Important information: The value of investments and the income from them, can go down as well as up, so you may get back less than you invest.
FRIDAY is the new Saturday. Across the world the argument for a four-day working week is being touted as a revolutionary way of bringing about economic renewal for society. The argument has gained further momentum with the Covid-19 pandemic making the ‘traditional’ five-day working week routine more flexible with the advancement of technology.
As a result, Fridays have - for many - become an important ‘catchup day’ to devote to the things that really matter. We believe your finances should be no exception.
So as we enter 2022, get ready for our new ‘Financial Friday’ series. Running every Friday - from now until the end of the current tax year - we will be sharing investment ideas for your ISA and SIPP, alongside practical tips to make your money go further.
This week, we’re looking at the rising cost of living. As prices rise we’re facing the biggest squeeze on our incomes since the 2008 financial crisis. What can you do about it - and where can you invest to beat it?
1. Switch to stocks and shares
Interest rates may be rising incrementally, but with inflation in the UK at an eye-watering 5.1% in December, chances are your savings are losing value. Women, who on average hold more in cash ISAs than Stocks and Shares ISAs should especially sit up and note. Yes, the stock market comes with more risk than cash, but over the long-term it’s still your best hope of achieving inflation-beating returns.
Investment idea: if you’re new to investing, or simply can’t make up your mind where to invest this year, a good way to dip your toes into stock market waters is via the Fidelity Index World Fund. You’ll get exposure to some of the world’s biggest and most exciting companies (think Microsoft, Coca-Cola, Disney and the like) at a very competitive cost.
2. Hold ‘real’ assets
Real assets are an important part of any well-diversified portfolio, with commodities a powerful hedge against inflation.
Investment idea: The Ninety-One Global Gold Fund offers exposure to gold, which many believe could be the surprise investment of 2022. Gold performs well when other assets do badly, and it does best when people lose confidence in central banks’ abilities to contain a crisis.
3. Food matters: change the way you shop and invest
For years, food price inflation has been negligible in the UK - with competition from discount retailers like Lidl and Aldi helping to keep the weekly supermarket shop competitive. But prices are rising, which means you may need to think about where you shop, and what you buy - perhaps trading down from brands to own-brands or budget ranges.
Investment idea: The rising cost of food can also be an investment opportunity. With droughts, floods and deforestation all having an impact on agriculture, investing in this space via ETFs or agriculture equities could make sense. Companies listed on the London Stock Exchange include the likes of Anglo-Eastern Plantations, M.P Evans Group and Camellia PLC.
Important information: Investors should note that the views expressed may no longer be current and may have already been acted upon. Overseas investments will be affected by movements in currency exchange rates. Withdrawals from a pension product will not normally be possible until you reach age 55 (57 from 2028). Tax treatment depends on individual circumstances and all tax rules may change in the future. Reference to specific securities should not be construed as a recommendation to buy or sell these securities and is included for the purposes of illustration only. Select 50 is not a personal recommendation to buy or sell a fund. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.
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