Lowes Magazine Issue 121

INVESTMENT Crypto- currency

Social media channels are being used to pedal crypto investments, with ‘influencers’ showing flash cars and extravagant lifestyles of people who have become rich by putting money into crypto. As with all speculative

CRYPTOCURRENCIES ARE CAUSING SPLIT OPINIONS in the world. China and India have banned them, the USA has imposed increased levels of regulation and taxation on them; El Salvador is building a bitcoin city funded by cryptocurrency. The UK Regulator has introduced measures to try to reduce crime within firms that work with cryptocurrency. Governments across the globe are concerned that current cryptocurrencies’ volatility make them unstable and so unsuitable as a medium of exchange. They are also concerned about the negative impact on consumers of the increasingly speculative investing into these unregulated assets if and when the price bubble bursts – globally the sector is now worth over $3 trillion. But crypto does have advantages – speed of transactions and lower charges for example – and central banks including the Bank of England, are looking at whether to introduce their own digital currencies to take back control. But serious implications for the financial eco-system, such as the potential for unstoppable runs on commercial banks, must be considered in the process. Also, the rise of cryptocurrencies has brought to a head some worrying signs amongst younger investors. Results of a poll among 2,000 18–24-year-olds on saving for the future concerned us. They showed that a third of this age group are eschewing long-term saving, preferring to invest in these highly speculative cryptocurrencies than a workplace or personal pension. This was despite well reported risks with cryptocurrencies and the long history of successful pension saving in the UK. Client competition 2022 ONE OF THE PREVAILING THEMES IN 2021 AND FOR 2022 will be the rate of inflation. Over the past year we have seen the headline rate of inflation jump from around 1% to 5.4% in December 2021. What happens over the next year will affect everyone in the country – with the certainty we will all be paying more for what we buy. For our 2022 Lowes Competition, therefore, we are going to focus on the rate of Consumer Prices Index (CPI) and Retail Prices Index (RPI) inflation. What we are asking you to do is predict the increase in the rate of CPI over the 12-month period to November 2022, as published by the ONS in December 2022. In the event of more than one entrant predicting the correct figure, as a tie-breaker, we are also asking you to predict the increase in the rate of RPI for the same period. To help you in your predictions, we have produced a table for the past five years of both CPI and RPI as published by the ONS every November.

investments, there will be those who have been successful but as we have seen all too

often, once the investment trend moves from the few to the many, the potential for investors to get their fingers burned increases exponentially. What is doubly worrying here is reports that younger investors are borrowing to invest in cryptocurrencies, a recipe for financial disaster if the bubble bursts. These are unregulated, volatile investments which can rise and fall by tens of thousands of pounds as they are highly exposed to investor sentiment. The only people guaranteed to win out from these investments are the brokers gaining commissions from the trades made. For anyone in their 20s, retirement may seem a long way off, but with greater responsibility now lying with the individual to make provision for their future, it should be firmly on their radar. They should be looking to long-term investments not get-rich-quick, highly speculative bets on unregulated assets. Experience has shown that all too often such bets can end in financial disaster. The prize is £500 of Amazon vouchers. The winner will be the person who most closely predicts the rise in CPI. In the unlikely event of the need for a tie-breaker, it will be the person who is closest to the rise in CPI and the rise in RPI for the period. CPI and RPI – 12 months to November 2017-2021 CPI RPI 2021 5.1 7.1 2020 0.3 1.2 2019 1.5 2.2 2018 2.3 3.2 2017 3.1 3.9 Source: ONS To enter, please visit this web address: www.Lowes.co.uk/ClientComp22

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