Investment is our way of securing future needs and finances. With it being important, we want to make sure that it is safe and that our investments are safe. Especially when it comes to business investments, we should have an established understanding of the industry that we are in.
The United Kingdom is home to one of the largest financial centers along with New York. It has also been ranked as 6th with the largest economy in the world. London, with the largest (GDP) in all of Europe, is recognised as one of the largest cities globally. With this being said, the UK can be recognised as one of the essential financial hubs both for local and international investors.
What is Investment?
Investment is defined as an item or asset which is acquired/owned, having a goal of generating appreciation or income. In an economic sense, it is the process of purchasing goods to be consumed in the future, not used today, in order to create wealth.
How to Make Investments in the UK
We all know that there are different types of investments, as well. There are different ways of how you can invest, and these include the following:
- For those investors who are peering into a much more direct approach with investment, it is possible to purchase stocks on the London Stock Exchange. What must be remembered, though, is with direct investment here in the UK, all investors, both local and international, must make careful consideration of the tax implications. There are US brokerages offering access to the London Stock Exchange.
- If you want the easiest way to invest in businesses in the United Kingdom, it is through ETFs (Exchange-traded funds). ETFs have the ability to provide investors a diversified exposure even being in a single security. This now can be traded the same as stock. (EWU), or the MSCI United Kingdom Index Fund is presently the most popular ETF in the market.
Aside from EWU, other popular ETFs to invest in:
- BLDRS Europe 100 ADR Index Fund (ADRU)
- SPDR DJ STOXX 50 ETF (FEU)
- BLDRS Developed Markets 100 ADR Index (ADRD)
Benefits of Investing in the UK
Investing in businesses here in the UK may be safer and secure compared to the other frontier and emerging markets. Here are some of the benefits we can gain by investing in the UK.
- The London Stock Exchange is known as the third-largest stock exchange in the world, with a market capitalisation of over 6 trillion in US dollars. From over 60 countries in the exchange, there are around 300,000 companies that are listed.
- Next to New York, London is one of the most advanced when it comes to financial markets. This makes its security market a liquid one and stable for every investor who seeks exposure outside the US.
- The United Kingdom is home to the majority of the largest blue-chip companies in the world. From GlaxoSmithKline to Rio Tinto to BP, investing in the UK would be a smart move. Investing here in our region is less of a risk compared to the other financial markets found around the globe.
Risks of Investing in the UK
Just like in any region, investing in UK businesses and companies have some risks to be accounted for as well.
- Over 70% of services make up the whole economy of the UK. While many of us may think that this is common to any developing country and that it means more stability, possible changes in commodity prices and consumer credit may cause some issues and problems.
- There are also political risks in investing in the UK. In 2016 when Britain threatened to leave the EU (European Union), it opened up higher levels of political risks to the economy. Similarly, Scotland as well as threatened to leave the European Union. Economic volatility might be one of the results of these types of threats.
Why Invest here in the UK?
When it comes to investments, you would want to make sure that your investments will grow in value and be beneficial to your success. For international investors, you will be glad to know that here, you will be open to an internationally competitive environment.
The UK, at 19%, has the lowest corporate tax, which to say is the lowest in the G7. Vast business opportunities are also offered. High returns and lower labour costs make our region an attractive investment destination for international investors. Europe, as well, is probably one of the easiest places where you can run and establish a business.
Best Sectors to Invest in for 2020
With the global outbreak, we are facing, investing may be hard to do, but here are 2 of the sectors which are in-demand at this time and should be invested in.
Given the pandemic, there is a growing demand in the supply of health care supplies and equipment. This being said, investing in businesses in this industry would be a smart move. With the demands, the need for more suppliers is evident. Thus, more financial aid is necessary. Investing in this sector doesn’t just mean income, but it also means contributing to the sooner recovery of everyone affected by this pandemic.
Researches and the need for equipment make processes easier and faster. Technological demand is evident as there is a need for more innovations that can help with solving the crisis we are currently in. For investors, technology stocks are significant in value at this point.
Investments are valuable, and you would have to make smart decisions as it involves our finances. In any region, when it comes to any industry, investing must always come with a strategy and full understanding. Here in the UK, we must remember that there are different methods we should remember if we wish to invest in businesses. Us, either local or international investors, have choices ranging from easy-to-learn ADRs and ETFs and even more complex methods of direct investments in the London Stock Exchange.
Remember that no matter what type of investment and method you like, every decision must be made with full caution as all have risks associated with them.