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How has Covid-19 affected the markets and our personal finances?

The last two years have been a roller coaster for all industries! Here's how the markets and personal finance has been affected by Covid-19. The post...
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The effect of Covid-19 has been felt in every single industry from retail to healthcare. As a result, the last two years have been a pretty busy time for the markets! Now that the end seems to finally be in sight, let’s take a look at exactly how the pandemic has affected personal finance over the last two years.


How the pandemic changed the markets and personal finance

Hargreaves Lansdown has recently published a report that covers exactly how the markets have changed over the course of the pandemic. The report takes a look at seven charts across a range of industries.

For the most part, the charts reflect concerns around inflation and increased credit card borrowing. However, there is some good news in regards to participation in investing across the UK. Here’s the rundown!

1. The number of retail investors is on the rise!

According to Susannah Streeter from Hargreaves Lansdown, the number of retail investors has increased over the course of Covid-19 due to savings that were made from reduced travel and social costs. The market analysis also explains that new investors were prompted to invest during the early days of the pandemic when vaccinations started to break out.

Susannah explains that these new investors should keep their eye on long-term gains rather than attempting to make short-term profits. The rise of retail investors has sparked volatility in the stock market and has pushed up the price of many popular stocks. If you want to start investing, take a look at our top-rated brokers for 2022.

2. UK stocks have taken a lead

The FTSE share index has gained in popularity over the last two years with an increasing number of investors turning to UK stocks. In fact, it has risen 44% since the early days of the pandemic. 

However, FTSE stocks in the travel and tourism markets are still suffering. This is partly due to the recent Ukraine conflict, which has caused major disruption for airlines and sparked volatility in the sector.


3. It’s been an exciting time for Bitcoin

Anyone interested in the crypto space will know that Bitcoin has experienced some major volatility over the past few years. It experienced a new all-time high in 2021 but has also experienced major drops. Despite this, the currency is still 60% higher than it was before the pandemic began.

However, across the rest of the world Bitcoin has failed to meet ‘digital gold’ expectations that enthusiasts once hoped for. It remains a highly unpredictable asset, and many investors still prefer the relative safety of the stock market.

4. Borrowing is back!

Sarah Coles from Hargreaves Lansdown explains that many Brits reduced their borrowing during the early days of the pandemic. This was largely due to increased living costs as the need to travel and socialise dropped. In April 2020, Brits repaid £7.34 million in consumer debt!

However, over the last 12 months borrowing has started to rise once again! The FCA reports that last year, 14% of people were forced to borrow more due to the financial squeeze.

5. Wages are falling

While the price of goods is going up, wages across the country are falling behind. In the early months of the pandemic, average pay was down by 1.3%.

Sarah Coles explains that regular pay is now down by 1% whilst inflation over the last three months averaged 4.8%. This is tightening the financial strain that is already felt by many across the UK.

6. Brits are eating into lockdown savings

During the pandemic, millions of Brits built up substantial savings. Some £278.8 billion was added into savings pots between 2020 and 2022. However, it seems that savings efforts have tailed off over recent months.

In January, we began to eat into lockdown savings to make up for rising prices and lack of work. The FCA reports that 34% of Brits have eaten into their savings. This means that people who were once financially secure may now be facing trouble.

7. Annuity rates are on the rise

There is some good news for those receiving annuity payments in the UK. While long-term gilt yields crashed at the beginning of the pandemic, rates have been on the rise in recent months.

This means that annuity income has increased and Brits receiving pensions are getting higher payouts. This comes as a relief as the cost of living is getting higher and many pensioners are struggling to make ends meet!

Investing in Cryptocurrency is extremely high risk and complex. The Motley Fool has provided this article for the sole purpose of education and not to help you decide whether or not to invest in cryptocurrency. Should you decide to invest in cryptocurrency or in any other investment, you should always obtain appropriate financial advice and only invest what you can afford to lose.

The post How has Covid-19 affected the markets and our personal finances? appeared first on The Motley Fool UK.

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