UK budget analysis: rising cost of living and a fall in income, what can women do to protect their money and grow their net worth. And listen to our podcast with Cathy Curtis (CFA)

  
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Welcome to our #94 weekly newsletter.

“For women taking control of their financial future”

-Jana Hlistova


From The Purse


In this week’s newsletter, we highlight an analysis of the UK budget. Households in the UK will face years of stagnating living standards.

What can women do to protect their money and grow their net worth?

We talk to Cathy Curtis, a Certified Financial Planner (CFA) on The Purse Podcast about how women can take control of their finances.

You can review the news in brief so you stay on top of global financial, economic and investing trends.

I hope you enjoy this week’s newsletter.

Until next week,

Jana


The UK budget analysis: rising cost of living and a fall in income

How can you protect your money and grow your net worth?


According to analysis, the UK budget presented last month means that households in the UK will face years of stagnating living standards, as reported by the Financial Times.

And according to the Resolution Foundation (a think-tank), households will be paying £3,000+ (on average) more each year in taxes by 2024-25, with the biggest impact felt by higher earners.

Based on forecasts from the Office of Budget Responsibility:

  • Real household disposable income will fall in the second half of 2021

  • A surge in the cost of living: inflation will average at 4% over the next year (however, inflation is now forecast at 5% by April 2022).

  • This will wipe out the growth in average wages of 3.9%

  • Mortgage holders will be ‘squeezed’ due to the likely hike in interest rates

  • In the long term, real wage growth is expected to settle at 1.5% (with average earnings only 2.8% higher in 2024 than they were in 2008).

  • Middle and high earners will bear the brunt ie incomes could fall 2% and up to 3.1% for higher earners.

Protect your money: start with a financial plan

Cathy Curtis, a Certified Financial Planner (CFP) explains why it is crucial for women to have a financial plan, on The Purse Podcast:

‘I really believe that everybody needs a financial plan. I don't care who you are.

If you don't plan for things in your life, you're just leaving everything up to chance.

So what a plan does is forces you to focus first off on your current financial situation. The first step is you look at everything that you have now, and then you start making estimates and assumptions about what's going to happen in the future.

And some of those estimates and assumptions are how much money you're going to make. And at what increase per year; what rates of return you're going to earn on your investments?

How much are you going to be able to save? How much social security are you going to get? When are you going to retire?

There's so many factors that go into it.

How I build the plan is the first step; I send all my clients a very detailed online questionnaire.

I also ask for a whole bunch of documents, their account statements, their health policies or insurance policies, because I look at all aspects of their finances, not just investments by any means. I look at whether they're insured properly. Are they taken advantage of all their employee benefits that they have them?What kind of estate planning have they done?

That's part of the CFP curriculum, the Certified Financial Planner curriculum…We know how to analyse all those different areas of a person's life, and then we make recommendations to improve on it.

So the first meeting I'll have with the client, I call my first draft plan meet.

And we'll look at the plan together. I'll show them how their money's flowing through the years. I will show them what they can do to make it better, things like that. And then in my case, those clients are with me for the long term. So we review that plan at least annually to make sure they're on track…”

Grow your net worth: invest in assets

Assets is essentially deferred expenditure which goes up in value over a given time frame. The aim is to generate returns which outpace inflation, rising taxes and the expanding money supply, every year.

But also knowing which assets to invest in, and how much, is key.

The aim is for your investments to outpace the costs of living and the surge in money supply (M2) which has gone up 11%+ in the UK and 15%+ in the US (read more about money supply and money printing).

With record low interest rates…

… investors are chasing better returns on investments such as equities and in stock markets, such as the S&P 500 and the Nasdaq (US) which continue to achieve all-time highs.

It is not surprising that investors are seeking alternative and riskier investments, such as crypto in order to achieve outsized returns.

For example, bitcoin has (as of the time of writing) appreciated 206%+ in the last 12 months. And ethereum has gone up 661%+ in price vs an overall 364% growth in the crypto market. Compare this to European stocks which appreciated 10.3%, as reported by Cointelegraph.

What next?

Share


News in Brief


Financial news

Crypto: bitcoin, ethereum & DeFi


The Purse Podcast


We cover the following in our conversation:

  • Why you need a financial plan

  • How women manage their money & invest

  • ESG investing

  • Crypto investing

  • Investing in female-led startups

  • Superstar Wall Street investor, Cathie Wood

  • And more

Please enjoy! Listen on all podcasting channels including Spotify and iTunes.


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 advisor.

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