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Royal Bank Invest

Our outlook on the
second half of 2022

The story so far

It might feel a bit like we’ve jumped out of the frying pan and into the fire. Just as the worst of Covid-19 seemingly passed, new crises have begun, with Russia’s invasion of Ukraine further pushing up the price of both energy and food. Markets, which had been showing record performance at the start of the year, have now dipped. We also saw the UK Prime Minister resign in July, but although that’s big political news, we wouldn’t expect it to have a large impact on global markets.

The potential for returns

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

Keep an eye on the cost of living

Everything has been getting more expensive, and that doesn’t look likely to change over the coming months.

Energy prices

£800 expected increase in typical energy bill per year from October.

Food and drink

6.7% rise in food and drink prices over the last year.

Cars

30% increase in used car prices since start of 2021 

Is an end in sight?

It continues to be a tough time for everyone, but there are some signs that these price rises may have peaked. This doesn’t mean prices will come back down but some of the pressures pushing them up, like supply chain problems, are easing.

With the UK economy growing at a reduced pace, and even declining in parts, the Bank of England will be cautious and may raise interest rates more slowly. This may be good if you’re borrowing but less so if you’re saving.

Things you could do to ease the squeeze

Start by budgeting

With prices on the up, keep on top of what you're spending and where. This can help you manage your budget better and find out if you could be saving money. Try our ‘Spending’ tracker in your Royal Bank app. 

Think about investing

Inflation (rising costs) can eat away the buying power of your savings. So, if you don’t expect to access all of your money in the immediate future, you may want to consider investing some of it. Over the long term, investing can provide higher potential returns than just keeping cash. This could offset rising inflation – but remember investing can be risky too and you could get back less than you put in. Find out if saving or investing is the best option for you.

Historical data shows investment markets are likely to recover and see growth beyond their last high point within 12 months of a downturn.

Investing could be a good way to reach your goals in the future. As you can see below, if you had left £100 invested in a global index since 2001, it would be worth nearly around £400 today. Though, of course, markets can go down as well up.

Source: Coutts/MSCI Global

Past performance is not an indicator of future performance and you may get back less than you initially invested.

Investing for good

Our investments are managed by the Coutts Asset Management team who are committed to investing for purpose as well as profit, pushing companies to work for the environment and society.

Learn more about investments

Whether you’re an experienced investor or just finding out what investing is, we’ve got a range of articles to help you understand more about investing.

We regularly update our articles depending on what’s happening in the market so check back for future updates.

Something else we can help you with?