Welcome to our #108 weekly newsletter.
“For women taking control of their financial future”
-Jana Hlistova
From The Purse
In this week’s newsletter, we focus on the rising cost of living and the steps you can take to protect your money.
April could be the toughest month for UK household budgets. It’s important to understand how your income will be affected and plan what you can do.
Check out the Spring Statement calculator created by The Guardian to work out how your income will change.
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You can review the news in brief so you stay on top of global financial, economic and investing trends.
Don’t forget to listen to The Purse Podcast with Anna Raptis who is the Founder and CEO of Amplifica Capital. Amplifica Capital is the first female focused VC firm in Mexico. Please enjoy!
I hope you enjoy this week’s newsletter.
Until next week,
Jana
The cost of living is going up: how can you protect your money?
April could go down as the toughest month for UK household budgets.
A combination of higher prices and tax changes - means that April 2022 could possibly go down as one of the toughest months for UK household budgets.
According to the Financial Times, it’s ‘rough weather ahead’ based on Rishi Sunak’s Spring Statement which he delivered this week.
Whilst Sunak highlighted support he is providing to hard pressed households, most people will suffer a financial battering in the years ahead.
After-tax household disposable incomes in the 2022-23 financial year will see ‘the largest fall in a single year since records began in 1956-57’. This is based on research by the Office for Budget Responsibility.
Here’s a summary of what you can do, as per Fidelity International:
Income tax:
With more money potentially being taken away in tax, it makes sense to invest more money into a pension where contributions benefit from tax relief. This will allow you to avoid some of the income tax freeze.
It’s also worth noting that Gift Aid relief - the tax relief available on charity donations - will remain at 20%.
National Insurance:
National Insurance will increase for those earning £50,000+ will pay £108 more and higher earners, such as those earning £100,000, will pay £6,611 per year, which is £730 more than at present.
Some employers allow their employees a process called Salary Sacrifice; to give up a fraction of their salary and to spend it on work benefits such as childcare vouchers, bike-to-work schemes or pension contributions.
This can add real value but importantly it reduces your income and therefore how much tax you pay.
Fuel and energy bills
The Ukraine War has put upward pressure on prices, and the price cap for gas and electricity bills will rise in April from £1,277 to £1,971 per year, an increase of £693.
And another big rise in forecast is expected in October.
The surge in oil prices means that petrol and diesel prices have risen to record levels, with the average price for a litre of unleaded now at 167.3p after rising 18p in the past month alone. Rishi Sunak announced a 5p per litre reduction in fuel duty in the Spring Statement, but this does little to elevate the price increase.
A few financial incentives are available for those willing to invest in renewable energy measures or efficiency improvements.
New measures like wind and water turbines will now qualify for the 5% VAT discount.
This could cut the cost of installing solar panels by £1,000, and the cost of annual energy bills by £300.
State pension and other benefits:
Whilst the State Pension will rise by 3.1%, this is still below the 6.2% inflation rate, which is expected to rise to 8% in the second quarter (Q2) and closer to 10% by the end of the year.
That means that State Pension and other benefits will fall in real terms.
Make sure that you are entitled to the maximum state pension possible. In order to get the full state pension you will need 35 years of National Insurance Contributions.
And invest as much as you can, monthly
If you are able to cut back on unnecessary spending, consider investing that money into a low-cost index fund, a thematic ETF and/or in crypto such as bitcoin or ether.
Consider allocating a set amount of your monthly pay cheque or income to your investments. Even if this is 1-5% of your monthly income, that is ok.
But your target should be at least 20%+.
Remember, the important point here is to create the habit, continue to invest, even if small amounts. Just keep going. Being consistent pays off.
Your investments will compound over time and your future self will be glad you did.
What next?
Check your National Insurance Record here.
Use the Spring Statement calculator to work out how your income will change.
News in Brief
Financial news
The US Federal Reserve balance sheet hit a new all-time high at $8,962.5bn as they bought more mortgage-backed securities and US Treasuries in the past week. Total assets now equal to 37.3% of US GDP.
Russia plans to demand Ruble payments for natural gas purchases from European nations, deepening its standoff with the West and potentially aggravating Europe’s worst energy crunch since the 1970s. European gas prices surged 30%+ after the news.
The markets price in 7+ rate hikes by the US Federal Reserve this year.
UK Chancellor, Rishi Sunak announced the Spring Statement which he said ‘delivers the biggest net cut to personal taxes in over a quarter of a century’. However it has been heavily criticised. The majority of people will be worse.
UK inflation jumps to 6.2%- a new 30-year high as soaring energy costs, fuel bills and food prices drive the worst cost of living squeeze in decades. (Inflation is expected to rise to 8% in Q2).
The Office for Budget’s Responsibility warns that living standards will fall at the fastest pace on record (UK). Real household disposable income is forecast to fall at the fastest annual rate since 1956.
Crypto: bitcoin, ethereum, DeFi & NFTs
Bitcoin tops $44,000 amid rumours of Terra’s Foundation focused on UST, the world's fourth-largest stablecoin, is accumulating the top cryptocurrency as a reserve asset. (See the currency price). Bitcoin has rallied more than 10% since the U.S. Federal Reserve (Fed) raised borrowing costs by 25 basis points on March 16.
On Tuesday, Ether (ETH), broke the $3,000 mark for the first time since March 2.
Spot ETFs (US) could see approvals by 2023. A proposed change that would require crypto exchanges to register with the SEC may be key to future approvals.
UK will reveal crypto regulations in the coming weeks. The announcement will focus in particular on stablecoins, digital assets that derive their value from existing currencies like the U.S. dollar.
BlackRock looks to offer crypto services to clients as demand rises. The Russia-Ukraine conflict will push countries to reassess currency dependencies, Fink said in a letter to shareholders.
NFT market shifting into a new growth phase. The proportion of minted and profitable NFT projects recently hit an all-time high, according to a graph provided in Nansen’s Minters Report.
HaunVentures: a firm built for the next generation of the internet led by Kathryn Haun, has raised $1.5bn across two funds to invest in web3.
The Purse Podcast
We cover the following in our conversation:
the LATAM startup ecosystem
investing in women in LATAM
women investors
emerging female fund managers
and more
Please enjoy! Listen here on iTunes and Spotify+
Coffee Break? Read This
We’d love to hear from you. Get in touch with Jana via the The Purse website or tweet @jointhepurse and @janicka.
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The Purse provides content for informational purposes only, we do not recommend products or services or provide investment advice. Please do your own research or speak to a financial adviser.
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