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Edinburgh Reporter
02-05-2025
- Business
- Edinburgh Reporter
With Inflation Rising and Markets Wobbling — Where Are Smart Investors Turning Now?
In March 2025, the UK Consumer Prices Index (CPI) rose by 3.4%. Rising costs are putting a strain on household budgets and hurting investor confidence. Stock markets are unstable, savings are shrinking, and many conventional investment strategies are ineffective. In this uncertain environment, it's clear that being cautious is not enough. So, where are smart investors looking to put their money now? And what can you learn from their new strategies? As per reports from the Office for National Statistics (ONS), the Consumer Prices Index, including housing costs (CPIH), also increased 3.4% in March 2025. With the value of the pound dropping, smart investors are re-evaluating their alternatives for growth and protection. Here's how they are changing their approach. Photo by Maxim Hopman on Unsplash Inflation Forces a Rethink on Traditional Investments UK inflation hit 3.7% in Q3 2025, mainly due to rising global energy prices and high food costs. This inflation reduces people's purchasing power, making low-yield savings and fixed-rate accounts less appealing. Traditional vehicles no longer offer real benefits. As a result, investors are looking for assets that can keep up with inflation instead of just protecting their capital. Investors Shift Gears Amid Market Volatility Thanks to its global connections, the FTSE 100 has largely stayed steady. In contrast, the FTSE 250, which focuses more on the UK market, has faced significant challenges. In response, many investors are changing their portfolios. There is a clear trend toward buying dividend-paying stocks and investing in safer sectors like healthcare and utilities. These areas are seeing increased investment. This shift shows a growing desire for investments that provide income and lower risk. 'A move toward safety is happening,' said a financial strategist in London. 'In a time when market swings are common, the need for stable income is critical.' Diversification Is No Longer Optional Investors are becoming careful about managing risks. They are diversifying their portfolios with a mix of multi-asset funds and global ETFs that cover different regions and asset types. A recent report from Investment Week shows that UK fund managers feel cautiously optimistic in early 2025 as they deal with geopolitical uncertainty and changing consumer behaviour. More investors are interested in Environmental, Social, and Governance (ESG) portfolios in this environment. These investments match what investors care about and provide a way to grow and stay strong in sectors focused on sustainability. As people look to make a positive impact with their money, ESG portfolios are becoming a wise long-term choice rather than just a passing trend. REITs Offer Property Access Without the Hassle Real Estate Investment Trusts (REITs) are becoming popular with investors who want to invest in property without owning it directly. They are appealing because they offer liquidity and help diversify investment portfolios. Take Edinburgh, for example. Its commercial property market is doing well due to high rental demand and a strong local economy, and many investors are taking notice. One expert states, 'You no longer need to be a landlord to enjoy the benefits of real estate. Without those annoying midnight phone calls, REITs give you the flexibility you want.' This makes investing smarter for everyone! Physical Assets Become a Hedge Against Uncertainty When markets become unstable, physical assets offer stability. Classic cars and rare art pieces are popular investment options. Recently, whisky cask investment has gained recognition as a smart option for those wanting to protect their money from inflation. This trend attracts collectors and new investors looking to explore this unique market. One option quietly gaining interest is whisky cask investment – long considered a niche collector's pursuit, but now entering the mainstream as a slow-growth, tangible alternative. According to a spokesperson from 'Whiskly casks are a good investment in times of high inflation and uncertainty. Whisky casks in particular are appealing to investors who want something physical, historically stable, and entirely separate from the stock market.' These assets are not only visually attractive, but they can also offer significant returns over time. Bonds Make a Comeback Despite Rate Cuts UK bond funds are gaining popularity, attracting £13.7 billion in net inflows, making them the top performers this year among all fund types. Many older investors are returning to NS&I products and Premium Bonds due to their stability and government backing. Recent interest rate cuts have led some to look for higher returns, but bonds still offer a safe option for cautious investors. These financial tools remain a trusted alternative for secure investing in uncertain times. Young Investors Are Prioritising Purpose Over Hype Interest in cryptocurrency is decreasing, and a new trend is increasing among younger investors, especially Millennials and Gen Z. These individuals focus on crowdfunded projects and community-driven businesses. Instead of looking for high investment returns, they invest in companies that match their values, such as ethical startups and local sustainability initiatives. For this generation, it is essential to actively shape the future they want to see and create positive change instead of only watching the market. Final Thoughts – What's Next for Investors in 2025? The old rules of investing are becoming outdated. As inflation changes the economy, savvy investors are changing their strategies for success. The future is not just about getting by; it's about being flexible, finding real value, and creating diverse portfolios. From sustainable funds to whisky casks and dividend-paying stocks, the best strategies combine strength with good returns. As we look toward 2025, remember that getting through tough times is insufficient. You need to change, adjust, and succeed. Don't wait for stability to come back. Change your portfolio now with a strategy focusing on being strong and earning good returns over the long term. Like this: Like Related
Yahoo
27-03-2025
- Business
- Yahoo
UK CPI inflation fell slightly to 2.8% in February 2025
The UK Consumer Prices Index (CPI) annual inflation rate has experienced a slight decline, settling at 2.8% over the 12 months to February 2025 - a decrease from the previous rate of 3% reported in January. The information, disclosed by the Office for National Statistics (ONS), also noted that the CPI saw a month-on-month increase of 0.4% in February. This represents a smaller increment compared to the 0.6% rise recorded during the same month of the previous year. The core CPI inflation rate, excluding energy, food, alcohol and tobacco, rose to 3.5% over the year up to February - a slight reduction from the 3.7% tallied up to January. Clothing and footwear witnessed a downturn in its annual inflation rate by 0.6% as of February 2025 - a stark contrast to the 1.8% increase observed in the year to January. The monthly figures indicated deflation of 0.3%. February's data represents the first negative annual rate since October 2021. Housing and household services saw the annual inflation rate decrease to 5.3% in February 2025 from January's figure of 5.6%. The month-on-month comparison showed prices had risen 0.3% - half of the increase one year previously. In response to the ONS data, British Retail Consortium insight director Kris Hamer stated: "Headline inflation fell marginally in February, driven by marginal drops in housing and household services and clothing and footwear entering deflation. Despite continued cost pressures, namely energy price volatility, food inflation remained unchanged. There was good news as some dairy products such as milk, cheese and eggs all saw price drops on the month. Heavy clothing and footwear discounting continued into February, as fashion sales continue to suffer due to unseasonal weather throughout the month." "Retail operates on tight margins and it would be impossible to absorb all £5bn of new costs which hit the industry in April. Food inflation has jumped significantly in recent months and is forecast to hit 5% by the end of 2025 as a result of the costs arising from the budget.' BRC–NielsenIQ's recent shop price index data for February 2025 revealed that shop price deflation remained stable at 0.7% on an annual basis, and exceeded three-month average deflation of 0.8%. "UK CPI inflation fell slightly to 2.8% in February 2025" was originally created and published by Retail Insight Network, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site. Sign in to access your portfolio
