Things could get worse. #financefriday

Omicron is spreading like wildfire across the UK but things could get worse. The wholesale price of natural gas has soared too and Britain faces soaring energy bills. We need to prepare for those higher energy costs which could make a lot of other things more expensive too. Things could get worse and spring rather than being a welcome break from winter high energy consumption will see the first of the higher domestic energy bills.

Things could get worse

Things could get worse

Energy prices feed through into the price of many things produced in this country and we know that higher energy prices are now global and so will feed through to most goods and services. Inflation is around 5 or 6% and rising so it is already happening. Inflation devalues our savings and investments and so we will lose out in more ways than one. Things could get worse? They will most definitely will get worse but at least if you have saving and investments you have a buffer to tide you over the bad patch.

Stocks

The FTSE 100 briefly went of the 7500 mark this week and share prices are still rising with many companies putting up prices in response to rising wholesale prices but also to recoup some of their pandemic losses. We need to take action on climate change but are we taking the right action? We will need natural gas for some time in the future and it is not the worst energy source. I bought shares in Rolls Royce because their plans to built small size nuclear powers stations could be part of the climate change solution. I also bought BP and Shell because they’re energy specialists and will probably be part of the solution too. Wind farms are very nice until the wind drops. Another thing in demand is money and so I also invested in banking.

eToro

My investments on eToro are still experimental and I have now started investing just $10 in a selection of companies further diversifying my portfolio. My return on my investments is back up to 14.6% and rising. Those investments are volatile which is to be expected with the pandemic being up and down as the virus mutates. Things could get worse and we could see some companies going into liquidation but I am fairly diversified and so if one company goes down I can stand the loss.

Batten down the hatches

We can see the storm worsening so it is time to batten down the hatches and prepare. We need some cash for emergencies and a diverse portfolio of investments to protect against inflation. We are relying on “herd immunity” kicking in and on money printing but the former might not happen for some time and the latter can’t go on forever…

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