Are you worried about Inflation Rates in 2022?
With the 2021 November Consumer Price Index (CPI) showing annual inflation hitting 6.8 percent (the highest in 39 years).
How will this affect us all over the next year?
With both the impacts of Brexit and of course COVID-19 along with soaring fuel prices, 2021 has been hard on both businesses and individual’s finances alike.Currently realistic predictions for inflation in the United Kingdom look likely to be around 6% by April 2022 and this may well last until June or July before starting to lower back down towards trend.
All this means many are left wondering how best to protect their assets.
Adsumus Financial Planning are happy to speak to you with a tailored plan regarding your assets, but following are a few general tips on how you can protect yourself.
1. Know where your money is going.
This might sound obvious, but how well do you know your monthly finances? When was the last time you checked your bank account line by line to make sure you’re not paying for any unwanted services? You may have joined a service as a trial and then forgotten about it, or have insurance for a phone you don’t actually own anymore. This may sound a very simple step, but it’s easy for anyone to miss out on a few payments they no longer need to make.
2. Your mortgage.
Is there anything you can do with your mortgage payments?
There are currently low re-mortgage rates available. For borrowers with at least 40% equity, it is possible to lock in at below 1%. (Be aware these are unlikely to last much longer though, as banks push the cost of mortgages higher).
3. Your pension income.
Next year’s state pension increase will still be linked to inflation so basic state pensions will increase by £5.55 a week.
When purchasing an annuity, inflation protection is an important consideration, particularly if you are reliant on the annuity income to meet your needs over the long term. Annuity income can be set to rise with an inflation index when purchasing and whilst initially providing a lower income than a level annuity as time goes on, income should increase in line with inflation. However, once purchased the annuity cannot be changed, so the need for inflation protection must be considered at outset.
Obviously make sure you are watching how much you withdraw from flexible pension arrangements. Operate if you can with a conservative attitude towards withdrawal.
4. Buy it now.
Before the likely rise in cost of higher value items ie cars, home improvements, holidays etc, then purchase them now.
5. Cash and Inflation.
Another important factor to consider is the depreciatory effect inflation has on cash. If inflation rates are higher than interest rates, this means that your cash savings are worth less in real terms year on year.
There are a variety of financial products available, including both investment and cash savings vehicles, that can protect your hard earned savings against capital erosion due to high inflation.
An investment portfolio, while riskier than cash savings, can provide returns in excess of inflation rates over the long-term. But it is also important to maintain some cash as an emergency fund should you require a lump sum in the short term. We can help you to manage this as part of our ongoing service, with a lifetime financial plan that will aid you in meeting your lifetime goals.
The Adsumus range of investment solutions and ongoing service has been carefully refined to help you reach your financial goals, grow your wealth and protect you as best as possible against rising inflation rates.
If you want to discuss your options with one of the Adsumus team then call us on 0203 026 2512 and we will be glad to help you.
As Adsumus Financial Services motto states, “Adsumus ut adiuvemus; we are here to help”
Please note: This article is subject to general opinion and does not constitute advice. Any decisions made in connection with this article are at your own risk. Please contact us if you have any queries or concerns regarding this article, or require advice on any financial matter.
Please note: This article is subject to general opinion and does not constitute as advice. Please contact us if you have any queries or concerns regarding this article, or require advice on any financial matter.