargon when preying on their victims. Terms like risk disclosures and terms of use are often used to limit their liability should investors suffer losses along the way.

Withdrawal restrictions

If you are attempting to withdraw funds from your account and cannot do so, it might be time to start worrying about your investment. If a broker provides you with a vague explanation or unclear apology when this happens, you need to re-consider your investment, or better yet, pull out before losing more money.

Blacklisted broker

Avoid brokers who fail to provide you with the proper credentials at all costs. You want a trustworthy person to manage your account. Do due diligence and check out regulating bodies to verify if a forex broker has a good legal standing in the foreign exchange market.

Conclusion

It is recommended to partner with a regulated broker with a well-established reputation, flawless track record, and has positive feedback from previous and existing investors to avoid becoming a victim of a foreign exchange trading scam. While the allure of quick returns is hard to dismiss, it is best to err on the side of caution and be more thorough in your vetting process.

Michael Kamerman, CEO of Skilling, shares his opinion on what stock you should buy this week.

Microsoft

In light of recent political triggers, markets are more prone than ever to volatility. For investors, it’s best to focus on big companies during this – given their high transparency and rigid business models.

Valued at over $2 trillion, Microsoft is a great example of a robust company. However, even the most robust companies are vulnerable to market volatility, as shown by shares falling by over 22% from the highs of $311 before rallying to $303.

Whilst buying during the dip has been a winning strategy for investors in the past, they need to exercise extra caution given the impact of political triggers on stocks currently. The stock market is facing heightened pressure and as a result, stocks aren’t performing in line with investors’ expected patterns. This means investors need to be certain they’re making rational and realistic decisions, rather than following the zeitgeist. 

Despite this, Microsoft stock is still a sustainable choice for investors given its track record of healthy returns. Also, given the growth runway, Microsoft can reap from the cloud, there’s a great opportunity for extra revenue for the company. By considering gaming and the emerging metaverse, the company can also look at expanding its offerings exponentially.

Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 89% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Not investment advice. Past performance is not indicative of future results.

Disclaimer: The information contained within this article is for educational and entertainment purposes ONLY. The commentary provided is the opinion of the author and should NOT be considered as personalised advice or recommendation. The information provided in this article should NOT be a person’s sole basis for an investment decision. All investments are made at the reader’s own risk. 

A wide range of apps is already being used in day-to-day life. Institutional trading platforms, direct access brokers, and HFT-investment tools expand their capabilities via API connections from AI backend systems. Companies with a significant footprint in the artificial intelligence sector have shown remarkable evolution and strength in the financial markets. Investors who have chosen the right stocks in the early stages of AI made meaningful profits partaking in their growth.

AI Revolutionises The Economy

Whether in the investment or energy sector, legal advice, retail or elder care, the areas in which artificial intelligence systems can be used are numerous and broad. Consequently, companies and analysts assume that artificial intelligence will revolutionise the economy of the 21st century.

AI has become a fundamental everyday companion for many people. For example, many use it to access buildings and data centres or digital facial recognition on their newest smartphones. Internet search results are getting better and better by picking the best results for a relevant query out of multi-millions of potential websites. In addition, voice assistance and translators become faster, and spell checkers in e-mails are more accurate than ever before.

The chances are that millions of people will be transported by autonomous driving cars soon. For their use, test automobiles are in operation worldwide. They collect "driving experience" over millions of miles and collect the essential data for self-learning algorithms.

Investors In AI-Focused Companies

Companies with a substantial focus on artificial intelligence see rapid gains on stock markets like the New York Stock Exchange or Nasdaq. Tech giants such as Microsoft Corporation, Nvidia Corporation, Alphabet Inc., and Apple Inc. have seen significant gains between March 2020 and December 2021. They all have in common that their services are used with existing products without selling something new to a customer.

Microsoft Windows is still by far the leading operating system on P.C. Alphabet's Google search is implemented on billions of devices and used by billions of users around the world every day. Nvidia's graphic cards are part of most gaming computers, and Google's Android-based devices dominate the smartphone market along with Apple's iOS systems. Those technologies play a crucial role in advancing artificial intelligence, whether Alexa, Cortana or Siri.

Nevertheless, caution is required, like with any investment. Being an industry leader in a growing market does not automatically ensure unlimited success without risk.

Companies can fail despite good ideas. Facebook, for example, changed its company philosophy in late 2021 by re-branding the company name from Facebook to Meta Platforms. with the focus on the growing Metaverse. This new company strategy is not a guarantee of success, and first growth projections confirm that the future growth is expensive while the user base is shrinking for the first time. Facebook goes with the Metaverse trend, and people tend to confirm that this is a real trend, but it might take decades before actual results become visible in balance sheets.

Therefore, buying individual shares of companies focusing on AI can lead to meaningful profits and extensive losses. Regardless of the prevalent company strategy, current market stake and future expansion of the digital transformation.

In general, investments need explicit expertise to determine the best possible companies worth an investment. The risk of investing in specific assets is significantly higher than for mutual funds that invest broadly and are actively managed by investment professionals.

AI Company Investments

Investing in specific shares of a company requires insights into the most key company fundamentals and ample knowledge about the stock market in general. Many free stock trading platforms provide free information about company metrics like:

In addition, numerous websites also supply users with stock charts, technical analysis features and portfolio tracking functionalities. But, in the beginning, investors have to learn how to interpret those company fundamentals correctly. Comparisons relative to other companies in peer groups and other sectors are also meaningful.

A small fraction of investors prefer day trading volatile growth stock with big stakes in AI technologies. They utilise tools to profit from minimal stock market movements. Such tools often focus on high-speed trade execution, extensive charting capacities and excellent customer support. Some of those platforms also use AI to find the best tradable stocks.

Day traders often trade 1,000 shares or more at once to achieve a high cumulative profit. Interestingly, a day trader holds 100% cash overnight without investment exposure. Therefore day trading is entirely independent of the company's future potential and business success.

Day trading is one of the most speculative investment strategies and demands a massive time responsibility. That's why most investors choose long-term investments by using instruments like ETFs.

Diversified Portfolios

Investing in artificial intelligence-focused mutual funds or exchange-traded funds is often considered a much safer alternative to day trading. With an accelerating digitisation trend, some investment funds focus entirely on artificial intelligence to benefit from the value driven by this technology. Their broadly diversified portfolios help investors partake in the evolution of AI companies worldwide.

Diversification of investments by investing in ETFs is a great alternative to day trading AI stocks. The key benefits are:

Conclusion

The artificial intelligence business has immense potential, and it will be one of the pivotal disrupting industries in the 21st century. As a result, investors can now participate in the future growth of AI in numerous ways. Retail brokers and more specialised HFT brokers continuously expand their capabilities and enable investors to connect AI systems to their order routing systems. Algorithms take care of the order routing and trade execution process.

Long-term investing via AI-focused exchange-traded funds has some limitations in controlling the company diversification within the ETF but requires only a little time commitment from the investor. In contrast, investing in stocks is an excellent way to diversify a portfolio directly. Still, it requires comprehensive knowledge of financial market behaviour and insights into key company financials. Yet, day trading volatile stocks allows to stay on cash overnight, but it is only an option for professionals and demands the highest time commitment.

David Morrison, Senior Market Analyst at Trade Nation, and Michael Kamerman, CEO of Skilling, share their opinions on what stock you should sell this week, and what stock you should buy.

Buy: BP

As Russian hostilities in Ukraine continue to ratchet up, and after the West imposed its toughest set of sanctions on Russia, BP announced it would dump its 20% stake in Rosneft, estimated to be worth £25 billion. The news led to a delayed opening last Monday and BP’s stock price fell 7%. This took the stock down to 350 pence. BP began the year at 330 pence and then rallied to 418 by 11th Feb. It has sold off ever since until hitting 350 pence on Monday. It subsequently jumped to 375 pence, having recovered all losses after the Rosneft news. But the stock slid below 350 on Friday 4th March following news that Russian forces had attacked Ukraine’s largest nuclear power plant. BP is trading a long way below the 720 pence high from 2006, but it’s comfortably above its October 2020 low when it fell below 200 pence. BP is undeniably a volatile stock. Fortunately, investors have received decent dividends over time, as a reward for their loyalty.

Does the current sell-off open an opportunity for dip buyers? Quite possibly. Looking at the chart, since the October 2020 low BP has trended upwards, putting in a succession of higher highs and lower lows. This is bullish. On top of this, WTI crude oil has just traded at levels last seen eleven years ago, and the latest OPEC+ meeting showed that members were in no mood to raise output above their current meagre supply increase. This should help with BP’s profitability. BP is a good dividend payer and is open to buybacks. In addition, the divestment of BP’s Rosneft stake could, according to a report from Bloomberg, boost the company’s environmental credentials, thereby making it more acceptable to the ESG crowd.

Sell: Big Retailers Like Macy’s

Department store group Macy’s, whose brands include Bloomingdale’s and beauty outlet Bluemercury, could struggle if the current economic environment persists. Inflation hasn’t proved to be transitory and seems likely to rise further given the recent jump in energy and food prices. At the same time, we could be looking at a period of falling growth. If so, then we should expect consumers to adapt to conditions and look at where they can make quick and easy savings. Maybe cut back on streaming subscription services for instance. But which ones? Also, the monthly subscriptions aren’t too onerous if you’re working. But what about jewellery, clothing, kitchenware, bedding? US consumers may decide to stop purchasing luxury items  while deciding they can live a bit longer before replacing other household items. I think this could be a problem for Macy’s. In mitigation, last month Macy’s released a strong set of quarterly results. The group also offered positive forward guidance for 2022, citing fresh initiatives such as expanding its digital business, as well as private brands and small, off-mall stores. These, along with the opening of the global economy post-Covid 19, should all be positives for the group. But gains in the stock price will depend on the success of the fresh initiatives, against what could be challenging economic conditions for the year ahead.

Macy’s has also rejected calls from activist investor Jana Partners to spin off its e-commerce operations. Jana Partners calculate that a split could double the group’s valuation. But Macy’s insists it would cost too much to make the change. No doubt activists will continue to circle, but investors will have to do their own due diligence to work out how this could affect the share price going forward.

- David Morrison, Senior Market Analyst at Trade Nation

Buy: NVDIA

NVDIA has some of the most sought-after gaming graphics processing units (GPUs) globally and is outperforming many of its competitors in the industry. Despite recent blips for the stock including a cyberattack, NVDIA has reported its best quarter in ten years. With the added potential of the metaverse, NVDA stock is an exciting option for investors. 

Jaguar Land Rover has also just entered a partnership with NVIDIA to develop their upcoming vehicles on the platform. With the highly anticipated RTX 4000 GPU rumoured to be released later this year, NVDA stock is likely to gain momentum. The company is also expected to offer a 150% performance increase with a forecasted revenue of $8.11 billion for Q1 2023.

However, investors need to be mindful of market volatility. After prolonged global chip shortages, it could take months for the supply of Nvidia GPUs to catch up with demand. As a result, investing in this stock can cause big losses as NVDA tumbles from recent highs and may take some time to be actionable once again.  Despite this, NVIDIA is still a dominant force in the chip space. By focusing on gaming, AI and the emerging metaverse, the company is expanding its business offerings exponentially.

Whilst the sluggish price momentum due to political triggers shouldn’t deter investors completely, as with any investment, investors need to understand what they’re investing in and make a rational, emotionally intelligent decision. 

- Michael Kamerman, CEO of Skilling

Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 89% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Not investment advice. Past performance is not indicative of future results.

Disclaimer: The information contained within this article is for educational and entertainment purposes ONLY. The commentary provided is the opinion of the author and should NOT be considered as personalised advice or recommendation. The information provided in this article should NOT be a person’s sole basis for an investment decision. All investments are made at the reader’s own risk. 

There is reported to have been a ‘staycation boom’ in the UK during the pandemic. This would make sense; after all, international travel has been fraught with additional complexity and cost, if not being rendered completely impossible for long periods over the past two years.

Indeed, it was recently reported that 39% of Britons would be more inclined to holiday in the UK post-pandemic. But the appetite for staycations was already well established before we had ever heard of Covid-19. A quick glance back to 2019 reveals that while 93 million Britons jetted overseas, whilst 123 million chose to holiday in the UK, suggesting that the ‘boom’ is simply an uptick in a stable domestic tourism industry – one that is worth over £1.6 trillion.

The strength of this industry, which is expected to grow further, has naturally impacted the property investment sector. Namely, more investors – particularly buy-to-let investors – are now considering holiday lets as a means of diversifying their portfolios. For those who fall into this camp, it is important to first understand the suitability of investing in holiday lets, including both the potential pitfalls and benefits that such an investment entails.

Reasons to be wary

Profitability – landlords acquiring a new property that they intend to use as a holiday let are likely to have paid an inflated price. Location is a very important factor in the success of a holiday let, and increased tourism in the last two years have pushed property prices up in tourist hotspots. Further, many properties will need furnishing and renovation to qualify as a holiday let. So, an initial outlay is common before income from holidaymakers starts to filter through; this could pose a potential barrier to some investors.

Running costs – with the cost of cleaning, energy and maintenance falling under the landlord’s remit, the regular turnover of guests creates some significant outgoing costs that can limit the money made on a property. Investors should also be aware that letting agents can charge between 20-30%, a necessary cost if they would prefer not to carry out the day-to-day management of the property. All these costs will eat into an investor’s yield. 

Lack of guests – unfortunately, the old adage ‘build it and they will come’ is not a guarantee in the holiday let market. Despite sites like Airbnb creating easier platforms to market holiday lets, it is unlikely that properties will ever be at full capacity all year round. As holiday lets must be let for a minimum of 105 days to earn their potential tax benefits (more on this below), failure to attract guests could be disastrous to a property’s profitability. 

Threat of regulation – with London capping short-term lets to just 90 nights a year unless planning permission is acquired, regulation in the holiday let industry is likely to increase. Areas like Cornwall and Bournemouth have seen incidents of 'over-tourism', and local councils may bring further regulation in to compensate.

Difficulty in finding finance – the relative insecurity of short-term lets makes borrowing from high street lenders difficult. As such, landlords could look for alternative financial backers. In doing so, lenders who underwrite on a case-by-case basis are essential to securing the best deal. Despite high-interest rates, variable discount rates and large down payments, investors and their brokers could consider their financial options as they hunt for the property itself in order to secure a deal that is most beneficial to their needs.

The benefits to be had

Those are the challenges, of which there are plenty. But that ought not to overshadow the potential upsides – again, there are numerous. 

As many experts suggest, investment in different markets can maximise returns as each asset will react differently to market fluctuations. While it certainly does not guarantee against loss, diversification can reduce risk. The potential benefits listed below reflect why many landlords regard holiday lets as an increasingly interesting way to diversify their portfolios.

Tax benefits – if a property qualifies as a Furnished Holiday Let (as defined by HMRC), landlords are able to claim Small Business Rate Relief, thus avoiding council tax or business rates on their property and increasing the potential for profit. Furthermore, landlords can offset energy, cleaning and maintenance bills against their profits, reducing their tax bill further. If they choose to sell, they can even claim some capital gains reliefs, increasing the value of a holiday let as an asset.

Yields – as a result of these tax reliefs, and a rental price increase of 41% since 2020, holiday lets can make 30% more yield than a BTL property. With most aiming for a return of 8% annually and an average profit target of 30% (rising to 50% on properties without mortgages and letting fees), holiday lets begin to look like a credible alternative to an established portfolio. 

Holiday home – the potential benefit that might have intrigued landlords the most during the pandemic is the opportunity to use a holiday let as a personal holiday home. To qualify for tax reliefs, holiday lets must be available to let for at least 210 days leaving landlords 22 weeks a year to use it themselves if they choose. With restrictions on international travel and a working from home order in place, the option to travel to a second home for free makes a holiday let an even more intriguing alternative to landlords.

Final thoughts

As restrictions ease and international travel continues its revival, it will be fascinating to see whether staycations remain as prominent, both in the media and with holidaymakers. For landlords considering a holiday let, they should weigh up whether they are capable of navigating the various pitfalls of the market. Those who are successful could certainly start to reap the attractive benefits a holiday let has to offer.

About the author: Paresh Raja is the founder and CEO of Market Financial Solutions (MFS) – a London-based bridging loan provider. Prior to establishing MFS in 2006, Paresh worked as a senior professional consultant in one of the top five management consultancy firms, and also set up an independent investment group.

According to the Financial Times, the Berkshire Hathaway CEO purchased the substantial stake just weeks before the record-breaking $68.7 billion acquisition was completed.

Berkshire Hathaway purchased nearly 14.7 million shares of Activision Blizzard in the fourth quarter of 2021, a stake that was worth approximately $975 million at the time. However, the video game company is now trading at around $81.50 per share following the deal. Consequently, Berkshire Hathaway’s stake is now worth approximately $1.2 billion. The perfect timing of Hathaway’s purchase has led many to believe that Buffett had inside knowledge of the Microsoft-Activision deal. 

Though he resigned in 2020, Gates sat on Berkshire Hathaway’s board for 16 years, while Buffett served as a trustee of the Bill and Melinda Gates Foundation from 2006 to 2021. However, the pair’s relationship is not solely professional. On Buffett’s 90th birthday, Gates marked the occasion by sharing a video of himself baking a birthday cake for the Berkshire Hathaway CEO. 

According to Statista, the number of self-employed professionals in the UK is 4.2 million as of November 2021. That’s a fall from a high of more than 5 million pre-pandemic. Nevertheless, the lure of being your own boss is strong, with the ability to pick and choose work that fits your lifestyle and financial needs.

Although some quit self-employment in favour of a career they perceive to be a safer bet, many others prefer to carve their own career path and build for the future. If you’re newly self-employed, or you’ve been self-employed for some time and only now starting to look ahead, it’s important to think more seriously about saving for the future.

If investing in finance is something that feels foreign to you, don’t panic. We’ve got you covered, with four savings opportunities to build a valuable nest egg for the future as a hard-working sole trader.

1. Self-Invested Personal Pensions (SIPPs)

As the name suggests, a SIPP is a self-managed personal pension plan. You have total control over what you invest in and when. Your annual contributions to a SIPP are capped at 100% of your salary, with tax relief applicable for those earning up to £40,000 a year. If you earn £30,000, you can pay £30,000 to your personal pension if you can afford to. It’s possible to invest lump sums or set up a standing order from your current account to move regular monthly sums across to top up your plan.

It is one of the most tax-efficient ways to invest as a self-employed professional. That’s because you’ll receive 20% tax relief from the UK government on anything you pay into your SIPP. Higher rate income taxpayers can claim more tax relief through their self-assessment tax returns.

With a SIPP, you also have the added flexibility of investing in additional asset types. This includes everything from overseas equities to property and land as investment trusts and exchange-traded funds (ETFs) that have holdings in firms that buy and lease real estate. At present, you cannot access money invested into a SIPP product until the age of 55 and this ceiling is due to rise to 57 in 2028.

2. Cash ISAs

Cash ISAs allow you to save up to £20,000 per annum in an ISA and accrue tax-free interest. They are available for people aged 16 and over and you must be a UK resident.

One of the main benefits of a cash ISA is that it offers easy access to your funds whenever you need them without incurring financial penalties for withdrawing them. However, some ‘easy access’ cash ISAs do set a limit to the number of withdrawals you can make each year. Another key benefit is the ability to transfer money within cash ISAs into other ISA products that may yield bigger returns when needed.

Look out for some cash ISAs that seek to entice you in with high rates of interest for a short-term period before tailing off to a much more modest level. Nevertheless, nothing is stopping you from moving funds from one cash ISA to another offering an improved interest rate.

3. Stocks And Shares ISAs

A stocks and shares ISA is another tax-efficient way to invest your hard-earned money. Currently, you can set aside up to £20,000 a year into a stocks and shares ISA. The biggest benefit of a stocks and shares ISA is that you don’t incur capital gains or income tax on any profits from your investments. It's also good to know that you can move funds from other ISA products like cash ISAs into a stocks and shares ISA to magnify potential profits at times when you have the utmost confidence in your portfolio.

These products provide a 'tax wrapper', as stocks and shares ISAs earnings are shielded from capital gains. With some brokers like Freetrade, it’s also possible to invest in fractional shares, which enables you to buy into some companies that may otherwise be out of your reach. This allows you to get a piece of even the biggest equities and diversify your long-term investment portfolio. For peace of mind, most regulated brokers in the UK are part of the Financial Services Compensation Scheme (FSCS), which gives investors peace of mind that funds are safeguarded in the event of company failure, up to a maximum of £85,000.

4. Lifetime ISAs

Lifetime ISAs (LISA) are one of the newest forms of ISAs from the UK government. A LISA is more typically geared towards millennial and Gen Z savers either looking to save for the first rung of the property ladder or saving for retirement well in advance.

According to GOV.UK, it’s possible to invest up to £4,000 during each tax year, with each LISA account given a 25% top-up bonus from the UK government each month. If you invest the £4,000 maximum, this means you’ll earn up to £1,000 a year from the government.

When you invest in a LISA — or indeed any of the ISA products available — you will eat into your yearly ISA allowance of £20,000. Let's say you invest the full £4,000 into your LISA, you can only invest another £16,000 into a stocks and shares ISA during the same tax year.

This should provide you with an overview of the savings landscape open to self-employed professionals across the UK. With state pensions being dished out later than ever, sole traders must manage their own finances sustainably with a healthy balance between today and tomorrow.

As mutual funds have grown in popularity in India, so has the number of fund houses or AMCs (Asset Management Companies). When you visit the websites of prominent AMCs, you will notice that they provide several sorts of mutual fund programmes to investors.

But have you ever thought about how these strategies came to be? Using NFOs. Investing in a mutual fund scheme during the NFO period could be quite profitable. Consider what NFOs are, how they work, and the benefits they provide.

What Is An NFO?

When a fund house creates a new mutual fund plan, it is referred to as an NFO. Similar to stock market IPOs (Initial Public Offerings), fund houses employ NFOs to obtain initial money for the purchase of securities that are in line with the fund's aim.

The NFO is open for a set length of time, during which investors can participate in the programme at the offer price. The NFO pricing in mutual funds in India is normally fixed at Rs. 10 per unit of the mutual fund scheme. When the NFO period finishes, current or new investors can only purchase units of the plan at a predetermined price, which is usually higher than the NFO price.

Is This A Good Opportunity For You?

The fund house uses an NFO to generate funds from the public to purchase market instruments such as equity shares, bonds, and so on. They are similar to IPOs, in which the general public can purchase shares before they are listed on a stock exchange. Furthermore, the extensive marketing efforts that go into its promotion make it a too-good-to-pass-up chance. However, before selecting one, you should use your discretion and wisdom. Just look at our market for a better view and understand the upcoming NFO of the market.

Types Of New Fund Offers

They are mostly of two types, and they are:

Open-Ended - An open-end fund will announce fresh shares for purchase on a specific launch day in a new fund offer. The number of shares available in open-end funds is unlimited. On their initial launch date and subsequently, these funds can be purchased and sold through a brokerage firm. The shares are not traded on a stock exchange and are managed by the fund business and/or its affiliates. Net asset values for open-end mutual funds are reported days after the market closes.

Close Ended - Because closed-end funds only issue a limited number of shares during their new fund offer, they are frequently among the most heavily marketed new fund issuances. Closed-end funds are traded on an exchange and receive daily price quotes throughout the day. Closed-end funds can be purchased through a brokerage firm on the day they are launched.

Benefits Of Investing In NFOs

1. Disciplined Investing Lock-in Period

Many people invest in mutual funds only to redeem them after a few months. This has a detrimental influence on the investment objectives. However, with NFOs, such as closed-ended NFOs, there is a lock-in term during which you must remain invested. This systematic approach to investing boosts the possibility for profits. Here is the list of a few upcoming NFOs.

2. Produce Profits

As previously stated, there might be a large disparity between the NFO and NAV prices. This distinction can be extremely lucrative at times.

3. Invest In Emerging Funds

Many AMCs are currently introducing novel mutual fund plans. Some schemes, for example, invest solely in newly listed stocks and IPOs. In addition, some schemes include hedging tactics to provide higher returns for investors. You can invest in such funds through NFO before they are open to all investors.

This is just the tip of the iceberg, and you can find more that match your financial needs and are good performers.

Should You Be Investing In NFOs?

While NFOs can be quite rewarding, it is incorrect to believe that every NFO would produce large returns. Before investing in NFO, you need to think about a few things. They are as follows:

Unlike traditional mutual fund schemes, where you can simply review prior performance before making an investment decision, NFOs do not provide any past performance statistics. As a result, they are risky and are not suitable for risk-averse investors.

Investors That Look To Invest In NFOs

When the markets are at their highest, most investors look for mutual fund investment opportunities. They want to get into the market, whether it's gold or real estate because they believe it will increase further. However, they also favour profitable investments that are offered at a lower cost. Asset management businesses (AMCs) attempt to capitalise on this investor mindset. 

This is why many gravitate toward the ostensibly less expensive NFOs. Investors consider NFOs to be a good value for money and subscribe to them. As a result, the fund houses will be able to meet their goal of boosting their Asset Under Management (AUM).

Conclusion

This can be an opportunity for you to diversify your portfolio, especially given the paperless and instantaneous investment processes. Giving you a heads up - just read the print of the NFO thoroughly and find out if it matches your objective and goal.

As I write this we are already well into the new year and it’s becoming clear 2022 has a very different outlook from last year when the “everything rally” was fuelled by easy money, ongoing COVID recovery and mitigation spending programmes, the market’s belief central banks would act to avoid any market instability from derailing sentiment, and COVID uncertainty.

 This year has opened with a much clearer perspective on how quickly central banks will act to address inflation, normalise rates and unwind the quantitative easing programmes that juiced markets with liquidity over the last decade. Welcome back to grown-up markets!

The critical uncertainties are how destabilisation rising/normalising rates become, how inflation – “transitory” or “persistent” – develops (and the danger it morphs into stagflation), and how quickly the global economy puts COVID-19 behind it to start growing again. That leaves geopolitical tensions over Ukraine and with China as the other known unknowns.

My tech valuation stupidity indicators – ARK, Bitcoin, Tesla - opened the year into negative numbers suggesting fundamental analysis is coming back into vogue.

In short, investors are going to have to think hard about what this market is telling them through 2022. The game is changing. One aspect I expect to change dramatically is “euphoric” market sentiment – the everything rally fuelled speculation to supercharged irrational levels. As a famous boxer never said: “I go into the fight prepared with a plan to get rich – which I stick with right up till I get punched hard in the face”.

Sentiment, especially towards get-rich tech scams, is changing. My tech valuation stupidity indicators – ARK, Bitcoin, Tesla - opened the year into negative numbers suggesting fundamental analysis is coming back into vogue. To be fair, Morgan Stanley disagrees with me on Tesla – predicting a rally to $1400 on the back of improving numbers and it’s already on the final lap of the EV marathon when everyone else is still tying their shoelaces… really? I predict everyone could be making decent EVs within a few years. But they won’t be… and to find out why, keep reading.

I would never grace my market haverings with the legitimacy of being “predictions” but let’s run through some ideas for the coming year.

Stocks

Inflation is nailed on – which is perversely good for stocks on a relative basis. The upside will come from higher corporate dividends as the globe recovers from COVID. Sound stocks which will continue to beat risk-adjusted bond returns. But it will be a selective market – distributable profits matter as rates rise, spelling a crisis for the tech sector where unprofitable firms telling the pursuit of size over returns will struggle. In a rising rate environment, fundamental value stocks will outperform. I’m also expecting an ESG backlash to benefit the detest oil majors as energy shortages in Q1 trigger a fundamental review of climate change transition, and the acknowledgement we can’t dump gas overnight and expect the global economy to keep working.

If we assume the global economy stages a covid recovery I’d expect a knew jerk Q1 market rally, before rising rates and lower liquidity sees a pretty flat second half.

Consumers

This is not going to be a good year for consumers - tax rises, massive increases in energy bills, inflation of food, accommodation, and modern necessities like Netflix will dramatically hit discretionary spending. Wages are likely to remain sticky for most workers, unless they are prepared to move into the more challenging sectors like service, entertainment and logistics where wages are rising. Issues like consumer exposure to interest-free debt (like Klarna) could prove “interesting” – if discretionary spending falls, then so will the amount of consumer free-cash to service debt.

Inflation

Forget transitory – that’s a 2021 expression. Supply chain bottlenecks triggered inflation – but they have themselves spawned significant consequences. We’re now seeing higher wages and supply chains evolving. Energy prices will hoick inflation. While 6-7% inflation rates will characterise the early part of the year we may see moderation to 4% later – but that will be remained sustained as the economy adjusts and finds a new equilibrium at a higher permanent inflation rate.

Bonds

The market now expects the Fed could hike four times this year. The Bank of England has already hit the button. Rising rates mean a bad year for bonds – but remember they are also the ultimate safe haven if markets snap. We’re likely to see an acceleration of corporate defaults which have been artificially low for over a decade due to ultra-low rates allowing unfit companies to survive – and that could get very messy due to terminally dismal liquidity in bond markets – which will set like concrete when the selling starts. Corporate spreads will widen – and the markets will have to relearn the fundamentals of credit strength.

Crypto vs Gold

No contest. Gold will win. Crypto enthusiasts can argue gold is as destructive to the environment as Bitcoin. Really. But it’s also real. Bitcoin isn’t.

Energy

2021 demonstrated the dangers of Energy Sovereignty. Without it, nations are vulnerable – as Europe is finding out. Ensuring sufficient stocks of energy – particularly oil and gas – will become paramount. ESG concerns will be dismissed as it becomes clear the optimal routes to Net Carbon Neutrality by 2050 depend on a phased approach with gas replacing coal before gas can be replaced itself. The likelihood is for oil and gas prices to remain elevated through 2022.

Renewables

Will 2022 be the year the world wakes up to the fact wind and solar might be marvellous in terms of fooling the people we’re greening the planet? They are the least efficient source of power, more expensive than expected to maintain, but can achieve easy funding at tight levels because every institutional investor wants to show off how green and ESG compliant they are by holding renewable assets. A better route to zero carbon involves a much wider range of non-CO2 emitting, but more “difficult” energy sources such as tidal, nuclear and clean gas, and mitigants like reforestation and better waste carbon sequestration. These are all achievable – but difficult. Nuclear fusion – will remain a tomorrow solution. I haven’t mentioned hydrogen – because it’s far more difficult than folk expect.

EVs

A world where Rivian made 1400 cars in 2021 but is worth more than the German auto sector has never made much sense. It makes even less when we appreciate that every single EV on the planet today is based on lithium batteries. Lithium is a nasty, dirty dangerous element that will kill us all if it leaks into the water table. Whatever Elon Musk says, it is very difficult to recycle. If we are going to make 35 million EVs by 2030, then we either mine every single atom of it on the planet or hope that a friendly asteroid comprising pristine lithium and cobalt makes a soft landing (as it didn’t happen in the film “Don’t Look Up”). Otherwise – we probably need a rethink on EV power – soon!

However, while the concept has actually been around for some time, it is only in the last few years that sustainable investing was gaining any significant traction. Then the COVID-19 pandemic hit and, as it rippled across the world, many proponents feared the worse for sustainable investing’s trajectory, as governments, regulators and investors switched attention to short term recovery measures.

But the worst did not happen, in fact, quite the opposite. The buzz about sustainable investing has continued to grow louder, as we are increasingly aware of how interconnected we are, but also the glaring inequalities we face. So, what does this mean for us now, as we look beyond the pandemic?  2022 appears to be the year that sustainable investing is set to skyrocket.

Sustainable investing explained

Sustainable investing is an investment discipline that considers environmental, social and corporate governance (ESG) criteria to generate long-term competitive financial returns and positive societal impact. Various other terms are often used such as responsible investing, impact investing or ethical investing – while there are nuanced differences, it’s fair to say that the commonality is to achieve positive change, invariably with a social or environmental dimension.

However, sustainable investing isn’t just about avoiding investing in companies that do harm. There is a new class of investors actively seeking out companies that address daunting social and environmental challenges while also delivering financial returns. These companies fall into a wide range of industries and sectors - ranging from food to transportation, from healthcare to education – the universe for sustainable investors is extensive.

Jumping on board

Even as recent as five years ago, the mainstream investment community was largely disengaged from discussions about sustainable investing. These conversations remained firmly within niche corners of the industry. This is shifting dramatically, with most big investors now believing sustainable investing to be good risk management, leveraging the practice to help manage risk in uncertain times. For sure, the COVID-19 pandemic has been somewhat of a game-changer in this regard because it turns out that companies that manage sustainability risks better, manage other risks better as well.

It helps also that some big names are getting more vocal about sustainable investing. Perhaps a pivotal moment happened in early 2020 when Larry Fink in his annual letter famously stated that Blackrock would put sustainability at the centre of its investment strategy. With all this momentum underway, we are going to see investors strengthening their ESG commitments and demand for sustainable and green products growing at a rapid pace.

The role of policy and regulation

There is a great deal happening on the global policy agenda too which is shaping the way many investors are thinking about sustainability. The Paris Agreement on Climate Change gave us a global carbon budget, and we are seeing widespread commitments being made by corporates and investors alike to achieving the Sustainable Development Goals. All this bodes well - and let’s face it, now we have the US back at the table, things are certainly looking up.

On the regulatory front, the European Union is leading the charge, with its Sustainable Finance Action Plan a sea change for investors. This includes new requirements to disclose the sustainability credentials of funds and regulations aimed at boosting transparency. The EU is certainly out front on sustainable finance regulation but countries around the world are watching closely on its success in implementation and are likely to follow suit in the months and years to come.

Looking out for sustainable stocks – what is out there?

The sustainable investing universe is wide and ESG is a broad church. However, as we look to the future certain themes and issues will gain more attention than others. For example, climate change will remain a top priority for many investors. At the end of last year, COP26 pulled together some significant private-sector commitments, particularly around driving trillions of dollars towards climate solutions. The momentum is clear as many large corporates make net-zero commitments, often more ambitious than national commitments. These are the companies that are worth looking at because they are embracing the inevitable.

At the same time, these actions are also being spurred on by a push back against high-carbon companies, especially Big Oil. Last year, a number of global fossil-fuel giants suffered embarrassing rebukes over their lack of climate change action. Investors are taking note and are increasingly willing to force companies to reduce their carbon dioxide emissions quickly.

Interestingly, the pandemic has shone a spotlight on social issues, pushing many investors to reconsider the management of social risks within their portfolios. This elevation of the ‘S’ in ESG is likely to continue. At the same time, the Black Lives Matter movement is bringing into sharper focus the lack of meaningful progress on racial equality and progressive investors are considering what action they can take. Diversity will continue to matter.

Take, for example, the growth and traction of gender-lens investing – an approach that integrates gender-based factors into investment strategy, process and analysis, in order to deliver positive benefits to women and girls. It is a growing sector and attention is not only coming from sustainable and impact investors. The evidence is stacking up as research continues to demonstrate the compelling case for gender diversity in the workforce, for overall economic growth, as well as improvements in innovation and productivity.

Still some challenges to overcome

There are still challenges to overcome to embed sustainable investing as the ‘new norm’. Disclosure and ESG data remain thorny issues, with concern that data is still fragmented, disclosure is inconsistent, and the lack of standardisation holds investors back. We still have some way to go on the regulatory front too – while the EU has been a front runner with its sustainable finance agenda, there are some delays as well as ongoing heated debates.

There is also increasing concern over the issue of greenwashing which is leading investors down the wrong path in some instances. Particularly for retail investors, where many are relying on certain labels such as ‘green’ or ‘SDGs’ or ‘gender diversity’ to guide them in the right direction when they make an investment decision. The problem is that sometimes these labels are not properly assigned, or maybe stretching the trust. This gives the investor a false sense of comfort, not to mention the damage it does to the reputation of the sustainable investment industry.

The important thing is to be aware of ‘greenwashing’ - some companies and funds can do a good job at ‘greenwashing’. Corporate marketing and PR efforts can hide a whole host of sins and this makes the job of sustainable investors even harder. It requires sustainable investors to do their research, check against third-party sources and undertake thorough due diligence.

Reasons for optimism

Despite these challenges, we have many reasons for optimism and 2022 is likely to see a sustainable investing boom. Perhaps one of the most exciting developments is how retail investors are waking up to the sustainable investing trend. Interestingly, research tells us that a lot of this drive is coming from women as well as younger generations. For certain, new audiences and new conversations are to be had – and the finance industry needs to be ready to deliver.

 

About the Author

Jessica Robinson is a leading expert on sustainable finance and responsible investing, and author of Financial Feminism: A Woman's Guide to Investing for a Sustainable Future.

Find out more at moxiefuture.com

Planning for retirement is paramount to success in this regard. Although there are many established methods that can get the job done, sometimes you need to get a little creative. Leveraging gold investments to prepare for retirement is a unique concept worth exploring more in-depth. Here are five unique investment strategies for retirement, with some of them exploring gold as an option. 

Prepare For After-Tax Expenses

Remember that old saying that "there are two things guaranteed in this world, death and taxes?" While it's a bit grim, it's true. Everyone should be paying their fair share of taxes. And with any retirement income or investments, there may be after-tax expenses that must be addressed. Understanding your retirement spending is pretty important. You'll need to figure out how you're spending is going to change, what your tax obligation is going to be, and allow for any unexpected expenses that may come up. Estimate the tax you'll need to pay on your retirement income then figure everything else from there. If you already know what you're walking into, you'll be better prepared for enjoying your retirement and addressing anything unexpected that may come up.

401K

The old standby for retirement accounts, the 401K, is a fundamental part of retirement planning. Remember those pesky taxes from before? Your 401K can help you reduce that tax burden as you save for retirement. A 401K is typically a combination retirement/saving/investment plan that is offered by your employer. With an annual contribution limit of $19,500, it's possible to save quite a bit each year in your 401K plan. Some employers also offer a match for the plan where they will put in an amount equal to your contribution up to a certain percentage. Often, 401K contributions are pre-tax meaning that the tax will come out after the contribution is made. So you're actually saving money on taxes there. Some plans give you a tax break when you have a dispersal, but there is an age limit on pulling money from the retirement account. Some penalties may be levied if funds are withdrawn before the age of 59. Ultimately, a 401k is a great investment that comes with a modicum of free money if your employer offers a match. It's worth getting for the passive nature of saving and the tax benefits alone.

Gold Stocks

Investing in Precious Metals is a pretty hot topic these days. Silver, palladium, platinum, copper, and gold are all viable options in this area, but gold tends to be a popular choice. While there are many ways to invest in gold, gold stocks are an easy, low impact way to do so. Resources like The Motley Fool often espouse the virtues of investing in gold stocks. And they're not off the mark at all. Whether you're looking to get into gold mining futures, exchange-traded funds, royalty/streaming companies, gold stocks offer a decent ROI and the benefits of gold without having to physically have the gold. Future stocks in particular also give you some insight into how the market might perform down the line or into the liquidity of buying/selling gold or gold stocks. Stocks can be a tough nut to crack, however, so it's best to seek a financial advisor and do plenty of research before plunging into this exciting world of investments.

Gold IRA

Anyone looking to invest in retirement accounts has probably heard of the ira. The individual retirement account is a popular choice for planning/investing for the future. Traditional and Roth IRA's are the most popular choices, but you may not have realised a gold IRA is an option. A gold IRA is a retirement account where physical gold is used to back up the account. Instead of contributing money or funds to the account, you instead contribute gold bullion, bars, coins, or other physical gold assets. Silver, palladium, and platinum can also be held in such accounts. Distributions and taxes work very much the same as traditional IRA. The IRS requires that the precious metals must be left in the care of the account custodian or caretaker.

Physical Gold

Gold barsWhile we're still on the subject of gold investments, physical gold is another often overlooked option for investing in precious metals. If you decide to get a gold IRA, then you already invest in physical precious metals. If you haven't gotten that far yet, then you might want to consider picking up a one-Troy oz gold bar or two. These bars are compact, valuable, and retain their value during inflation. Moreover, they are easily bought and sold or stored in a safe space within your home. These types of gold bars are finely made, mostly pure, and usually have certificates of authenticity to show they are a fantastic value. If gold bars don't pique your interest, then you might consider investing in gold bullion, coins, or even jewellery. Either way, physical gold can represent a wonderful investment option and help you prepare better for your retirement.

About Finance Monthly

Universal Media logo
Finance Monthly is a comprehensive website tailored for individuals seeking insights into the world of consumer finance and money management. It offers news, commentary, and in-depth analysis on topics crucial to personal financial management and decision-making. Whether you're interested in budgeting, investing, or understanding market trends, Finance Monthly provides valuable information to help you navigate the financial aspects of everyday life.
© 2024 Finance Monthly - All Rights Reserved.
News Illustration

Get our free monthly FM email

Subscribe to Finance Monthly and Get the Latest Finance News, Opinion and Insight Direct to you every month.
chevron-right-circle linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram