Analysts at Price water house Coopers have identified five “megatrends” they believe will reshape the world. Along with climate change and urbanisation, the report points to shifts in economic power, social change, and technology as factors that will influence businesses, culture, and our lives in general.
Embedded within these megatrends is the ever-changing nature of consumer spending. As economies expand and contract, spending fluctuates. In 2021, with many economies in a state of flux, money isn’t flowing as freely as it previously has. Typically, this has affected methods of earning for both businesses and individuals.
Spending Slumps but Opportunities Rise Up
According to the Office of National Statistics, spending in all UK sectors decreased last year. UK household spending between July and September 2020 was down 10.1% year-on-year. Similarly, Q3 spending in restaurants and hotels decreased by 25.6% compared to the same period in 2019.
These effects are still being felt in 2021, and are likely to produce aftershocks that reverberate for at least a few more years. That’s bad news for many businesses. However, during times of crisis, opportunities can emerge.
Indeed, when we look towards the megatrend of technological innovation, there are new ways to tackle struggling economies and drops in consumer spending. For example, modern investing provides a way for businesses and consumers to generate income.
On the consumer side, stock trading in the UK is more accessible thanks to online trading sites. They provide everybody with access to a wealth of information about how, when, and why to trade. For example, novices can learn the basics of trading and discover the difference between stocks, shares and equities. From there, they can take positions on over 16,000 shares and ETFs via their desktop or mobile.
Technology Liberates the Money Market
Online trading comes with a certain amount of risk. The value of a trader’s investments can decrease just as it can increase. Therefore, you have to have an appropriate risk strategy.
This means choosing a suitable percentage of your bankroll to stake per trade (usually 1%). You should also use take-profit and stop-loss tools to limit your exposure. Doing these things can help to reduce your risk which, as we’ve noted, is an inevitable part of trading. However, once you’ve accounted for risk, the broader point here is that general consumers now have easy access to the stock markets, which wasn’t the case 20 years ago. As such, the average person has a chance to capitalise on market fluctuations and make money.
As previously stated, opportunities can emerge from a crisis. In this case, a downturn in consumer spending has led to the value of certain businesses falling. For example, shares in Tesco dropped during the spring of 2020 and then again in February 2021. That means it’s cheaper to buy shares in Tesco now than it was in 2019. If we assume that retail spending will gradually increase again as the economy stabilises, it’s possible to say that the value of Tesco shares will also increase. Thus, as an investor, it’s possible to capitalise on the latest megatrends and changes in consumer spending.
We can also expand on the concept of digital investments and consider these innovations from the perspective of a business.
Businesses Don’t Have to Suffer if Spending Drops
Modern technology has made it easier for businesses to attract investors. Crowdfunding sites have become a popular choice for certain businesses. Selling a stake in a company to general consumers has removed the need to be listed on a stock exchange.
In essence, crowdfunding technology has cut out the middleman. It’s a similar story with initial public offerings (IPOs), particularly in the cryptocurrency space. Companies are creating their own crypto tokens and selling them. The money generated is used to fund the company.
Again, this is an example of how one megatrend, technology, intersects with others, i.e. business and finance. Economic shifts may have caused a drop in consumer spending, but that doesn’t mean opportunities to make money have dried up. Instead, the way people can make money has changed.
If people are spending less, businesses can generate investment using modern methods. If wages are stagnant and income is tight, people have ways to earn money through online trading. Of course, there are risks; however, the opportunities are there. That’s what analysts are describing when they say megatrends are reshaping business, culture and our lives.
The value of shares, ETFs and ETCs bought through a share dealing account, a stocks and shares ISA or a SIPP can fall as well as rise, which could mean getting back less than you originally put in. Past performance is no guarantee of future results.’