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Royal Bank Invest

Investment Outlook 2022

How to make the most of your money in 2022

The Covid pandemic and Russian invasion of Ukraine have shown there are some things we can’t control. But when it comes to personal finance, there are things you can keep an eye on in the year ahead if you want to make the most of your money. 

What’s going on?

Counting the cost of the weekly shop

It’s not just the price of a Freddo that has gone up… energy costs and supply chain issues have forced businesses to put up their prices: affecting everything from chocolate, to cornflakes, to cars...

The economy could be set to grow

We’re seeing a big economic recovery, meaning growth could well continue throughout 2022. This might be good news for earners as wages are expected to rise.

House prices keep on climbing but interest rates might also rise

House prices are expected to keep on rising in 2022 although not at quite the same pace as 2021. The expected increase to interest rates could add to your monthly mortgage repayments if you have a variable rate mortgage.

What might affect your finances in the year ahead?

A small increase in interest rates

We expect the Bank of England will further raise interest rates as it looks to manage inflation. This means you’ll get a little more back on your savings but it could make borrowing more expensive… especially if you have a mortgage.

A big increase in prices aka ‘inflation’

Inflation (rising costs) means the value of your pounds is being eaten away. Even though interest rates are rising, they are well below inflation.

So, what can you do to make your money work for you in 2022?

Investing could be one way to try to protect your money from the effects of inflation.

The potential for returns

Investing in a diversified portfolio can help spread the risk of investing by not having all your eggs in one basket. This means investing in different classes of assets, including markets and government bonds. And the longer you invest the more opportunity you provide for your money to grow (but please be aware there are risks too).

Why investing could help make your money work harder

With interest rates currently historically low, investing could be a good way to make your money work harder for you and your family, and creates the potential to grow your money.

Is investing right for me?

No matter what stage you are at in your life, level of knowledge you have, or amount you want to invest, we have simple options that could suit you. You can start online from just £50 with 5 ready-made funds, from cautious to high-risk.

Invest in positive change

You could help the planet and your finances because we invest in companies and industries who positively affect our world.

A note on market volatility

When we see events such as the current invasion of Ukraine, markets react fast and we see quick movements – ‘volatility’ - with the value of people’s investments falling in the short term. However, history has shown that markets recover – which is one of the reasons why investments are considered for the longer term (about five years or more).

It’s always worth remembering that past performance should not be taken as an indication of future performance. The value of investments, and the income you get from them, can fall as well as rise, and you may not get back what you put in.

You can read more on our views on the Ukraine situation here.

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