Unless you have been living under a rock for the last few weeks, you will have seen that the markets have been spoked by the prospects of higher inflation. This has come about due to the post Covid bounce we predicted back in January, in our Roaring 20s article. https://willowrivers.com/the-roaring-20s-are-back/ This latest article looks at how to profit from inflation.
Just in case you don’t know what inflation is. I have borrowed a definition from Robbert Kiyosakis website: The simple definition of inflation is when prices rise and the purchasing power of a currency drops. It means that you can buy less with your money than you used to be able to. Simple!
So we are all getting poorer. Our money goes less far and this is bad news unless our income is linked to inflation.
Luckily there are ways of beating this. Some assets perform better than others in an inflationary environment and we are lucky enough to have a number of these on our books here at Willow Rivers Wealth Ltd.
Long-term (since 1950) correlation between inflation & various financial/real assets.
So lets first look at what not to do!
The worse thing you can do, is hold all your net worth in cash in an inflationary environment. You are effectively making a negative return. With some analyst stating inflation could pass 5% this is a very real threat.
The boom on the back of the rapid vaccine rollout is starting to take shape and many assets and commodities are getting swept up in the rapid recovery. None more so than in the construction industry:
Inflation in building materials will lead to higher prices for construction and thus higher property prices down the line. Added to this, demand for property is rising as people come out of look down and look to improve their living standards.
So the first and most obvious place to look when trying to beat inflation in the property market. Inflation is also a good time to use leverage. One can buy a property with a buy-to-let mortgage and buy an appreciating asset with a 25% deposit but see capital appreciation on the full value of the property. If you fix in your mortgage rate for several years you should be able to see steady capital appreciation and rental growth, while your fixed interest costs remain the same. A very crude example of this would be a if a 100,000 pound flat appreciates by 10% and you have invested 25,000 you have made a paper profit of 40%. (10,000/25,000 x100) comfortably beating inflation. There are obviously other costs to take into account but even when these are added you should still be well clear of any inflation.
Buy developing houses and projects now, you can build at the current prices and sell at the new rate of inflation in 6 to 12 months time. We offer a number of property developments around the county all with market beating returns of 15%+. We use a JCT contract https://corporate.jctltd.co.uk/products/about-our-contracts/ which fixes the price of the build at the front end and avoids any uncomfortable surprises for the investor. Get in touch to find out about our latest development opportunities around the county. More details at www.willowrivers.com
You can trade commodities on all the usual platforms such as Etoro and IG. Oil Copper and Timber are already showing excessive growth, but just about any commodity used in the building process will see substantial growth over the next couple of years.
Renewable energy with inflation linked returns.
We have been developing renewable energy projects for over ten years now. Feed-in-tariffs linked to inflation are a thing of the past now, however we are still building private projects with a Power Purchase Agreement (PPA). The power generated from wind, solar or geothermal is sold back to the business below and the contract is fixed for 20 to 30 years with an inflation linked kickder to the price. We are able to generate 10% to 15% pa returns which will rise in line with inflation. Get in touch to find out what projects we have available for investors. Projects start from 20,000 pounds to 25m. www.willowrivers.com
Farmland and Forestry
UK Farmland will also appreciate again. The combination of the security land ownership offers, zero inheritance tax and yields linked to commodity prices will attract both UK and international investors alike. We work closely with a number of UK land companies and can help with forestry and agricultural land investment.
Three weeks into 2021 and it seems like a good time to take stock and have a look at what’s happening in the world of investments and wealth management this year.
With Christmas being a very low-key affair and people not being allowed to travel, things seemed to go back to normal much earlier than usual.
Brexit was finally put to bed without too much disruption and the virus continues to burn like a smouldering peat bog, flaring up each season. But with a vaccine on horizon for most and the worst fears of Brexit out the way, business confidence is definitely on the rise. Are the Roaring 20s are back ?
We have seen an electric start to our property developments in Kent and Cambridge.
Our first offering, a small 2 bedroom timber framed house was funded in the first week of the year and it looks like we have secured 3 investors for our larger development of 4 terrace houses.
We have secured two more projects, another Kent and one in Sussex. Due to the fast nature of these deals they rarely make it to the website. So if you are interest in development opportunities, please get in touch and we will add you to the list. They are all very straight forward. We secure projects with full planning and developer finance in place. All we require is the equity to close the deal. We manage all contractors and you receive 15% pa during the build. Your security is a second charge against the asset after the bank. The average project length is 8-12 months.
The Cambridge biomedical sector goes form strength to strength as the AstraZeneca vaccine gets a global roll out. This has really highlighted how important the Cambridge Biomedical Campus is and our Cambridge biomedical fund is perfectly positioned to make the most of this over the next few years, click here to find out more and request a brochure. The fund has full HMRC approval so can be used for tax planning under the EIS and SEIS schemes.
We are still seeing lots of interest in our renewable energy opportunities. Our Geothermal project in Hungary continues to perform year after year and generates a genuine 12% net PA for our investors. Click here for more details. We are also working on new solar and gas CHP projects throughout the UK. If you are looking for renewable energy assets do let us know as we can source just about all asset types including energy storage.
We saw considerable increases in the price of all major crypto assts over the Christmas period as predicted here back in November. Bitcoin got a bit crazy towards the start of the year and some of that froth has since blown off. The price has stabilised around the $30k mark and will likely start to increase again once the new US government makes its stance clear on crypto assets. You can’t stop people investing in crypto but you can certainly make it more difficult. The UK recently banned leveraged investments in crypto for retail investors and its not impossible other countries will follow suit. That doesn’t meant to say demand is falling, just slowing down for a bit. Large corporate entities such as Greyscale continue to accumulate very rapidly and we expect this trend to continue and prices to rise due to the finite supply of bitcoins.
Now is not a bad time to be buying the dip before the next move higher later this year.
DeFi is set to transform the finance and banking sector over the next few years. I wont go into too much detail here, but expect to hear a lot more about this space in the coming months.
Artificial Intelligence (AI)
For those looking for more explosive growth potential in the technology sector, our AI Fund is just the ticket. Achieving 214% over the past 4 years this collection of the 42 most exciting AI stocks globally, is chosen using AI then approved by a panel of AI experts. Click here to find out more and request a brochure.
So to conclude, 2021 is going to be a very busy year, we see exceptional opportunities in the property development sector due to pent up demand form Covid-19. Crypto and DeFi will change the way we do business and finance. The UK will be one of the early winners from it”s advanced biomedical sector and the rapid rollout of the vaccine.
We see a great many positives in 2021 and we hope you will join Willow Rivers Wealth for the ride during the return of the ‘’Roaring 20s’’.
There seems to be a great many historical events unfolding at the same point in time, we look at some investment ideas for 2021
It’s only when you stop to write a blog or spend some time to reflect that you realise this is history in motion. As I write this, Donald Trump, the president of the United States of America is calling the election rigged and is questioning the validity of the result. This undermines so many things and erodes trust in just about everything.
No matter what your stance on Bitcoin, it’s independent nature has to have some allure as even the president calls into question the system itself. This recent Twitter thread by Raoul Pal explains it’s long term potential very well and why we should all be holding some Bitcoin.
Brexit negotiations are nearing the end game, with neither party willing to budge and a no deal Brexit is looking increasingly likely. The EU is also threatening our energy security as part of the deal.
We have not even mentioned the virus and its ”cure” announced last week. The timing of which also occurred right after the election. The markets took the news with great gusto. Pfizer was up almost 16% on the day at one point.
So what does all this mean for investors??
The Pfizer cure is only 90% effective and has only had a limited trial, however as I write this Moderna (MRNA) has just announced a vaccine with a 95% success rate, which ironically was fast-tracked by the Trump administrations funding.
This has also seen another stock market move higher, along with oil prices and Bitcoin.
So should we be out on the streets throwing a party and celebrating the end of perhaps the worse year in many peoples lives? Possibly!
However things are going to get worse before they get better, the time lag in producing the vaccine and the onset of winter flu seasons means many more will sadly die and our health systems will be stretched. We will have to endure a miserable winter and a lockdown Christmas before we can get out on the streets.
Spring 2021 will be a time of great prosperity as months of pent up demand are released in an investment boom not seen for some time.
And although now may not seem like the time, now is when you should be planning for this. We have compiled a quick to do list ready for 2021.
It will be interesting to see how the treasury manages this post investment boom. They have obviously run up massive debts during the pandemic and as such will be keen to recoup this. One such suggestion has been to tax drivers on a pay per mile tax, which seems rather unfair, another will be to raid business. What ever they choose lets hope its done in such a way as not to strangle growth.
So keep your head down for a few more months, get your house in order and prepare for the good times again in the spring. If you have any questions or would like any suggestions on how best to play the above please get in touch and we will gladly give you a free consultation.
We selected the development due to it’s close proximity to the Biomedical Campus and the AstraZeneca building.
Money continues to flow into the Biomedical Campus, the government has just committed another £120 million for a new cancer research hospital right next to the AstraZeneca building and a short walk from our development. This will create more jobs and demand for accommodation in the area.
Cambridge Biomedical Campus
Off the back of our time spent in Cambridge we have been introduced to a Biomedical Enterprise Investment Scheme Fund. The fund has been designed to find and invest in early stage biotech companies, with an emphasis on Artificial Intelligence in Cambridge.
The Cambridge based office has a wealth of experience in angel investing and Cambridge Biomedical start ups and they already have a good track record of picking winners.
We are very pleased to be working with them and hope our clients will too.
EIS Relief available
The fund will invest in SEIS and EIS qualified companies. EIS/SEIS is a tax relief scheme created by the UK Government to encourage investment in seed-stage startups and businesses.
If eligible, you can claim back up to 50% of the value of your investment in the form of income tax relief. Therefore, if you make an investment of £100,000, you can save £50,000 in income tax.
The combination of tax relief and arguably the worlds most important industry in the wake of Covid-19 makes this a very compelling investment.
Its been a while since I last wrote a blog back in March about the pain and suffering the COVID-19 was about to inflict on both individuals and markets.
I will be honest and say I did not see the stock market bouncing back anywhere near as quickly as it has. However my call on Gold has been justified with a price rise from $1660 to $1951 as I write this. Thats a 17% return during a global pandemic in less than 6 months… not bad, I know quite a few clients have heeded this advice and even leveraged their position for even greater gains.
Anyway, I am not here to talk about Gold, I do see some more upside but its probably time to take profits and look for the next double digit opportunity.
So back to the virus. I was the first to call for a lockdown of sorts, or at least ban unnecessary large gatherings such as Cheltenham, I was not however promoting a total paralysis of the UK and most other global economies.
There is a great article in the FT this week about Swedens approach, a lesson in common sense. They looked at the bigger picture, i.e the economy, mental health and other indirect effects of a total lockdown. This pandemic is not going away anytime soon, we have to look at ways of managing it rather than thinking it will be destroyed any time soon. The Sweden model is a pretty good template.
I was lucky enough to spend my lockdown in The Netherlands. They also took a simple, sensible approach, keeping business open wherever possible with social distancing and encouraging outdoor activities.
The result was a 7% decline in the economy compared to the Uk’s 20%. Both are now thankfully on the mend due to government stimulus and the virus not being as bad as previously anticipated, but the debt will be around a lot longer.
The world has however changed as we know it. Much of London is still a ghost town as people refuse to go back to the office and get comfortable with home working.
I think the majority of people are shunning the commute rather than the office itself. As someone who spent 5 years crammed on the London Tube at rush hour, I wouldn’t be rushing back if I had an excuse like Covid-19.
So businesses are embracing the new normal, people are moving out to the burbs to have a garden and more space and companies look for smaller offices in more pleasant locations with shorter commutes.
Which brings me nicely on to Cambridge.
Having lived in Oxford for many years, I never spent a great deal of time in Cambridge as it seem to offer much the same experience. Having recently visited the city to view a couple of developments we have funded there, I was surprised by the buzz the city had, even in the middle of a pandemic. Offices were being filled by companies fleeing London, lab space was in short supply due to the demands of COVID-19 research and property prices are being pushed to even higher levels than before the pandemic.
However it was the biomedical campus that really surprised me the most. Has there ever been a better time to boast Europes biggest medical research and health centre? At its heart is the new AstraZeneca HQ, at a cost of one billion pounds its a serious piece of real-estate, just what you need to start a tsunami of followers to a science park.
So Cambridge has become something of a global sweat spot. I spent many of my early years sourcing emerging market property based on similar fundamentals. Its not often you find such compelling drivers on your door step. The other nice aspect of R&D is that it wont be effected by Brexit.
Knowledge still passes freely between boarders as far as I am aware.
I haven’t even touched on what a stunningly beautiful location it it. Picture postcard architecture , weeping Willow trees over the many rivers and wonderful pubs and restaurants, not to mention excellent train connections with London and only half an hour away from Stansted Airport. They are also building a new train station at the science park, which always massively boost property prices.
So to conclude, I think COVID-19 is going to be major boom for this historical city. More and more people will want to work here, pushing up both rents and property prices. Demand for office space which is already undersupplied will see yields on commercial jump very quickly.
We have already completed two development opportunities in the city and we are expecting more. We are also going to be working with a biomedical EIS fund. Investors will be able to invest in a basket of local startups and receive tax breaks for doing it. So to find out more about any of these unique ways to play the Cambridge growth story, please get in touch. There has never been a better time to invest in Cambridge.
As I write this, the UK and the Netherlands have both imposed strict lockdowns on their populations overnight. Some more successfully than others it must be said. Investors are now asking, should I buy the dip?
As the majority of the Dutch population work from home or travel to work on bikes, Londoners continue to pile on to the underground and pass the virus around like sweets.
The below image shows a screenshot of rush hour this morning. Spare a thought for all those workers who don’t have an option to stay at home.
The UK has finally done the right thing and locked the population down, its about 2 weeks too late and the damage has already been done.
You only have to look at China and Italy to see that numbers are falling, lock downs work, FACT. They reduce the spread and give health workers a fighting chance of treating the sick.
2 weeks ago today the UK government allowed Cheltenham horse racing festival to take place. 251,000 people from all over the world attended the UK’s premier horse-racing event. The Government was so afraid of loosing all that income from hotels, gambling and alcohol it let an event go ahead which will undoubtedly cost lives and spread the virus both around the UK and internationally.
So will the lockdowns mark the bottom of the stock market collapse?
I am optimistic we are going to see a stabilisation in the stock market. The UK and US have gone to unprecedented measures to stimulate the economy and guarantee wages. Later this week we expect the Feral Reserve to fire up the printing press and start quantitative easing and bond buying. This will mark the start of the biggest gold market bull in history. If you have not invested in gold yet now is the time. Buy physical gold, invest via a Gold fund or as I do trade it via spread betting firms like IG.
This is a once in a lifetime trade and should not be missed.
But back to the stock market. Will we see a recovery and bounce in the stock market? In a word no.
The world as we know it has changed. We are about to go into a recession at best and possibly a depression, the likes of which have not been seen since the great depression of the 1930s. If you don’t know what a depression looks like, now might be a good time to dust off your history books. It’s not pretty and its not good for stock markets.
With the population trapped inside, only able to consume supermarket food, wine and Netflix. The rest of the economy is paralised. The last 10 years has seen the buy the dip mentality, as markets only headed one way due to globalisation and one of the longest booms in history.
The new world is going to look very different, international boarders have gone back up, the likes of which we have not seen since the creation of the EU. International travel has ground to a halt and while the virus is still alive it is likely to stay that way. Even once a county believes it is clear of the virus they wont openly encourage travel from those counties still struggling to destroy the spread.
A good example of this I believe will be the UK and Netherlands. They have had similar infection trajectories (as seen below thanks to the FT). Both countries have managed it equally badly up until now. Both encouraged large gatherings such as Cheltenham and carnival in the Netherlands and both are paying the price now.
Mega City Handicap
However unlike the UK which has one Mega City in London, the Netherlands is a collection of smaller city’s with excellent infrastructure for cycling. Social distancing is clearly not working in the UK. Until we find a solution it will take a very long time for the virus to leave London. The US will have similar problems in its metropolitan areas, not to mention a president loathed to lock down his economy for fear of loosing votes.
So even when some counties have beaten this, they will likely stay in lockdown and keep their boarders closed for fear of further contagion. Then the global economy will only be as strong as its weakest part. This could easily be measured in years not months.
So for now the restaurants shops, bars and business will stay closed for the next few weeks. All large gatherings in the Netherlands will be banned until June.
Will lockdowns become the air raids of the second world war. Every time there is a new outbreak we all get sent home for a couple of weeks to avoid the spread? Quite possibly.
Conclusion: Should I buy the dip?
So in conclusion taking all the above into account I see very little prospect for growth in the foreseeable. We will not see a V shaped bounce as some expert believe. There will be pockets of reinfections which will be enough to keep boarders and travel to a minimum for a while yet. Supply chains will continue to be be disrupted and we can only hope the warmer months will help in the fight against this invisible enemy.
‘Twas the week before Christmas, when all through the house not a creature was stirring, not even a mouse……. Or a deal……
That’s how it feels here at Willow Rivers at the moment, the combination of the election, Brexit and Christmas has made for something of a perfect storm for investors to sit on their hands and keep warm. This blog looks at what investors are missing out on.
However the slowdown does not stop us from doing our job. From a sourcing perspective it’s actually quite helpful.
We have been getting access to deals that would usually have been snapped up long ago by VC funds and institutional investors. This is especially true with property development opportunities at the moment.
I have 3 perfectly structured turn key deals all begging for an investors just waiting to break ground. I am sure they will go as soon as we hear the result of the election.
I am also seeing some incredible disruptive technology investments coming across my desk. We are looking for equity for 2 very exciting established companies both with game changing tech in their own right.
Solar investment in Australia
Rooftop solar is the cheapest and cleanest form of energy there is. You may have noticed if you have been to Australia recently, that most large roofs are not full of solar panels. Strange in such a famously sunny county.
That’s because there is a problem. Their grid was never built for a two-way flow of energy and too much solar causes voltage problems to local electricity grids designed to bring power only one way. That is why grid operators generally have a zero solar export rule for larger rooftop solar systems.
Our partners have solved this problem with the world’s first, award winning eleXsysTM technology and unleashed the considerable solar energy potential of commercial and industrial roof space. Their technology will allow large scale investment into rooftop solar as it makes these ‘urban solar power stations’ bankable to invest in. Get in touch to find out more, this tech has a truly global reach and will further reduce our need for fossil fuel and maximise the use of our renewable energy sources.
The second such technology we are very excited about is a Blockchain technology. VdoChain will put monetization and control back in the hands of video creators by putting video on the blockchain, delivering on blockchain’s promise of providing a safe and secure way to guarantee ownership of an asset in an untrusted environment.
VdoChain puts the video asset on the blockchain, unlocking the power of the blockchain to provide guaranteed, public, auditable rights without requiring third- party intervention.
TV content currently accounts for $500b globally. That an incredible market and its growing all the time. If this company scrapes even the smallest fraction of this figure with its disruptive technology, their current valuation of $20m will look very cheap indeed.
Solar Development Poland.
If you are not on our mailing list you may not be aware that our solar development bond has just reached a very exciting milestone.
We are very proud to announce that we have now reached a significant landmark and that, having been granted all the requisite permissions and with a successful application for a grid connection, the 40MW Chotkow site is ‘ready-to-build’.
This is great news for us and means we will now proceed to the construction phase of the site and thus it should reach commercial operations date (COD) in early 2020, in line with our planned schedule.
With this ready-to-build milestone reached and the Power Purchase Agreement in place, the site now has a value of circa £4.8 million before we proceed to construction – although please be aware that these values are not fixed and are subject to change.
So the project is well advanced, value has been added through planning being approved and we are still accepting bond investors. So if you have between £10,000 and £2,500,000 and would like to receive 10% pa for 3 years secured against 3 utility scale Polish solar projects please get in touch.
Proptech App: Cureoscity
Finally, I have joined the team at http://cureoscity.com/ a UK base Proptech firm who are revolutionising the way we interact with our office space. I will be helping them roll out their new building app across Europe. Already installed in a number of iconic London commercial buildings, including the Leadenhall, One Angle Court, and White City Place. This technology to be the norm in most major city commercial offices over the next few years, you heard it here first.
The technology and App starts with door access control into the building, no more key cards around your neck. Your phone becomes the key.
The app will also allow you to book and pay for services and products around the building. Book a meeting room, order lunch to your desk, book a test drive in the latest Electric Vehicle, browse gym classes. You will also be able to arrange external deliveries to your desk and check on the latest events, weather and live travel updates.
It will integrate with the Internet of Things (IoT) to create a true smart place experience. The app will not only increase the experience and productivity for the end user but also help the building owner to create a more diverse and interesting place to work.
The apps insight and analytical capabilities will help building owners design spaces we want to spend time in and motivate us to work at our most efficient.
It will also help optimise the buildings heating and lighting as it learns how people move and interact with their spaces across the day.
So thats what investors are missing out on this Christmas….. If you haven’t already done so, make sure you sign up to our newsletter to get all the latest investment opportunities and updates.
To celebrate 10 years of Willow Rivers we are having a Willow Rivers Wealth Tech Rebrand and change of focus. We will continue to offer cutting edge renewable energy projects to our corporate and retail clients and we will continue to help developers raise funds for sustainable projects and developments in the UK and overseas.
I am very excited to announce that we will now also be making a more conscious move into the technology side of the business. Ever since the implementation of the first smart meter and micro inverter on our solar panels, we have seen how greentech, fintech and proptech has revolutionised the renewable, property and green investment landscape. (more…)
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