There are so many reasons why one should invest in UK’s economy. One of them is certainly the fact that it houses the largest financial center in the world, with the ones in New York, USA. Therefore, it attracts many investors from around the world, but also from inside the country. Here are a few things to know, when one decides to invest in the UK.
The London Stock Exchange
The easiest way to invest in UK’s economy is obviously to trade on the London stock exchange. Has we mentioned, it is one of the two largest financial centers of the world, with a market capitalization of over 6 trillion US dollars (£4.25 trillion). On it, there are more than 3,000 company titles which can be traded. They are from various locations around the world, including Africa, China, Latin America, and Europe. Nowadays, it is easier than ever to take part in these trades. All you have to do, is find a trading platform, where you will deposit money that you want to invest, and then start getting in on the action.
However, even if the UK is an attractive investment destination, investors should also be aware of the key risks, relating directly to the country. That way they can invest taking in account this information. The UK economy is highly dependent on consumer credit and commodity prices, since it is mostly based on consumers actions. Therefore, in moments of inflation, it can definitely create a trend towards lower value of stocks. Nothing that a good investor would not foresee, as long as he is aware of this.
Main Benefits and Risks of investing in the UK
Since London has been a financial hub for so long, it has become quite stable. It is the most utilized by international traders, who want to invest outside of the U.S.
Investors looking to buy blue-chip stocks also come to the London stock exchange, since many of them are traded on its floor. For example, it is the case with Rio Tinto, BP and GlaxoSmithKline. These stocks are known for the fact that they are a lot less risky than others on the market, bringing in many investors looking for that particular quality.
The most important risk factors of investing in the UK, are the fact that its economy is based on consumer trends, which can change quite rapidly and also for its political directions, which we have known to be assertive before. A good example of this, being the country’s decision to leave the European Union, a few years back.