Investment Outlook 2022
The value of investments can fall as well as rise, and you may not get back the full amount you invest. Eligibility criteria, fees and charges apply. Information on this page was collated and published in January 2022.
How to make the most of your money in 2022
Although the global economy is set to grow in 2022, the world continues to face many challenges, not least the new Omicron Covid variant. The pandemic has shown there are some things we can’t control but, when it comes to personal finance, there are some potential pinch points you can keep an eye on to help you manage your money.
What’s going to affect you in the year ahead?
Counting the cost of the weekly shop
The cost of living rose at its quickest rate in a decade in late 2021. This is because of inflation, which is now hovering above 5%.
From clothes shopping to eating out, things are getting more expensive: Petrol is now at record highs, while energy costs have leapt due to a 50% surge in wholesale fuel costs.
Low interest rates means the purchasing power of cash is declining
While the return on your savings can rise with interest rates, these are currently less than the rate of inflation – by quite a lot.
Following a rate rise to 0.25% in December 2021, the Bank will almost certainly make further rate increases in 2022. However, these will likely remain within historic low levels – i.e. beneath 2% – so well below Bank inflation predictions of 5%.
What does this mean for house prices and mortgages?
It’s good news for property owners but perhaps less so if you’re looking to buy. House prices continued to rise through 2021, (by more than 11%) meaning average house prices in the have increased by over £30,000 since the start of the pandemic.
This growth should continue into 2022, though probably at a lower rate and will likely differ across the country: London was actually the region with the lowest annual growth (2.8%) last year, while the North West saw the biggest growth (16.8%).
Many experts expect interest rate rises could impact those who have variable rate mortgages, although most people in the are on fixed rate mortgages which should help protect them from any rise.
The economy is bouncing back
The global economic recovery is well underway and looks set to continue into 2022, if at a slightly slower rate. Nonetheless, GDP is on track to return to its pre-Covid levels in the first quarter of 2022 and as the recovery continues through the year, wages should rise in line with inflation.
Making your money work for you in 2022
The current level of inflation could eat away at the purchasing power of your savings. Therefore, in 2022, investing could be a good way of managing your wealth and taking advantage of the potential for a post-pandemic recovery.
Why investing can be a good idea
Gaining from growth
Long-term returns
Global opportunities
The return of an index of global equity markets (MSCI World) over the last 40 years in GBP terms. Chart shows value overtime of £100 invested in November 1981. Gross of any fees. Source: Bloomberg/Coutts. Past performance is not an indicator of future performance and you may get back less than you initially invested.
How to make the most of your Investments
No matter what stage you are at in your life, level of knowledge you have, or amount you want to invest, there are options for everyone.
Already a Premier investor?
Review your existing investments and explore opportunities for 2022.
You need to be a Shostra Bank customer with online banking, aged 18 - 84 and a UK resident for tax purposes. Fees and charges apply. The value of investments can fall as well as rise, and you may not get back the full amount you invest. You should continue to hold cash for your short term needs.
Get started on your investment path in 2022
We’ve created Shostra Bank Invest to make investing online easy. Start investing from £50.
A fee applies for this service. All our investment solutions are delivered and managed by Coutts. All advice and recommendations will be restricted to investment and protection products on the panel of products available to the wealth manager.
Specialist advice from our Wealth Managers
For customers who want specialist investment advice, and can invest £250,000 or more, our face-to-face advice service is available.
Trends to watch in 2022
Coutts award-winning asset management team have detailed a few areas to keep an eye on in 2022.
1. Governments trying to manage inflation
- Increasingly, companies are signalling that inflation is a problem and passing on their increased costs to consumers, fuelling inflation, which is likely to reach 5-7% in the US.
- Central banks such as the Bank and the Federal Reserve in the US are facing a tricky balancing act between curbing inflation and encouraging post-pandemic growth. To manage inflation we’re likely to see them ‘tighten’ monetary policy by raising interest rates, while governments also wind down their pandemic stimulus programmes.
- This could make borrowing more expensive for individuals and companies, however these decisions on interest rates by central banks will be taken with the expectation that economic growth will continue to be strong throughout 2022 – a view we share.
2. Climate change front and centre for investors
- Following the commitments made at COP26, we are expecting governments in 2022 to come out with increased regulations and standards on reducing emissions between now and 2025. This will likely impact companies, their revenues and ultimately their valuations.
- So, it’s more important than ever to incorporate the transition to net zero into the investment process to help you take advantage of new opportunities and manage risk. That is exactly what we’ve done.
- Our investments are made with a net zero carbon emissions goal in mind and we deliberately avoid certain sectors and companies which we believe might jeopardise that goal. We’re also proactive shareholders for all our investors, voting to create real sustainability and social benefit from how companies are run.
3. Markets still set to grow
- Markets are following strong recovery growth in 2021 and the is expected to rise above its pre-Covid level GDP in 2022.
- However, the impact of a new Covid variant in Omicron may be cause for some uncertainty as governments and businesses work out the best way to continue supporting economic growth.
- One sector we are watching is healthcare, which we believe will do well in an aging population and which has strong long-term fundamentals.