2022 has been a year of highs, but the high in this regard is inflation. The prices of goods and foodstuff have been skyrocketing at an alarming rate. This has directly had an impact on the cost of living of UK citizens and beyond. Inflation is determined by how much goods and services have increased over a given period.

To better explain how inflation works. When you say there has been an inflation rate of 7%, it means that the prices of goods and services is 7% more expensive than in the past year.

This means the cost of living is directly impacted by an increase in the inflation rate.

The Bank of England on May 5 forecasted the highest inflation in the country since 1982 will happen by Q4 2022. They forecasted that the inflation rate will peak by slightly over 10%. They projected that inflation will be at about 9% in Q1 2023, before reducing to 3.6% by the end of 2023 and below 2% in 2024.

1.  Relationship between the cost of living and inflation

Cost of living is the amount needed to maintain a standard of living. Though inflation directly impacts your cost of living, it is not the only variable affecting it. Another variable that affects the cost of living is how expensive a particular area is.

Factors like rent cost, house cost, healthcare, taxes and transport also play a hand in changes in the cost of living. For example, living in a city like London is more expensive than in Hereford, West Midlands and Derry, Northern Ireland.

Some unexpected chain of events can also affect the cost of living in a particular area. During the Covid-19 pandemic, for example, more people had decreased the cost of living because they didn’t have to commute to work.

In an instance where global warming becomes extreme, people in cold countries won’t have to worry about heating anymore. This will reduce the amount they spend.

People in hotter countries might have to invest in air-conditioning. This will increase the cost of living in this region.

2.  Drivers of Inflation

In 2022, there have been three main drivers of consumer price inflation. They are

• Transport
• Food and non-alcoholic beverages
• Housing, electricity, water and similar bills

These three drivers account for more than 50% of the Consumer Price Index.

In May 2022, Consumer Prices were 9.1% higher than in the same period in 2021.

Since April 2022, the Ofgem price cap rise has been directly responsible for the increase in “housing, water, electricity, gas and other fuels”.

Between April and May 2022 alone, the price of this driver increased by over 46%, with a further increment experienced in May.

Motor fuels have played a big part in the high cost of transport in recent months. The annual growth rates for petrol and diesel reached 32.8% in May 2022. This was the highest rate ever recorded since the inception of consumer price inflation in January 1989.

Energy prices, including household tariffs and petrol costs, have also played a role. Between May 2021 and the same period in 2022, there has been a domestic gas price growth of 95%. Domestic electricity prices have also gone up by 54% during this period.

Another factor that affects the cost of living through inflation is political conflicts. An example is how much Russia’s invasion of Ukraine has affected the world’s economy.

The warring countries, Russia and Ukraine happen to be one of the largest producers and exporters of agricultural goods like wheat and metals.

These conflicts and sanctions put on a country like Russia mean these products cost more on international markets.

This has led to an increase in food and material prices in countries like the UK.

3.  Inflation vs real wages

When talking about inflation, it is important to take income into account. What then is the relationship between income and inflation?

If your income is higher than the inflation rate, you will have less to worry about in terms of the cost of living. But if income isn’t increasing at the same pace as inflation then it becomes a problem.

For example, imagine we have an inflation rate of 6%, but the average income also increased by 9%, then the real income would have increased by +3%. This means that inflation has increased but the cost of living won’t affect the family much.

4.  Why the cost of living may rise more than inflation

Energy, transport and food have been the main drivers of consumer price inflation. The problem with this is that these drivers are essential expenses for most households and can’t be done without.

Yes, ways of reducing how much they take up from your income can be found but it has its limits. Higher-income households have an advantage here as they can swap their non-essential spending to cover these necessities.

Not many small-income households have that opportunity.

It is very possible to have a case whereby the cost of living becomes higher than the inflation rate.

Inflation is the measure of the purchasing power of money in an economy. The same is through for households.

A low-income family may spend much of their income on basic food items, rent and fuel for example. The cost of living for these families would easily be higher than inflation if the cost of these essentials increases at a faster pace than inflation.

The cost of living has been increasing faster than inflation for some basic essentials. Jack Monroe, a food campaigner said basic foods rose higher than the official inflation rate between 2021 and 2022.

However, this year, higher-income households have experienced higher inflation rates than low-income families. The reasons for this are simple.

Higher-income households tend to spend more to maintain their standard of living. This means spending more on transportation as they use personal cars instead of the public transport system.

The consequence here is spending more on fuel as the price of motor fuels has drastically increased over the past year.

Other areas higher-income households are spending more on are energy, recreation, hotels, restaurants, and lifestyle.

5.  How Government policies are helping

The Chancellor announced measures taken to support households in February, March, and May 2022. The support was estimated at £37 billion and includes:

• Given a £400 relief off energy bills for households
• Households receiving means-tested benefits were given £650 plus a £300 payment for pensioners and people receiving disability payments were given £150
• Giving a 5p cut to fuel duty
• Households in council tax band A-D were given a £150 tax rebate
• The threshold at which NICs charged on earnings was increased

Both National Insurance contributions (NICs) and income tax experienced tax rises by the Government in April 2022. The net level of government during this period is estimated to reach about £14 billion in 2022/23 when the changes are included.

In May 2022, 88% of adults in Great Britain experienced a rise in their cost of living, according to the office of the National Statistics.

Office for Budget Responsibility (OBR) in its March 2022 forecast suggested that household income taxes after tax and adjusted for inflation to begin lowering in Q2 2022 will not recover till Q3 2024.

Since lower-income families spend more of their income on energy, food, and transport, they are expected to be affected more by the changes in the cost of living. That is why the recent Government support for households was created around benefiting lower-income households the most.

According to the Resolution Foundation, the measures in place by the Government to support households will remove 82% of the rise in households’ energy costs in 2022-2023. This number is expected to increase to over 90% for poorer households.

Low-income households spend a larger proportion than average on energy and food so will be more affected by price increases. Overall, recent Government support for households benefits low-income households the most.

The Resolution Foundation estimate that the measures announced to support households this year will “in effect offset 82 per cent of the rise in households’ energy costs in 2022-23, rising to over 90 per cent for poorer households”.

 

Shrinkflation knock-on effect of inflation

When inflation happens, companies and brands tend to compensate for the lower purchasing power of customers with shrinkflation. Companies intentionally reduce the size of their products so it is still affordable for all.

Most times, the problem when it comes to money is that lots of people tend to neglect savings and investment and concentrate more on expenses. Although it is more fun and easier to spend all the money you laboured for within a short period but the sad truth is that there are lots of reasons why you need to spend less and save more money to invest for the future.

Stay on this article as we guide you on the ways you can reduce spending and increase savings and investment:

1. Track Your Financial Growth

Calculating your net worth will help you to determine an overview of your financial standing. Net worth is determined as, your assets which include; investment, savings and cash in checking, real estate etc. minus your debts like mortgage, overdue credit card bills, student loans, etc. By doing this each year, you will be able to monitor your progression towards any debt repayment goals and savings.

2. Make a Budget

Another thing you need to do is that you need to have a realistic budget that you stick to. You need to be intentional about your savings goal and not only think about it. This includes you being realistic about your current household financial situation. You then need to set numbers that are attainable and correspond to your spending to enable you to save.

When you know what you are spending money on, you will likely not overspend. Monzo and Starling are two digital banks that can you with this.

There are also free budgeting apps like Money Dashboard that can help you manage all your accounts in one place.

3. Pay Attention To The Cash Flow Concept

Understanding what cash flow is, how it works and what your household financial situation looks like is very essential. Revise your expenses and your income then determine your savings habit.

4. Work With Your Partner

If you have someone you stay with, or you are married, teamwork and communication about your household finances are very important. To save and invest more, you both need to be on the same page with your plan, desire, and resources.

Editor’s Pick What Is The Best Way To Improve Your Finances How To Live Well On One Income In The UK How to Build a Better Relationship with Money

 

5. Differentiate Between your “Want” and “Need”

Understanding the differences between your wants and needs. Identifying them will help you to avoid unnecessary expenses and help you say NO when something that does not correspond with your financial goal comes up.

6. Cancel Redundant Subscriptions

The thing with subscriptions is that they tend to pile up. Before you know it, those little subscriptions have become very expensive.

The Covid-19 lockdown and the work from home period gave people a lot of free time and subscriptions could have piled up. Now you have to ask yourself if you really need Netflix, Disney+, and Amazon Prime accounts?

7. Save First, Spend Later

When we make money, it is really important to save first before trying to sort anything else.

The rule of thumb is to use the 50/30/20 flexible approach to budgeting. What this means is simple. 50% goes to your needs like food, bills and debt. 30% goes wants. These are things you want to buy. 20% goes for savings and financial goals.

You can always adjust the ratios to what works best for you.

8. Pay Attention To Your Accounts

Do you know about tax-free ISA allowance? You can take advantage of your £20,000 tax-free ISA allowance. ISA rates aren’t great but it makes sense if you leave the money untouched for a long period.

You can get more information about it here www.gov.uk/individual-savings-accounts. You can find the best cash ISA rates at Moneyfacts.

Secure your accounts by turning on multi-factor authentication on all of your accounts to provide an extra layer of security. To do this, first protect your money and yourself by knowing where all your account is which includes; credit cards, retirements, banking, and student loan

Also, there are several safety precautions you can take which includes; setting up credit report monitoring, etc.

9. Improve Your Financial Credit Score

To increase your credit score, the most important thing you need to do is to keep your credit utilization rate under 30%. You also need to pay off your bills on time as at when due.

Lots of credit companies pay attention to your account on the length of your credit history, the mix of credit accounts you use, and the last time you applied for new credit.

10. Plan For Your Benefits

You probably have employer’s benefits that you are not aware of. Some of these include wellness opportunities, gym reimbursements, or financial planning sessions.

Make sure you pay attention to them by taking a few minutes through your HR portal or reaching out directly to your benefits manager can yield positive results.

You should take time out to find out the benefits your employer offer.

11. Be A Clever Customer, Not Loyal

It is easy to get attached to brands. But are they always the best option for you. The truth is, the emotional connection we have to brands apart, cheaper doesn’t always mean worse.

Sometimes, cheaper could be better and more suited to your needs.

To save more, you really have to be more clever with your brands and vendors. You can use comparison sites to search for better deals.

12. Maximize Your Savings Potential

Your rate of savings is determined by the percentage of income that you keep every month concerning your expenses i.e. Income – Expenses = Savings.

By increasing your savings, you are putting yourself in a better overall financial position. This will give you extra money at hand to save or to accomplish your goal, be it to invest or buy a house.

There are several ways to increase your savings, you can unimportant monthly subscription, get a side hustle, ask for a raise at work and more.

13. Reduce your expenses

This is another way you can save more by making sure that you are spending only what is important.

You can do this by making a list of all of your non-essential expenses for the last month. How do you achieve this? You can keep track of your expenses for a few months.

Rank them from the most important to least important and reduce or cut spending on the least important or unnecessary.

Conclusion

There are several ways you can spend less money than you make. But most of them rely on you either making more money or reducing your expenses.

The methods discussed are proven ways of reducing your spending so you can have more money saved for investing.

Vanguard UK currently does not offer REIT Funds to UK investors. However, there are other stock brokers in the UK who offer Vanguard REIT ETF. IG in the UK is one of such brokers who offer the US REIT of Vanguard.

Vanguard might consider having it later in the future and you can find out on Vanguard UK’s list of funds.

You can find the Vanguard Real Estate ETF (VNQ) on the IG website which is available for UK investors. Vanguard in the UK generally does not offer exactly the same funds they have in the US to their UK investors. In most cases, they do have similar funds.

For example, Vanguard Total Stock Market Index Fund is one of the most popular Vanguard Funds in the US. They don’t have it in the UK but there is an equivalent of it in the UK which is available on Trading212 another stock broker.

I wrote a blog post on the UK equivalent of Vanguard Total Stock Market Index Fund (VTSMX)

What is REIT

REIT is a fund that contains stocks issued by real estate investment trusts (REITs), companies that purchase office buildings, hotels, and other real property. These are investments that finance income-generating real estate.

REIT provides the opportunity to invest in real estate without buying real estate. By investing in REIT funds, individual investors can earn dividends from real estate investments—without having to buy, manage, or finance any real estate properties themselves.

UK REIT to consider

Here are some of the REIT you can consider in the UK

iShares UK Property UCITS ETF

iShares REIT is one of the few ones you can consider in the UK. This fund seeks to mainly track the performance of an index of UK-listed real estate companies and REITs which includes popular REIT stocks such as Segro, Land Securities Group, and British Land.

Dividends of this REIT are paid quarterly and have a distribution yield of 1.77%. This fund is focused on established UK REIT shares and listed property companies.

You can also check other brokers in the UK for UK and International REIT you can invest in. Below are some of the top brokers in the UK.

• IG
• Trading 212
• Freetrade
• Hargreaves Lansdown

 

 

Buying a house is basically a must-do for most of us. One factor that prevents most people from becoming homeowners is money. But you don’t have to be extra rich to become a homeowner in the UK. There are ways you can start saving money to achieve this goal.

A house is ordinarily a structure meant for shelter, but to many of us, it means more than that. It is a milestone and dream come true for many.

In the UK, over 27 million people are homeowners, 24.6% are in the process of acquiring one while 86% want to buy a house.

While house prices in the real estate market keep on rising, getting your dream home may not be as hard as you think. Here are the top six ways to start saving money for a house in the UK.

Start Saving

The mantra for anyone wanting to become a homeowner should be ‘save! Save! Save!’

While the median age of most people acquiring homes in the UK is 34 years, quite a number of people have started embracing the save early buy early mantra. This saves them quite a lot of trouble.

While most prefer to save when they are ‘financially stable enough’, saving early has been proven to be highly effective. Especially, in the acquisition of properties in the real estate market.

It does not matter the age or job, the best time to start saving is now.

 

I have a constructive article on how to start saving here and here.

Plan For It

If you do not plan, then you are writing an invitation to failure. Planning is a very important aspect of our everyday lives. You do not become a house owner by chance.

Buying a house requires even the most intricate of details. Any prospective homeowner should plan a detailed budget around the house he/she has in mind.

Details such as the price of the house should be indicated.

When you do this, you can then detail how this would be achieved.

The prospective homeowner should know what to forgo in his budget to maximize his savings.

Put Your Plan In Action.

Planning does not necessarily guarantee the actualization of your dream. Though it is the first step towards achieving this.

A lot of factors will determine how successful your plans are.

How well you stick to your budget is a necessary factor. After determining the ‘how’ part of your saving plan, putting that plan into action is one of the most important steps to take.

This however requires a high level of discipline. For instance, one could cut on the amount spent on fast food and opt for home cooking, reduce the amount spent on entertainment and subscriptions and more. That extra money should then be put into your house savings.

 

This calculator will help you calculate your monthly expenses.

Save Every Dime (Save Some More)

I am a minimalist. It is a habit that I picked up from my wife. But what I have found out about being a minimalist is that it makes it easier for me to save.

Sometimes being a minimalist mean I constantly overthink before I spend any money that I don’t have to.

A dime goes a long way and so does a shilling. It is crazy how much you can save when put certain money away. One plus one equals two after all. Spare change, loose change could add up over time when you think about it. Even though it is always very tempting to get rid of them.

So keep that loose change it could go a long way. It may look like nothing today, but it might be worth something tomorrow.

Get A Side Job

One plus one equals two and two jobs are sometimes better than one. Especially when they don’t have to clash.

Houses aren’t cheap to acquire and it takes commitment.

House prices are astronomically high at the moment and to save more, you might want to get a side hustle.

There are several side hustles you can choose to embark on. But most times, people tend to choose one they have prior knowledge about.

Your side hustle can either be online or offline.

For instance, one could try the freelancing market by selling services like writing, offering to teach English to non-natives, doing transcription jobs, doing odd jobs like babysitting, being a dog groomer or dog walker and much more.

If you are going for an online side job, you have several options to choose from.

 

Here are 101 side hustle ideas you can choose from.

Put Savings In A Fixed Deposit Account.

Money put in a fixed deposit account tend to earn a higher interest margin when compared to other accounts.

One could decide to lock their saving for a certain period, for instance, lock their house savings for either half a year, a year or more.

This will be highly advantageous as you will not be able to touch those saving at the same time earn huge amounts of interest.

Do A Garage Sale

We all have got stuff that we are not using but still occupy a huge amount of space in our wardrobes and garages.

Believe me when I tell you that you might have gold wasting away in your garage.

What I mean is that those junks that accumulate dust in your garage can be worth some money.

Doing a garage sale can generate some amount of income that could come in handy when wanting to save for that dream house.

There are several ways to sell these items but the two popular options are eBay and Amazon and Facebook marketplace.

Consider sharing an apartment

Rent prices are high and it might be one of the reasons why you can’t adequately save enough.

If you are considering purchasing a house soon, you should consider sharing an apartment to reduce the cost of renting.

Expenses such as food and entertainment can also be cut down by half if your apartment buddy will be sharing the costs.

Buy goods at the charity or thrift stores

Goods at the charity shop are ironically one of the cheapest, unique and high quality.

While you may prefer to do most of your shopping at the supermarket, during this period you might want to start visiting the charity store.

The one pound or two pounds saved at the charity could be a game-changer for you.

In Conclusion

Owning a home is practically everybody’s dream. Be it you are buying it as an asset or to get some privacy, or even to start your own family. Buying a house is definitely not an easy task but with these simple savings tips, you could be a homeowner in no time.

Many Africans migrate abroad for greener pastures but over time a lot of people start thinking about coming back home. Of course, they can’t go back home to nothing. This is why diasporans look for business ideas when moving back to Africa.

Africa’s population alone makes it a market with huge opportunities. According to a UNICEF prediction, Africa’s population will increase by 1.8 billion people. This means that business opportunities will continue to be on the increase.

People move abroad for opportunities for a better life and standard of living. But most start to feel homesick after years and even decades of staying abroad.

So many plan to move back home to settle down eventually. But what to do after coming back home you ask? What do they do with all the money they have gathered and saved up in the diaspora?

Here are 15 promising business ideas that you as a diasporan moving back to Africa can invest in.

Agric-business

While agriculture is the backbone of most African country’s economy, it, however, has not been fully exploited as a business opportunity. Every year, over 257 million Africans starve while 12 Africans die of hunger every minute.

Everybody knows that with every growing population, so does the demand for their needs increase. And with a population growth like Africa, this definitely sounds like a business opportunity.

The World Bank suggests that by 2030, the food demand in Africa could equal $1 trillion.

One of the factors causing this is the shortage of canned and processed foods. A knock-on effect of this is that food prices are high. This is because, at the moment, most food products can’t be transported to distant locations without expiring.

When this happens, produces increase their prices to make up for their losses.

This is just one problem. There are several agricultural opportunities you can still look at.

Pharmaceutical products, Medical Clinics and Healthy Food

Did you know 80% of African pharmaceutical products are imported? But the African pharmaceutical market is a rapidly growing one.

Covid 19, however, exposed the true situation of the pharmaceutical and medical industry in Africa.

Only a few African countries manufacture their own medicine while the majority of them import from abroad. While it may require billions of dollars to invest in, the profits earned sure are outstanding.

It is also not news that many of our medical facilities are substandard. Most don’t even have a good working environment.

Perhaps, the easiest of the three medical challenges mentioned is the healthy food industry. Yes, it would require a great deal of knowledge on the production side but it is still doable.

There are however several challenges to face. From funds to various government licenses and regulations. Not everyone might be interested in manoeuvring these barriers.

If you are thinking of investing in any of these industries, go for it. It is a good opportunity for anyone willing to invest.

Construction and Real Estate Industry.

The world is changing and so is Africa. Change is inevitable, you could even tell from the tall buildings sprouting from the ground up, from the roads now snaking their ways into villages.

Construction and real estate as industries bring in massive profits.

The African population is ever-increasing and this leads to serious housing deficits. Examples can be seen in Accra, Kampala and even Cape Town.

According to World Bank, the urbanization rate in sub-Sahara Africa is suggested to increase from 36 percent to 50 percent by the year 2030.

Day in day out, it is not uncommon to see roads or buildings being constructed. From cement to sand, beams, and even roofing materials, all these things bring in massive profits to investors.

With the knowledge of when to invest, where to invest and where to get the raw materials, the construction industry is definitely profitable.

Automobile industry

‘Car dealers’ as we like to call it. The number of cars being imported into Africa will definitely shock you.

In Nigeria for example, you simply have to take a drive down to Tin Can in Lagos to see the number of cars being offloaded from shipping containers every day.

Every year, 28.45 billion dollars is spent on importing automobiles while the profits earned will shock you even more.

An advantage you have over people doing car business in Africa is your nearness to resources. By this, I mean depending on the country you are living in, you have a first-hand inspection of cars that are to be sold.

For example, let’s say you live in the US and you see a car for auction near you. You have the opportunity to see those cars live and know the true working condition.

This is different from car dealers from Africa who just buy cars and hope the condition is not worse than what was stated on the auction site.

Invest in Mobile Phone Market

Thanks to the marketing plan of smartphone manufacturers as well as the effort put in by importers, Africa’s smartphone market has experienced a boom over the years.

Companies like Transsion, the manufacturers of Tecno, Itel and Infinix are the leaders in smartphone sales in Africa for a reason. The strategy of offering their low-end devices at prices as low as $100 or less have made smartphones affordable for everyone.

Also, we have an increase in demand for fairly used phones.

The impact of social media on phone demands can’t also be underestimated. Almost everyone now has digital devices. Social networking sites such as Facebook, Twitter, Reddit, and WhatsApp have popularized them even further.

The things you can do with mobile devices nowadays are boundless.

Smartphones and other smart gadgets from all over the world have been flooding the African market with astoundingly huge profits gotten from it.

According to reports from the Nigerian Communications Commission, the mobile phone market in Nigeria is worth about N484 billion.

Should you want to invest, then an investment in the smartphone market is worth it.

Information Technology (IT)

The IT sector in Africa is one of the fastest-growing industries. Even the U.S. Department of Commerce identifies it as one of the fastest and most profitable sectors in Africa.

We live in an age where connectivity is a priority. Companies and governments are always looking for ways to make their systems more effective.

If you are currently an IT professional abroad, you will quickly find out that systems and technology there is far superior to those in Africa. Already you have a problem you can solve, you just have to take action.

Commercial Food Services

Clothe, housing, transport and food are three industries that stay evergreen.

Food services like restaurants nowadays have become a sure way of reining in profits. From the young to the old, everyone must eat. It is not uncommon in Africa to see new restaurants spring up one after the other.

All over Africa, you will find few fast-food restaurants dominating the food sector.

The profits made from these restaurants are jaw-dropping.

Delivery or Logistics services

Thanks to the growth of eCommerce platforms and the impact of social media vendors, the demand for delivery or logistics companies have increased enormously.

These days, it is not uncommon to sight delivery vehicles every time you go out. Everyone wants something delivered.

Delivery services are surprisingly making huge profits in Africa.

Nowadays, people opt to buy goods online be it within Africa or abroad then have them delivered to either their homes or workplaces at a certain fee.

Should you want to invest in a business, then delivery or logistics service is worth looking into.

Invest in Education

Did you know that the under 18 demographic represents one-third of the African population?

This means that the education sector is a big potential market.

Also, thanks to the poor state of public schools, most people strive to send their kids to privately owned schools.

Investing in education, more so, in the private sector certainly does bring quite a lot of profits.

With the teacher to student ratio at the public schools being 1:60. Most parents opt to take their children to schools where there is no scramble for resources. Where their children’s needs will be catered for easily.

This opens up a lot of opportunities for new schools to enter the market.

Hair, Beauty and cosmetics products

The growth of the beauty and cosmetics industry over the years is truly phenomenal.

According to Euromonitor International, the beauty industry is worth about $25.4 billion in the Middle East and Africa. They also suggested that the market will grow by 6.4 percent over the next four years.

Reports have also estimated the market for weaves, hair extensions and wigs at over $6 billion a year.

All over Africa, there is a huge demand for hair, cosmetics and beauty product with profits earned being triple the amount invested.

Perhaps even more surprising is that these industries have not peaked in Africa. The global personal care industry is worth about $400 billion with Africa representing only a 3% share of this.

There is still significant room for growth and money to be made here.

Join The Fashion Industry

The fashion industry is huge anywhere in the world and it is no different in Africa.

Did you know that the footwear and apparel market in Africa is estimated to be worth about $31 billion?

The industry is worth about $2.4 trillion globally.

When you look at the African population, you will realize that there is still so much money to be made from this industry. Like many industries in Africa, people are only just starting to understand the true worth.

Imports of used clothes, bags and shoes have been found to make tremendously huge amounts of profits.

Fintech Industry

Perhaps there is no emerging industry that is making as much rave as the fintech industry in Africa right now.

A testament to this is that as of 2018, Africa had only one unicorn startup company, Jumia.

In 2021 alone, the continent has seen 3 unicorn startup companies. Flutterwave, Interswitch and Fawry are the three companies to achieve unicorn status this year.

There is no other industry in Africa that is getting as much international capital and backing as fintech at the moment.

This boom in the industry is however not surprising.

Did you know that more than 60% of Africa’s adult population are unbanked?

Over 350 million African adults own smartphones but a high percentage of them do not have a bank account or access to formal financial services.

The market here is huge.

Apartment Hotels

The growth of apartment hotels in Africa is rather sudden but unsurprising. Africa’s real estate sector itself remains a prime industry and is ever-growing.

Apartment hotels which is a real estate niche is still an emerging market in Africa. The huge demand for it is however easy to understand.

Apartment hotels are fully furnished apartments that offer the comfort and privacy you can get in your very homes.

Serviced apartments can also cost 20-30% less than an equivalent extended stay at conventional hotels.

Apart from comfort and privacy, global business travel is also a driving factor for the rise in serviced apartments. This market is estimated to spend more than $1.2 trillion annually.

Supermarket (Grocery Retail Sales)

The supermarket industry has always been a lucrative one. It is not uncommon to see various minimarts almost everywhere you go.

Food is an essential part of our everyday lives and the demand for it will always be high.

It is also not uncommon to see multi function supermarkets with sectors divided into grocery, fashion, pharmacy and the likes. Supermarkets are popular for bulk and cheaper buys.

In 2017, Nigerians spent $44 billion on food with grocery sales accounting for 75% of it.

In the same 2017, the value of grocery retail sales in South Africa was about $44.9 billion.

Keep in mind that there have been more demand for food since then and the effect of inflation and recession.

The biggest aspect to be considered when opening a supermarket isn’t only capital. Your location probably plays the biggest part in the survival of your business.

You must choose a prime location.

Importing and Exporting

The importing and exporting industry has always been huge. With a little research, you can become an importer or exporter in no time.

Importing business can allow you to do business in your home country without really staying there. All you have to do is find products that you know is in demand in your host country and begin from there.

You have to be careful of greed when you start though. It is best for you to focus on only a few products so you don’t spread yourself too thin.

You can also choose to find products in Africa that you can export abroad.

If you are dealing with farm produce, for example, you can either export raw materials or processed commodities.

Products like coffee, honey, Shea butter and flowers are available at cheaper prices in Africa. You can take advantage of that.

Also, exporting from Africa is cheaper than importing back to Africa.

All you need to do is to source for reliable companies in your home country that you can sell to.

In Conclusion

Go east or go west home is always the best. Home is where our roots are. While most African countries are underdeveloped, it is a continent rich in resources. The population alone makes it one of the fastest-growing consumer markets in the whole world. There is a market for virtually any business you want to do in Africa, all you have to do is decide. Over time it should become a worthy investment.

Starting a journey in stock and share can be daunting for beginners. Is Vanguard good for you as a beginner who is just starting in investing in stock and shares? Please stay with me as I take you through some very useful points about Vanguard UK.

Less is better

Vanguard mainly has its own products which are not too many. You can easily scan through the Vanguard list of funds without getting confused.

If you compare Vanguard with other major stockbrokers in the UK. You will quickly see the difference.

It can be good to have a lot to choose from. However, for most beginners, that can get you confused.

It is like walking into Tesco and seeing multiple brands of bathroom cleaner spray which gets you confused on which one to buy.

But instead, if you are in Lidl or Aldi, you might just see a couple and it’s easier for you to pick one without getting too confused. By the way, I am not saying Aldi or Lidl is better than Tesco as a brand, this is just an example.

For example, Vanguard UK has about 76 funds to choose from. The other major stockbrokers in the UK have on average 5000 funds, stocks, and shares.

Stock Broker	Number of Products
Vanguard	About 76 funds
Freetrade	Over 5,000 funds, stocks
Hargreaves Lansdown	Over 8,000 funds, stocks and shares
Trading 212	Over 10,000 funds, stocks and shares

Low risk

One of the most important things to be careful of in-stock and shares investing is losing money. All stockbrokers do have a statement that summaries as this,

“The value of your investments can go down as well as up, so you may get back less than you invest.”

In some cases, they will clearly state that ‘your capital is at risk’. It is normal for them to make that clear because that is the nature of investing in anything. Nothing is a guarantee when it comes to investing.

As a beginner, it makes sense to reduce your risk exposure and this is why investing through Vanguard is good for beginners. Vanguard offer low risk investing through their Index Fund and Exchange Traded Funds (ETF).

I will explain more about Index Fund and ETF in another article which you can read after this one. It is a very useful article. The link is below.

Basically, investing in one company (individual stocks and shares) is riskier than investing in a fund that invests in a variety of companies. 

With vanguard, their funds are low risk. They are ETF and index funds which means they invest in a bit of everything and that reduces the risk.

Low fees

If you compare Vanguard fees to other brokers you will quickly notice how low their fee is.

They offer one of the cheapest fees for a UK online brokerage.

All Vanguard accounts have a 0.15% annual account management fee. Fees on funds also average about 0.20%. Vanguard fees are actually very transparent.

It is however important to know that they charge periodic one-off bid-offer spreads on certain trades. The good thing is that the fees are so small they are almost negligible.

As an investor in the stock market, you have to be careful of how much fees you pay because fees can significantly reduce how much money you make in the stock market.

Vanguard is a reputable company with integrity that you can trust.

User-Friendly Platform

Vanguard platform is beginner and user friendly. The simplicity of their platform makes it easy to create an account and start investing without any complications and confusion.

There are brokers out there who make things too complicated for beginners. Vanguard gets this right.

Vanguard UK website’s home page is very informative and easy to navigate.

The website is fully mobile-friendly.

Good Customer Service and Support

Customer support is one of the most important factors that you must put into consideration when investing in the stock market.

You want to deal with a company that is reachable and approachable. Vanguard offers its customers world-class support. 

You can easily reach them via email or phone call. They are swift to deal with any issues or concerns you have.

Vanguard Account Types

One of the factors that make Vanguard beginner-friendly is the fact that they have a variety of account types. The most important one is the Stocks and Shares ISA which is a tax-efficient account in the UK.

As a beginner, this is the account type you should be considering when starting with Vanguard. 

As well, Vanguard has the Junior ISA which is very good for people who have kids and want to teach their children to invest at an early age.

Vanguard Personal Pension account is also an option. And, the last one is the General Account which you might not need as a beginner except if you have already put in the maximum amount in your ISA account.

Vanguard ISAs

Vanguard ISAs are stocks and shares ISAs that allow you to invest on a tax-deferred basis for retirement.

In 2021, ISAs have a £20,000 annual contribution limit.

You must be at least 18 years old to be eligible to make an ISA. But there is a clause which I will talk about.

This Vanguard option has a 0.15% annual account fee. You don’t get charged extra for things like payments, deals and the likes.

The regular ISA and Junior ISA are identical. The difference is that Junior ISA is managed by the beneficiary’s parents or guardian. You must be a legal guardian before you can open this account in their name. Full control of the account will be transferred to them once they turn 18.

Self-Invested Pension Plans (SIPPs)

I like to call this the full package plan. the reason is simple. Vanguard SIPPs gives you every option you can require from a pension plan.

Tax-deferred growth, tax-free inheritance, and tax relief go to your retirement funds.

With this account, holders have a huge amount of flexibility in the makeup of their portfolio.

They also have a low 0.15% account fee capped at £375 per annum.

You can also transfer SIPPs from other providers to Vanguard.

General Investment Account (GIAs)

This account is Vanguard’s flagship product. The account gives you the ability to invest in one of the 75+ funds that Vanguard offers.

With GIAs, you can invest in as many funds as you wish. Though you have to keep in mind that you are eligible for income taxes and capital gain taxes.

GIA  accounts have a low 0.15% annual account fee capped at £375 per annum.

You can start investing in GIA for as little as £100.

Like the SIPPs plan, you can also transfer GIA from other providers to Vanguard.

 

Is Vanguard Legit? Will My Money Be Safe With Them?

Vanguard is very much legit and safe to use. It is one of the popular and well-used wealth management companies in the world.

They are responsible for managing trillions of pounds in wealth. They are also the single largest fund provider in the world.

Vanguard has some of the wealthiest people on its roaster.

Vanguard has various security measures in place to protect its user’s accounts. Some of them are time-out features, additional security codes for transactions, encrypted online withdrawals.

They also protect your personal and financial information with standard bank-level.

Vanguard is also regulated by the Financial Conduct Authority (FCA) and the Financial Services Compensation Scheme.

There is also a contingency measure in place for up to £85,000 of your investments to be protected in case the company goes under.

These are just some of the measures in place to ensure your money is secure. There are still several account security features you can explore.

 

Final Thoughts

Vanguard is a tested and trusted investment platform. As such, it is very good for beginner investors.

With over 75+ investment options, it is one of the best options for beginner investors.

There are however a couple of disadvantages to using the vanguard. But they are overall negligible issues.

The first is that you can only invest in funds run with Vanguard. That doesn’t make it a flexible option.

The second issue is that the Vanguard platform doesn’t have a large research library for beginner investors. But Vanguard’s global popularity means a quick search on search engines should fix this for you.

When it comes to passive asset management, Vanguard is probably the best option out there. It’s however not a great choice for interactive investors.