Are there any real investment opportunities in the UK in 2022? Or are we all at the mercy of the triple whammy of rising interest rates, rising inflation, and the rising cost of living?
Investment Opportunities in 2022 for Cash
Inflation at the time of writing (June 2022), has now risen to 9.1%. The rate of increase has slowed dramatically. ISAs currently offers an interest rate between around 1.2% and 2.75% (moneyfacts.co.uk). That means that you are currently losing at best, 6.35% in the value of your cash, and with the bank of England forecasting inflation to rise to up to 11% by the end of 2022, that figure could be even worse.
So your cash investments are currently falling in value and will buy less in the future than cash will buy now. That’s not a great place to be, and with interest rates still relatively low, and likely to remain so (although it will rise), it’s unlikely that interest rates on cash investments will rise to the level required to counter rising inflation.
Has the bubble burst in the Cryptocurrency Market?
Cryptocurrencies like Bitcoin have enjoyed a prolonged period of growth since the inception of this decentralised currency. However, since November 2021, the market has suffered a steep decline in value, losing some 70% of its value, or $2 trillion. The mantra in the crypto market doesn’t seem to be one of buoyant investment at the moment, but rather of survival.
So investment opportunities in the cryptocurrency market are for only the very experienced risk-taker.
Stocks, Shares, and Equities
The FTSE 100 has made gains so far this year of 1.4%. Unsurprisingly, energy companies like Shell and pharmaceuticals like Astra Zeneca and GlaxoSmithKline have made it into the FTSE 100 over the last 6 months. So there is money to be made in this field, but with gains of 1.4% this year, experience is key.
That said, over the long term, investments are likely to rise, as long as inventors can think long term and not panic in the short term. However, there is still the matter of rising inflation to consider, so the real question is whether over (let’s say) 20 years, your investments outperform inflation by a margin that meets your plans. Right now the stock market is holding steady. But for your investments to outstrip the rate of inflation you need to see double-digit growth.
Are investors doomed in the short term then?
Yes and no. If you’re planning on making a quick buck then the answer right now is yes. But if you can weather the storm in the markets over the coming months, your investments will, as always, shop growth over the long term. But cash investments are going to struggle, and the bloodbath in the crypto markets doesn’t look like it’s going to abate any time soon.
Property Investment Opportunities 2022
Bricks and mortar investment has always been a more secure long-term investment than stocks and shares, cash, and more recently crypto. Yes, people have made a lot of money in those markets, but the risks are high and crashes frequent.
Property investment works on an 18-year cycle. In the last 18 years we’ve witnessed the banking collapse in 2008, economic challenges through Covid in 2020-2021, and now the war in Ukraine and subsequent increase in the cost of living, interest rates, and inflation.
During all of these economic events, property values have continued to grow, and rental yields have remained healthy.
Right now, rental yields on average are around 6%. That may be below the rate of inflation, but it’s significantly higher than cash or equity investments. And property values in the North West, Yorkshire, Humber, and the North East will grow by 18% in the next 5 years, and 15% in the Midlands. So viewing property investment as a long-term investment is crucial, and the yields for the careful investor speak for themselves.
We would be remiss not to mention that property investment isn’t all plain sailing. It’s hard work, but for the professional investor presents continuing opportunities during challenging economic times as well as good.
What should property investors be doing right now?
Challenging economics presents an opportunity for business owners. Some of them are property investors, and our belief is that all property investments should be treated as a business. Review our blog about strategic planning for property investors.
Make savings on costs
Take a look at your bottom line and current expenditure. Are there areas in your business where you are spending money that you could save? You’ll probably be surprised by the amount of wasted cash. Could you run a paperless office? Have you checked the prices that your suppliers charge? Are there more cost-effective options? And IT and telecoms could be costing you more than they should do.
Landlords National Purchasing Group
Are you refurbishing or replacing worn out kitchens, bathrooms, boilers, and so on? LNPG gives you access to a buying group for landlords for everything from kitchens to paint. 5,000 landlords belong to this group and negotiate competitive prices through the power of contract pricing. Take a look at the LNPG website here
Learn to become more Lean and Efficient as a Business
We’ve looked at cost savings already, but have you considered the processes in your business and how you can automate them, or improve upon how you operate. You could consider the technology you use, the way you finance your acquisitions or cashflow, and how your processes work for you. Take a look at our cashflow forecasting service for help with understanding your true financial position so that you can make informed choices.
And look at your property finance. Our sister company Liddle Perrett can help you to review your buy-to-let mortgage commitments and protection.
Finally, review the support and advisers that you have around you. Are they providing the cost-effective support that you need?
The Hawkhurst Invest Proposition
Our ambition is to help you achieve financial freedom through property investment. And right now the opportunities for professional property investors are clear to see. With the skill and experience that you need at your fingertips and access to competitively priced property that will give you an excellent return on your investment, we’re here to guide and advise on properties that are right for your portfolio.
Not only that, but with a range of professional services geared towards portfolio growth and continued investment, Hawkhurst Invest is the partner that you need by your side to help you grow your business.