It’s time for the annual dusting-off of crystal balls, as analysts and experts try to predict what 2019 holds in store for your money.
It’s a difficult enough business at the best of times but at the moment the level of uncertainty we face makes it a desperately thankless task.
There are, however, 10 predictions we can confidently make – no matter what 2019 has to offer – from better savings rates to more millionaires, and lower energy bills.
Savings rates will increase slightly
Bank of England interest rates are devilishly difficult to predict, particularly at the moment, but this isn’t the only thing driving savings rates. The tap of cheap government money was turned off at the start of 2018, so the funds flowing through the system are starting to dry up. As we go through 2019, some banks will offer slightly better savings rates to attract cash from customers again.
To take advantage of better rates, you’ll need to switch, but most people won’t
An FCA report in 2015 found that the longer you have money in a savings account, the lower the rate is likely to fall. It means we’ll need to switch in order to take advantage of the better rates on offer. Unfortunately, our research found that fewer than a third of people are planning to switch their savings over the next year – and 66 per cent of people are never planning to switch.
Brexit is going to have a significant impact on the stock market
If you ask six experts exactly what that impact will be, you’ll get six different answers. However, they’ll all agree there’s likely to be volatility in the short term. During the volatile times it’s important to not to panic and sell up. Investors should have a timescale of five to 10 years or more, which will help them ride out short-term ups and downs. Regular savers, including those contributing to a pension, will also benefit from the dips, because their regular monthly contributions will go further.
The housing market will remain sluggish
House price predictions range from steady and slow growth to a ‘worst case’ scenario of falls of over a third – depending how Brexit plays out. But while we can’t predict prices with any certainty, we know that sales are likely to remain sluggish, because when buyers are this unsure about the future, they tend to put their plans on hold.
Your pension prospects are likely to improve
From April 2019, the auto enrolment minimums increase from 5 per cent (with at least 2 per cent from the employer) to 8 per cent (with at least 3 per cent coming from the employer). So if you’re employed, and enrolled in your employer’s pension, the contributions will get a boost from April onwards. It’s a good opportunity to find out where you stand and the pension pot you’re set to retire with.
The energy price cap will come in, but everyone on it will be over-paying
Default tariffs will be capped from January 1, so the average dual fuel customer who pays by direct debit should pay no more than £1,137. Unfortunately Ofgem has already warned that it may rise in April, because wholesale prices have gone up. In any case, anyone on this tariff will be paying more than they need to – as it’s well above the cheapest deals on the market.
Currency markets will be volatile, but you can still pay less for your holiday money
Currency markets hate uncertainty, so the pound’s fortunes are likely to fluctuate as the twists and turns in the Brexit drama continue. However, by shopping around for your holiday money, plenty of time in advance, you can dramatically improve your own personal exchange rate.
There will be 24 new Premium Bond millionaires
The draw is always variable, but at the moment there are two new millionaires each month. Of course, any money you put into Premium Bonds that doesn’t attract a prize will be losing money after inflation. However, in low interest rate environment, Premium Bonds are attractive, because you have an opportunity to win prizes and the outside chance of winning a million pounds. It’s one reason why more than 20 million savers think it’s worth a punt.
You’ll have at least one unexpected bill out of the blue
Our research shows that fewer than half of us (48 per cent) are saving to pay unexpected bills, and yet in any given year, it’s a racing certainty you’ll end up with at least one expense you’re not expecting. If you’re not one of the minority who are saving just in case, ask yourself how you would meet the cost.
Someone you know will die – and they probably won’t have a will
Two-thirds of people in the UK don’t have a will, and if you die without one, you have no say over how your money is divided. Instead it’s split in a pre-determined way which ignores long-term partners, step-children and nieces and nephews – and can force families to pay unnecessary inheritance tax bills too. So make this the year you make a will (or update it if you have one) – and speak to your family and friends about their arrangements too.
Sarah Coles is a personal finance analyst at Hargreaves Lansdown. The views expressed above are her own and should not be taken as investment advice.