The Moneybox Bulletin: November 2022


Compared with recent history, the last weeks of November were reasonably quiet from an investing and personal finance perspective. This is despite the Autumn Statement from the Chancellor on 17 November. 


Although it contained some significant tax and policy changes, the key difference between this statement and the disastrous ‘mini-budget’ of the Truss-Kwarteng era is that the changes were signposted well in advance, and also crucially came costed and assessed by the Office for Budget Responsibility.

Read more about what the Autumn Statement means for you

All of this meant the budget was largely ignored by markets – which came as a welcome relief following the turmoil of September and October. As a whole, markets were quietly positive in November, with the FTSE 100 up 5.57% and the S&P 500 up 5.81%.*

This tends to be the way with markets. When they go down sharply, as they naturally can do sometimes, you see headlines of billions wiped off stock markets, coupled with photos of stressed investment traders. You don’t see as many headlines when markets are trending upwards which can trick us into thinking the negative periods are more frequent than they really are. 

In the middle of November, US markets actually saw their best day in two and a half years. On 10 November, the S&P 500 went up 5.5% in a single day. What made this day so great you might wonder? Well the US inflation figures came in slightly lower than expected, creating a wave of optimism that the worst of the cost of living crisis may be over. 

This has yet to be proved of course but given the news we have seen so far in 2022, investors are primed for any good news they can find. Hence they reacted to this glimmer of optimism by buying stocks. 

This one extremely good day seemingly out of nowhere yet again proves the point that trying to time the market is almost impossible. Repeatedly predicting in advance when and where these positive days will happen is incredibly difficult and frankly unnecessary. You don’t need to pick and choose when you invest to have a positive outcome, you just need to invest consistently over a reasonably long period of time. 

Plus, the risk and consequences of getting your timing wrong is high, and missing just the few best days of the market can significantly impact your returns


But what does all of this mean for you?

As we come towards the end of a tough year for markets, it may sound strange to be talking about investing. However, the best investing habits stay the same, regardless of market conditions. Also, with UK inflation running at 11.1% for October 2022, it’s important to try and protect the real value of your savings. Historically speaking, investing has given you the best chance of doing so. So it’s not a bad time to work out whether you should be investing.

We discussed last month the importance of having an emergency fund. This is a pot of money that’s set aside with the hope that you never have to touch it. On top of this, before you consider investing, you should ring fence any money you know you are going to spend on big purchases in the next five years. This means things like house deposits or home-improvement money, car purchases or big holidays; this money should not be invested.

If you then have further savings beyond that, it’s important to consider investing. With inflation as high as it is right now, money kept in savings accounts for five to 10 years will be able to buy a lot less at the end of that period. Getting started with investing, little and often, can help offset the negative impact of inflation over the longer term.

It’s also important to realise that you may already be investing and not realise it. Many people are not aware that their pensions are most likely invested in the stock market. So you may have more investing experience than you think!


Good news story

Mortgage rates skyrocketed in early October after the ‘mini-budget’. There has been better news in the last month though as mortgage rates have slowly started to come down from those highs.

Also, in the middle of November, the Deputy Governor of the Bank of England questioned whether interest rates really will have to rise by as much as we expected.

Both of these bits of news will be welcome relief to first time buyers trying to get on the property ladder – as well as homeowners with mortgage deals coming up for renewal in the coming months.


*Google Finance, 1 November to 1 December 2022