When you reach your 30s, investing is a great way to expand your finances and make sure you are doing everything you can for your future. If you have already started, then there could be ways to improve your investment strategies. If you are a beginner investor in your 30s then this will help you find the strategies for you.
If you are a beginner to investing, then you can find out how it works here.
A study by robo-advisor Personal Capital found that the average age people begin investing is 33.3 years. It’s important to understand that starting now can significantly impact your financial future. The earlier you start investing, the more time your money has to grow through the power of compound interest. Compounding can exponentially increase your returns over time, making it one of the most effective strategies for wealth accumulation. Use our compound interest calculator.
Your 30s are a pivotal time to establish or refine your investment strategies. By understanding your limits, seeking diversification, clarifying your goals, considering homeownership, investing in stocks with just a little risk and committing to regular reviews, you can create a strong financial foundation for your future. Starting now will set you on the path to achieving your financial aspirations, no matter when you begin.
So, take a look at some key investing strategies for your 30s.
Check out Investing strategies for your 20s.
The VIX index became a key focus of market attention in early August as it spiked to over 60, sparking fears of a recession and a bear market.
The VIX, or Volatility Index, is a real-time market index that represents the market's expectations for volatility over the coming 30 days. It is derived from the prices of S&P 500 index options, which are financial derivatives that allow investors to speculate on or hedge against changes in the price of the S&P 500.
The VIX is calculated by the Chicago Board Options Exchange (CBOE), and it has become one of the most widely recognized measures of market risk. The VIX is expressed as a percentage and typically in a range between 15 and 30.
“Volatility of returns are typically negatively correlated” notes Ryan Maxwell CEO of FirstRate Data “a low VIX, indicating a low expectation for volatility, is a bullish signal that the market is not expecting large selloffs in the immediate future”.
The VIX is calculated using the prices of a wide range of S&P 500 index options with different strike prices and expiration dates. The formula used by the CBOE takes into account the weighted average of the implied volatilities of these options. Implied volatility is a measure of how much the market expects the price of the S&P 500 to fluctuate in the future.
In simpler terms, the VIX captures the collective sentiment of options traders. When traders anticipate significant price swings in the S&P 500, the prices of options—and thus the VIX—tend to rise. Conversely, when traders expect a calm, stable market, the VIX tends to fall.
The VIX is often interpreted as a measure of fear or uncertainty in the market:
Understanding the VIX and its implications can be valuable for investors in several ways:
While the VIX is a powerful tool, it has its limitations:
The Lifetime ISA (LISA) is an invaluable tool for both aspiring homeowners and those planning for retirement, offering distinct advantages that make it worth considering. Available to individuals between the ages of 18 and 39, the LISA presents a unique opportunity to save money with substantial government incentives.
One of the key benefits of a LISA is the 25% government bonus on your contributions.
For every £4,000 you deposit per tax year, you receive a £1,000 bonus, which can significantly boost your savings.
This is especially advantageous if you're aiming to buy your first home or save for retirement. However, it’s crucial to note that the maximum you can contribute each tax year is £4,000, and the bonus is capped at £1,000 per year. So, you can deposit smaller amounts and still receive a 25% bonus for example if you deposit £500 for the tax year, the government will give you £125, giving you £625 in total.
When it comes to purchasing your first home, the LISA has specific conditions. The property must cost under £450,000, and you must plan to live in the home yourself, not rent it out.
Additionally, you need to use a traditional repayment mortgage to qualify.
You can also combine your LISA with you partner if you plan to buy the house together, however, if one of you has previously bought and owned a home then only the eligible one will be able to open an account.
You cannot access the money for the first 12 months after your initial deposit. This rule is crucial for those considering early withdrawals, as it ensures you receive the government bonus only if you adhere to the account’s intended purposes.
Another benefit of the LISA is its flexibility regarding retirement savings. You can use the funds once you turn 60, allowing you to keep your money invested and growing tax-free until then. This can be a substantial advantage for long-term financial planning, as it offers the potential for compounded growth without immediate tax implications.
If you intend to withdraw fund from your Lifetime ISA prior to reaching the age of 60, or before the account has been open for a full 12 months following your initial deposit, you will face penalties.
Specifically, a 25% charge will be applied to the amount withdrawn, you will also be forfeiting any government bonuses if you withdraw money during the first 12 months.
Today, the Conservative party have announced their manifesto with Rishi Sunak stating their pledges for their time in parliament if they are voted in on July 4th.
The Conservative manifesto lay priority on cutting taxes, improving investment which continues their economic trend of using trickle-down economics, in which cutting businesses and income taxes could see results in a greater economy for the UK.
UK football clubs make their money from sponsorships, matchdays and broadcast however often this isn’t enough to keep them out of debt.
The spending of a football clubs on infrastructure, salaries, competitions and more is often far more then the club earns back causing mounting debt and potential breaches of FFP.
FFP – Financial Fair Play
The FFP rules cam into force in 2014 to ensure financial sustainability for clubs and prevent financial disaster. It was a common theme that football clubs would be spending far more than they could afford and drowning themselves into debt with the hope of an investor to pull them back.
The UEFA set a budget for clubs and now the rule is they cannot have a loss greater than £105m over three seasons, £35m a season.
Many football clubs are in debt due to spending more than they earn, which is breaching FFP rules and could result in consequences.
According to figures on the BBC current Premier League club debt levels are approximately £3.6bn.
Wages are usually the biggest day-to-day running costs, as well as transfer fees with both absorbing about 90% of total Premier League revenue across the 20 clubs. Clubs have to resort to selling players and relying on owner generosity to cover the losses.
If a football club is found to break FFP rules then they could face one of the below,
Everton – Breached FFP by £16.1m they were deducted 10 points which they appealed and this was brought down to 6 points.
Nottingham Forest breaches the rules by £34.5m over two seasons and only had 4 points deducted which they are appealing
Sky Sports tells us that as well as Everton and Nottingham, Sheffield United, Burnley, Luton and Brentford also await their verdict which will impact their Premier League relegation battle.
Consequently, the current macroeconomic backdrop is not a recipe for decent investment returns in stocks, bond, and cash. This represents a significant challenge for investors and savers alike, who are already under increased pressure due to decisions made by successive governments, which have introduced a series of restrictions on pensions. Further compounding the issue, the financial strain caused by rising inflation and the cost-of-living crisis are causing significant stress for investors.
This year, tax and pension planning will undoubtedly be two key issues influencing investors. Even before the Chancellor’s Autumn statement, which raised the UK’s tax burden to its highest level since Clement Attlee’s post-war government, a series of restrictions on pensions has forced many savers to look for alternative tax-efficient options for their capital.[1]
Indeed, the government's decision in the Spring of last year to reduce the lifetime allowance on savers’ pensions and lock it at this level until 2026 will see any remaining excess in pensions pots subject to a 55 per cent tax penalty.
Venture Capital Trusts (VCTs), such as Triple Point’s Venture Fund VCT, can provide investors with a crucial investment and supplementary pension tool. This comes at a time when the government is raising record revenues from taxpayers, thus making it critical that investors put their money to work effectively.
The tax-free dividends offered by VCTs, alongside no capital gains tax (CGT) on gains, make them an attractive alternative source of tax-free income, which can complement a traditional pension portfolio.
Furthermore, over the last ten years, the average net asset value total return for both AIM VCTs and generalist VCTs has been 101%, making VCTs not only a tax-efficient vehicle but also a competitive investment product in its own right.[2]
However, it is not enough to merely focus on the tax situation this year. Many investors will find their tax-free allowances and thresholds squeezed by 2024 if they don’t act now.
With the tax-free dividend allowance being reduced to £1,000 in 2023 and £500 from April 2024, VCTs remain one of the most tax-efficient investments by allowing investors to claim upfront tax relief worth 30% of the amount invested, up to an investment of £200,000.
For business owners who have traditionally reduced their income tax liability by investing large sums into their pension or paying themselves dividends, these changes can have a devastating impact on their financial and pension planning if they are not addressed.
By investing in a VCT, business owners and other investors who have used dividends as a vital source of income can significantly reduce their financial exposure to the costly shifts in the UK’s tax and pension planning regulations, which look likely to occur over the next decade.
To truly capitalise on the benefits of VCT investment, investors and savers should look to invest in VCTs that they think have the best strategy. With over 20% of start-ups failing within the first five years, implementing the right investment plan can help mitigate the risks that come with investing in early-stage companies.[3]
A successful VCT strategy should follow a key investment criterion ensuring that each early-stage company has an appetite for growth and a path for long-term profitability. This involves working alongside VCTs to solve real-world corporate challenges. For example, Strategic VCT investments enable innovation in young companies, helping create local and highly skilled jobs while allowing the investor to back high-quality and better-capitalised companies with lower valuations.
Triple Points Venture Fund VCT, for example, adopts a challenge-led approach to investment which primarily focuses on pre-series A B2B technology businesses. With high-growth B2B technology businesses accounting for 77% of all exits in 2019, this sector tends to offer better valuation on entry and better returns.[4]
Whilst tax relief is one of the primary appeals of a VCT investment, it is difficult to ignore the role in which they play within the wider UK economy. VCT fundraising in 2022 surpassed the £1 billion milestone for the first time, raising £1.13 billion to be invested in small and innovative UK companies.[5]
Despite the daunting in-tray which investors face, the benefits of VCT investment have never been greater. It offers an opportunity to both support and capitalise on a wave of British entrepreneurialism emerging from this recessionary period. For business owners, VCT investment allows them to efficiently extract profits from the business at a time when the UK government is slashing the dividend tax allowance.
If investors don’t act now and plan ahead by incorporating VCTs into their investment portfolio, they risk being exposed to increasing macroeconomic pressures and foreseeable changes to the UK’s pension and tax systems.
[1] https://www.independent.co.uk/money/uk-s-tax-burden-what-do-the-figures-show-b2097564.html [2] https://www.theaic.co.uk/aic/find-compare-investment-companies/advanced-compare [3] https://www.investopedia.com/articles/personal-finance/040915/how-many-startups-fail-and-why.asp [4] https://www.triplepoint.co.uk/filedownload.php?a=750-5f802c8866add [5] https://www.theaic.co.uk/aic/news/press-releases/smes-to-benefit-from-record-funding-as-vcts-raise-over-a-billion-in-202122
As the total crypto market cap dropped by $90 billion within 24 hours, the number of searches containing “Bitcoin dead” surged.
While experts are divided on what the plummeting of cryptocurrency means — a temporary setback or signs of a larger recession — it is clear that the increased volatility of the market offers many lessons for investors. Whether you’ve been hesitant to invest in crypto or are second-guessing your choice to do so, here’s how the crypto crash illustrates the risks of cryptocurrency investments and what you can do to manage those risks.
The crypto market isn’t a stranger to crashes. Bitcoin alone experienced a major crash in late 2018, followed by significant crashes during the COVID-19 pandemic. However, crypto’s tumble into its lowest levels since 2020 is evidence that holding onto your crypto assets can be a dangerous game in itself. Even Coinbase has laid off 18% of its workforce, and many investors are predicting a long-lasting crypto winter. We’ll explore some of the risks that the current state of the market has unearthed.
One of the core lessons that the crypto crash can teach investors is the fact that cryptocurrency isn’t a reliable investment at all. When you hold onto your crypto assets through a crash — or when you decide to take advantage of low costs to invest — there’s never a guarantee that your assets will bounce back. This is because cryptocurrency like Bitcoin has no intrinsic value.
To manage your risk, it’s important to avoid putting all (or even most) of your eggs in the crypto basket. Crypto should be treated as a gamble. Whether you sell or keep your crypto assets should be a question of how much you’re willing to risk, and perhaps what reward you’re waiting for before you cash out. If you’re looking to increase your profit to reach your long-term financial goals, maintaining safer investments, like high-yield savings accounts and index funds, is ideal.
If you’ve developed a professional network or gained followers due to your crypto usage, the current crypto crash may have been a blow to your reputation. For many old-school investors and others outside of the investment world, the crash is being viewed as evidence that crypto isn’t a legitimate investment.
One key to risk management for crypto investors is being willing to take ownership. When crypto falls more than you expected, be willing to admit your miscalculations. Continuing to promote crypto as a volatile market can damage your reputation further when the market fails to bounce back quickly.
The plunge in cryptocurrency value hasn’t deterred blockchain hackers from taking advantage of virtual vulnerabilities. As the market crashed, hackers made off with $100 million in cryptocurrency. Crypto and NFT thefts and fraud are continuing to rise.
Choosing a secure internet and a cold wallet is key to reducing risk when investing in crypto. Cold wallets aren’t connected to the internet — which limits your susceptibility to cyberattacks — and are protected by physical keys that you can store in a secure place. You can even store your assets in multiple wallets to get further protection.
However, it’s always important to keep potential insider threats, which cause over 30% of breaches, in mind. People close to you — and even those inside investment firms — are more easily able to hack crypto wallets and steal funds. Avoid having your entire investment portfolio on a public blockchain, which can make you a greater target for hackers. Ideally, crypto shouldn’t make up more than 5% of your portfolio.
Cryptocurrency is widely recognised as a threat to the environment due to the large amount of energy needed for mining. Unfortunately, the crypto crash doesn’t have much of a silver lining, as the amount of processing power used for mining isn’t declining. This is an important time for investors to consider the carbon footprint they’re leaving behind, as well as evaluate whether the environmental and financial costs of energy are worth the uncertain earnings.
Many crypto investors turn to stablecoins to avoid the volatility of the greater crypto market. Stablecoins, like Tether and Terra, are meant to maintain their value since they’re pegged to real assets, like gold or the U.S. dollar. However, TerraUSD crashed with the rest of the crypto market, leading to disastrous results for its sister token Luna.
Investors must recognise that there isn’t actually a safe way to enter the crypto market. Stablecoins don’t provide the stability they’re meant to, which means they can’t reduce your risk. As international governments discuss the possibility of regulating stablecoins, the future of stablecoins is largely unknown and, once again, a gamble.
While there isn’t an easy way to protect yourself from bad crypto investments, there are a few ways you can evaluate how reputable a cryptocurrency is. For instance, you can read up on the team behind the cryptocurrency — which should be disclosed and experienced — and read about their roadmap, so you can evaluate their potential for success. Taking a look at a cryptocurrency’s trading history, which should display steady growth, is also key to limiting your risk.
If you’re part of an investment firm — which is likely already taking steps to evaluate crypto — you can still take action to protect your business by keeping your organisation agile. In a volatile market, a firm that learns from failure and eliminates bottlenecks created by silos and hierarchies is best equipped to think on its feet when issues occur.
There’s no telling what’s in store for crypto in the future, so anyone involved in or considering investments must be wary of the market’s volatility and take steps to manage their own risk.
About the author: Adrian Johansen lives and thrives in the Pacific Northwest. She covers topics related to business and tech, especially when they intersect with sustainability and diversity issues. You can follow her on Twitter at @AdrianJohanse18.
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The value of the dollar against Bitcoin highlights the effect decentralised currencies such as crypto are having in this arena. When you look at how much the dollar has devalued against Bitcoin over the last five years, it sits at 96.53%. It took 50 years for it to drop in value by 50% against gold. This is because of a global debt crisis. Chief economists say that printing and devaluing more of a nation’s currency is the easiest way out of a debt crisis. Of the roughly 750 currencies that have existed since 1700, only about 20% remain, and those that remain have all been devalued.
Another reason is inflation. It stands at a 40-year high. Many will look to the war in Ukraine and rent hikes for answers to gross inflation, however, many others disagree. These unpredicted events just happen to coincide with inflation after a record increase in printing dollars – 35% of all US dollars have been printed in the last 10 months. In practice, this means that as global economies begin to start up again after the pandemic, this record amount of dollar production is now catching up via inflation. This is also not a nuanced effect, nor endemic solely to the US, we are seeing it happening in the Eurozone too.
There is actually very little a country can do to combat inflation. Its main option is to print more money, making the physical currency more expensive to store and move. This increases interest rates and lowers growth. However, if the growth is low, it pushes you into recession. We are seeing this economic trend play out, with Deutsche Bank informing investors that they are expecting the worst recession in history to hit towards the end of 2023.
There are five areas of high growth that many investors should be looking at and these are Edtech, Medtech, Greentech, Space-tech and Fintech.
Obviously, these are all the major areas of tech that are disrupting and decentralising the current centralised systems. Society 4.0 is moving to Society 5.0, from the industrial to an age of impact. Societies are broken down into 1.0 – Hunter-gatherer, 2.0 – Agrarian, 3.0 – Industrial, 4.0 – Information. The transition is at first obvious but becomes embedded into our societal and economic systems, this is what we are currently seeing with big data. All of the fastest-growing companies and exponential technologies are now in this area.
When we look at this trend, what is really interesting is how much it has grown in the last 12 months and the projections over the next decade. ARK Invest, an investment management company, has researched the market growth of exponential technology. Their research shows that, by 2030, these sectors are on track to grow to $210 trillion from $20 trillion in 2020. But as these areas of technology that are seeing this exponential growth are numerous, choosing ‘your wave’ is crucial. One area that has interested me and I believe has advantageous benefits is utilising AI in business. As AI becomes more prevalent in the marketplace, it will improve a company’s reputation and valuation as its products will become more customer-centric and drive engagement. When looking at ARK’s research in this area, they suggest that this is on track to grow from $2.5 trillion in 2021 to $87 trillion by 2030.
Personal experience of leveraging exponentials specific to interests in investments and business are usually easier to research and put into action as the passion is already there. Exponentials represent numerous factions of a 5.0 society, and as we move into it, we must all look to what we can leverage personally, whether it be investments or integrations of other exponentials such as battery technology, cloud computing or blockchain, for example.
Everything that we do is being digitised and will encompass Society 5.0; in the digital decade, this will be apparent through a digital overlay on your day-to-day experience. Foresight and action have helped me as an entrepreneur stay ahead of this curve and pushed my interests into this field. We are now looking at partnering with some top-level partners for our ‘Metaversity’, which creates digital campuses for Edtech.
When we look at the history of the web, it is broken down into Web 1.0: accessible content was read -only, Web 2.0: the emergence of blogs and social media, the public was able to create content, Web 3.0: what we are now transitioning into – allows users to have ownership. For example, music was incredibly difficult for artists to monetise, but through NFTs, we are now seeing this being challenged.
The merging of our digital and physical lives will look at Social Spaces (what you build to interact with), Digital Objects (NFTs) and Wallets & Identity - people will need to know that you are real and that they can pass something to you, ie, assets through blockchain or currency.
What this means when looking at investing is that it will shift the paradigm. In the integration of Web 3.0, we must start to ask ourselves not just what we want to invest in, but also, what is the social group or economy we want to invest in? Right now, we are born into a nation with its own economy, so your assets and finances are by default, intrinsically linked. This is an incredibly important aspect, as Web 3.0 will negate citizenship and structured economies. Your wealth will not be linked to your physical citizenship, but to your digital citizenship. What this means in practice is that wealth will no longer be connected to place, but to purpose. Everyone will have the opportunity to build an economy around their individual purpose.
The 2022 Global Impact Investor Summit hosted on the edtech platform GenuisU, saw keynote speakers Roger James Hamilton, Founder & CEO of Genius Group, world-renowned investor Jim Rogers, Marcus de Maria, Founder & Chairman of Investment Mastery, Simon Zutshi, Founder of property investors network (pin), and Mark Robinson, Founder of International Academy of Wealth, share their top 10 investment trends for 2022-2023. Roger James Hamilton, founder and CEO of Genius Group offered his detailed analysis and the whole summit can be viewed online.
About the Author: Roger James Hamilton is a New York Times bestselling author and Founder and CEO of Genius Group, a multi-million dollar group of companies, headquartered in Singapore, which currently includes companies such as GeniusU, Entrepreneurs Institute, Entrepreneur Resorts and Genius School and has an acquisition plan to add in a further 5 companies in 2022 to the Group.
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The outlook for the crypto market looked bleak on Tuesday following a brief rally on Monday that sent Bitcoin above the $31,000 level for the first time in six days.
In the past 24 hours, the combined market cap of all crypto assets has dropped by $90 billion to just over $1.2 trillion. Bitcoin is now trading at approximately $29,500, down 5% in just one day.
However, analysts have recognised recent institutional investor interest in Bitcoin exchange-traded products as a sign of long-term strength in the crypto market.
"It's largely institutional, and to a degree retail investors, recognising that the pain is already endured, and we're closer to the bottom than we are to the top,” Chief investment officer of Arizona-based IDX Digital Assets, Ben McMillan, told Reuters.
"If you're getting into crypto at these levels, a little near-term volatility could be worth a long-term payoff.”
To help you on your journey, here are several tips that all successful traders follow religiously.
The first and most important thing that all successful traders have is a plan. This plan includes their investment goals, risk tolerance, and entry and exit strategies. Without a plan, it is very easy to get lost in the sea of information out there and make impulsive decisions that can lead to large losses.
To come up with a plan, you need to first determine your investment goals. Are you looking to make a quick profit or are you more interested in long-term gains? Once you know your goals, you can start thinking about how much risk you are willing to take. Higher risks usually mean higher potential rewards but they also come with a greater chance of losses.
After you have determined your goals and risk tolerance, it is time to develop your entry and exit strategies. These will be the rules that you follow when buying and selling assets. For example, you may decide to only buy stocks that are trading below their intrinsic value or you may sell an asset as soon as it reaches your desired profit level.
Many successful traders use some form of automation in their trading. This could be something as simple as using a trading bot to execute their trades or it could be a more complex system that includes algorithmic trading. Using RoboForex, you can easily automate your forex trading strategies. For instance, using the MetaTrader platforms allows you to set up expert advisors that will automatically follow your trading rules.
Additionally, using automation can help you to take emotion out of the equation and make more logical unbiased decisions. It can also help you to execute trades faster which can be crucial in the fast-paced world of trading.
Another important habit of successful traders is that they keep a trading journal. In this journal, they track their trade setup, entry and exit points, and profit or loss. This helps them to stay disciplined and accountable for their trades. It also allows them to go back and review their previous trades to see what worked and what didn’t.
This has shown to be an extremely useful exercise for many traders as it allows them to improve their performance over time. If you don’t already keep a trading journal, it is highly recommended that you start doing so.
Risk management is one of the most important aspects of trading. Without proper risk management, it is very easy to lose all of your capital. That’s why successful traders always have a risk management strategy in place before they even enter a trade. This strategy includes things like setting stop losses and taking profits at predetermined levels.
By having a risk management strategy, you will be able to limit your losses and protect your capital. This will allow you to stay in the game even when things are going against you.
No matter how good of a trader you are, there will always be times when things don’t go your way.
That’s why it is important to prepare for the worst. This includes having enough capital to cover your losses and being able to emotionally handle losing streaks. Many traders blow up their accounts because they are not prepared for a losing streak. By having the proper mindset and capital in place, you will be able to weather any storm.
The world of trading is constantly changing. New products are being introduced, regulations are being implemented, and economic conditions are always fluctuating. That’s why traders need to stay up-to-date on all the latest news and developments.
This can be done by reading financial news articles, following thought leaders on social media, and attending industry events. There are also many great resources like Traders Laboratory where you can find useful information and connect with other traders. By staying up-to-date, you will be able to make better-informed trading decisions and you will also be able to adapt to changes in the market quickly which can give you a competitive edge.
Successful trading investors tend to follow similar patterns and guidelines to be successful. Some of these include automation, maintaining a trading journal, implementing a risk management strategy, and staying up-to-date with the latest news and developments. By following these tips, you will be on your way to a more successful trading career.
This is why the success witnessed in the UK property market was quite special. The resilience of the market saw investors presumably looking to cash in on assets that have been historically reliable during a time when other opportunities haven’t looked as stable. Clearly, when looking at recent figures, this isn’t slowing down, with houses selling faster than ever, twice as quickly as they did in 2019, according to Rightmove’s house price index.
This boost in market activity is coupled with the surge in rising house prices recorded across each of the major recognised UK house price indices. For example, Nationwide's April house price index revealed that average property prices have now reached £267,620, the ninth straight month of growth.
Of course, this should not encourage complacency – the property market is not impervious to market volatility, particularly in the face of rising inflation and a cost-of-living crisis.
That said, with all Covid restrictions coming to an end at the beginning of the year, the health of the market is set to receive a significant boost in the form of international investors keen to take advantage of the freedoms not as readily available in previous years.
Attracting non-domestic investment will be vital. Not just to maintain the current growth of the market once domestic activity begins to lose momentum, but to help with the country’s economic recovery.
Fortunately, this appears to be the case since the reopening of travel into the UK. According to Knight Frank’s City Wealth Index section of their 2022 Wealth Report, in 2021, London saw more cross-border private capital in real estate than any other city in the world, with over $3 billion invested. Their forecasts estimate this trend to continue over 2022, with a further $24 billion expected to be invested in the capital.
The demand is certainly here for international investments when considering the UK’s housing crisis as the country desperately needs to address the chronic shortage in housing. According to one estimate commissioned by the National Housing Federation (NHF) and Crisis from Heriot-Watt University, around 340,000 new homes need to be supplied in England each year, of which 145,000 should be affordable. However, only 216,000 new homes were supplied in 2020/2021.
International investors have the potential to play a key role in supporting the construction and development sectors by buying new residential units off-plan and funding development schemes, particularly at a time when the knock-on effects of the pandemic have contributed to the slowdown of construction.
As such, they have the potential to achieve strong returns, especially when investing in growing areas. Regional areas outside of London, such as the West Midlands and North of England, are also very much on investors’ radars and will be ones to watch as they continue to gather pace in the years to come.
Despite the promising signs, one must also acknowledge that the macroeconomic headwinds at play could impact the pace of growth.
For one, interest rates have continued climbing, having recently risen to 1%. Usually seen as a negative headwind for property investors, increased base rates tend to be followed by a rise in mortgages. Any overseas investors already operating on a variable term mortgage will see rates rising, while those considering taking a new one out to purchase UK property will have to factor in higher mortgage rates than they would have experienced last year.
Of course, the reason the Bank of England has increased interest rates is to control soaring inflation; another potential concern for the investors. Prices are set to rise to 10% this year – the highest rate for 40 years alongside increased energy bills and goods prices. A combination of high interest and inflation could erode rental returns and devalue the property if house price growth slows. Not to mention the consequent cost-of-living crisis brought on by raised costs has an indirect effect, as tenants could struggle to afford rents.
However, with all this said, international investment in the UK is unlikely to falter when the demand for new property is so high. Meanwhile, the drop in the pound since the UK’s withdrawal from the EU means that favourable exchange rates will see investors’ money stretch further.
With so much economic uncertainty off the back of a, to put it lightly, challenging two years, it is more important now than ever that we take full advantage of international investment flows. Harnessing the potential of this vital resource will be key to ensuring the continued healthy growth of the industry, the creation of new homes, and the wider economy in general, as we look to put recent times behind us.
About the author: Jamie Johnson is the CEO of FJP Investment, an introducer of UK and overseas property-based investments to a global audience of high net-worth and sophisticated investors, institutions as well as family offices. Founded in 2013, the business also partners with developers in order to provide them with a readily accessible source of funding for their development projects.
Mid-week, investors wiped nearly 25% off Target shares after its profit halved. Meanwhile, Walmart was down 1.3% on Thursday after already falling more than 17% in the two sessions after it announced poor results on Tuesday.
Target’s earnings revealed consumers have been spending more on food and household essentials but cutting back on high-margin items. Meanwhile, Walmart’s earnings revealed consumers had moved to buy lower-margin basics.
On Tuesday, Federal Reserve Chair Jerome Powell pledged the US central bank would rise interest rates as high as necessary to combat spiralling inflation.
"We think the developing impact on retail spending as inflation outpaces wages for even longer than people might have expected is a principal factor in causing the market sell-off today," commented Paul Christopher, head of global market strategy at Wells Fargo Investment Institute. "Retailers are starting to reveal the impact of eroding consumer purchasing power."