Few people could’ve predicted the economic turmoil the first half of the year has brought: headline inflation, market volatility, and rising interest rates. Suffice to say, 2022 has had a rocky start. But what effect has this had on personal finances?
You may have seen your investments, including your pension, take some unexpected turns. While it’s normal for your balance to go up and down, our current situation in the UK is (and forgive the term) ‘unprecedented‘. So, what do you need to know?
- Inflation is a general increase in the prices of goods, the current rate of inflation rose this month to 9.1%.
- Interest rates measure the cost of borrowing and reward for saving cash. The current interest rate is 1.25%, which means when you borrow money you’ll have more to repay, and when you save money you’ll earn more interest.
Why does this matter? In the UK, both inflation and interest rates are the highest they’ve been in decades. As inflation erodes the value of your pension, and high interest rates impact pensions too, those saving towards retirement will have been doubly hit this year.
Keep reading to find out how financial markets have performed this month and what’s new in PensionBee HQ.
How did financial markets perform in June 2022?
June began a sharper global market downturn as the UK officially entered into a ‘bear market‘ (a continued period where prices of company shares fell 20% or more). Yet arguably the greatest surprise was the decline in the performance of bonds. So, what are bonds?
Bonds are basically loans given by investors to companies. Historically, bonds have been seen as ‘safe assets‘. As such they’re often included in pensions, especially for those approaching retirement, as they tend to fluctuate a lot less than stock markets.
Thriving on market stability, bonds aim to provide moderate growth for investors. However, recent surges in inflation and rising interest rates have pushed bonds between the proverbial rock and a hard place - leaving investors understandably concerned.
For a more in-depth look at bonds and the current market performances, read What happened to pensions in June 2022?
Remember that your pension is a long-term investment when considering short-term performance. Past performance is not a guide to future performance. As with all investments, capital is at risk.
The Pension Confident Podcast episode 7: The rising tide of financial scams
Last year saw a 30% hike in swindlers’ profits compared to the year before. Our latest episode of the Pension Confident Podcast discusses the rising tide of financial scams: what to look out for and how to stay safe from fraud.
We were joined this month by Michelle Cracknell CBE, Independent Non-Executive Director of PensionBee and former Chief Executive of The Pensions Advisory Service, Lisa Markey, Head of Security and Counter Fraud at the OBIE, and Jonathan Lister Parsons, Chief Technology Officer at PensionBee.
Subscribe and download our latest episode on Spotify, or your favourite podcast app. You can read the transcript of this episode on our blog, or you can watch it on YouTube. Please share your thoughts on social media or by leaving a review!
And don’t forget to tune in to next month’s episode where we’ll be discussing the importance of teaching kids about money.
What else is new?
At PensionBee HQ we’re constantly innovating to help make managing your pension simple. Following the success of our Easy Bank Transfer mobile feature (where you can make safe and easy payments to your pension from your phone) we’re now working towards rolling this out across the web too.
We’re looking for volunteers to help provide feedback on everything from exciting new products to existing features. If you’d like to participate in surveys, focus groups, prototype testing and more, sign up to become a HoneyMaker.
Keep an eye out for our next update on our blog. We’re always working on new features to make our customers happy so if you have any ideas or suggestions, please email [email protected] or let us know on social media.
