Never mind Americans stranded in negative equity, Middle England could be next to suffer the impact of the global credit turmoil, new research suggests. It also studied in depth how the current economic conditions have changed the investment industry. The main change is a trend toward new methods of investing. These methods have always been profitable according to analysts, but now they are used much more because they are recession proof. Before we go into the rest of the research we review the hottest investment trend. According to the research it is Internet gaming.
This trend has taken the investing world like a tidal wave because of new software that came out a few years back. It is now possible to scan prices globally in seconds and uncover risk-free betting opportunities which provide guaranteed returns of as much as 12% per month. Using software like one called ArbAlarm, ordinary people can now easily profit from this unique method of investment. Aware of this trend, the UK government recently announced through the Treasury that the profits made from sports arbitrage trading will continue to remain free of all tax. This includes income tax and capital gains tax on all profits.
In an interview, former City trader Rajeev Shah, famous author of ‘Sports-Arbitrage - How To Place Riskless Bets & Create Tax-Free Investments’ explained that an arbitrage occurs when different bookmakers’ prices on the same events overlap. In these cases, it is possible to bet on all of the outcomes in that event in such a way as to be guaranteed a total return which is greater than the total outlay. The mathematics of this type of trade are precise & the resultant profits are free of all risk.
The research also said that it is the financial purse-strings of “middle England” that could be hardest hit by the current economic turmoil. A study by the insurance company Axa found that three in four families with an income of more than ￡30,000 were planning to rein in spending this year as household budgets become increasingly stretched. It is not just rising fuel and food bills that are causing difficulties.
The crisis in the housing and mortgage markets looks set to have a profound effect on many affluent families. Stephen Folkard, a spokesman for Axa, said: “The family home has been a ‘Get out of jail free’ card for much of middle England. These families may have higher than average incomes, but millions are weighed down by high lifestyle costs.
“This may not have seemed so much of a problem while property prices rose and remortgaging remained cheap and easy. But with the housing market stalling and lenders withdrawing mortgage deals, many families face tough choices as the strain on their finances takes its toll.”
It is estimated that 1.4m homeowners will need to remortgage over the next 12 months. These borrowers face significantly higher mortgage costs, and lenders have withdrawn many of their cheaper fixed rate and discounted deals.
Moneyfacts, the financial analyst, estimates that up to 90 mortgage deals a day are currently being withdrawn.
So what steps are families taking now to address these problems?
According to this research, the most common remedy is to cut back on luxuries – so meals out, exotic holidays and the latest electronic gadgets may soon become a thing of the past for many strapped-for-cash families. However, many households are being forced to take more drastic action.
According to Axa, 8 per cent of higher earners are considering ditching health or life insurance policies, while one in five plans to stop saving or reduce pension contributions this year.
Prudential also found that the credit crunch was causing workers to cut back on pension contributions. Pru, the biggest pension provider in the UK, said that a recent survey showed that people were halving the amount they were saving into pension plans.
As well as spending and saving less, families were looking at ways to maximise their income. The Axa research showed that 15 per cent of more affluent households have been forced to raise extra cash by a spouse going out to work or by the main breadwinner taking on extra work.
Tags: UK News