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)
Welcome to our #94 weekly newsletter.
“For women taking control of their financial future”
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,
The UK budget analysis: rising cost of living and a fall in income
How can you protect your money and grow your net worth?
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.
Listen to The Purse Podcast interview with Cathy Curtis about working with a financial planner and growing your net worth.
Listen to The Purse Podcast interview with Tina Weeks about how to manage your money.
Listen to The Purse Podcast with Vicky Pryce about rising inflation, slowing economic growth.
News in Brief
On Friday, the Dow Jones closed down 900+ points in biggest drop since October 2020 as new Covid variant sparks market plunge.
Brent oil also fell 10%+, dropping below $74 per barrel, from $82/barrel on Thursday night on fears that new pandemic curbs could be brought in, such as travel restrictions.
On Friday, £72bn was wiped off the FTSE 100 as the biggest sell-off since June 2020 after the discovery of a new Covid variant.
The UK is headed for the biggest Black Friday sales day. The figures show the UK is on track for shoppers to spend almost £9.2bn this weekend – 15% more than in 2020.
The Bank of England (BoE): the ground is prepared for policy action ie an increase in interest rates (in the coming months). But, the BoE says that must be cautious in their approach.
Rising Covid-19 cases hits eurozone consumer confidence. This indicates that the recent rise in Covid-19 infections, which has forced a full lockdown in Austria and emergency measures in Germany.
UK shoppers face fastest price rises since 1990 in Christmas rush. Fears of shortages encouraged people to start their festive shopping earlier.
Crypto: bitcoin, ethereum & DeFi
Bitcoin, ethereum (and the crypto market) drops amid reports of the new Covid strain. Bitcoin, which opened on Friday at a price of $58,700, is now trading at $54,380+. Ethereum, which opened on Friday at at $4,400, is now priced at just over $4,094+ and is threatening to drop below the milestone price bracket.
El Salvador buys 100 bitcoin when the market ‘dipped’. The price of the largest crypto currency by market-cap fell close to $54,000.
More than 1m ETH has been burned since the London upgrade EIP 1559. At the current price of ether, the total value of the total ETH destroyed so far now stands at over $4.2bn.
Thursday: Shiba Inu was up 18% (to $0.000044) amid 1m SHIB holders milestone. The meme currency is currently trading at $0.0000402). On 15 November, Gemini (the crypto exchange) announced they would be listing the meme currency on the exchange.
Christie’s to hold ethereum NFT auction on OpenSea. The collaboration, called "Christie's X OpenSea," will be hosted on the OpenSea website with bidding and payments made using Ethereum.
The Purse Podcast
We cover the following in our conversation:
Why you need a financial plan
How women manage their money & invest
Investing in female-led startups
Superstar Wall Street investor, Cathie Wood
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.