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For the second year in a row, Bitcoin, the world’s most popular cryptocurrency, has outperformed stocks, gold and other traditional investments in terms of gains. According to Finder.com‘s annual investment tracker, which tracks the performance of some of the UK’s most popular investments, Bitcoin was the best performing asset in 2021.

So, which other investments did well? And what are the key takeaways for investors? Let’s find out. 

Before we continue, please note that investing in Cryptocurrency is extremely high risk and complex. The Motley Fool has provided this article for the sole purpose of education and not to help you decide whether or not to invest in Cryptocurrency. Should you decide to invest in Cryptocurrency or in any other investment, you should always obtain appropriate financial advice and only invest what you can afford to lose.

Bitcoin reigns supreme

Every year, Finder.com, the personal finance comparison website, fictionally invests £1,000 in some of the UK’s most popular investments to track their performance over the year. In 2021, the investments tracked included:

• Bitcoin
• Gold
• The US dollar
• FTSE 100” href=”https://www.fool.co.uk/personal-finance/share-dealing/guides/what-is-the-ftse-100/” data-wpil-keyword-link=”linked”>FTSE 100
• Tesla stock
• The Fundsmith equity fund
• A Union Bank savings account

The results for 2021 are in, and Bitcoin has been shown to be the best performing asset, outperforming the likes of stocks, gold, funds and savings accounts.

According to Finder, if you had invested £1,000 in Bitcoin at the start of January 2021, it would have been worth £1,622 at the end of the year. This is a significant gain, albeit a smaller one than in 2020, where a £1,000 investment finished the year at £3,919.

Indeed, had it not been for the digital asset’s spectacular fall in value over the last two months of the year, Bitcoin investors would have ended 2021 with much larger gains. Bitcoin’s price ended the year at around $47,000 (£35,000) after reaching an all-time high of nearly $69,000 (£51,000) in early November 2021.

How other investments performed

The second-best performing investment out of the seven tracked by Finder was Tesla stock. The stats show that a £1,000 investment in this stock was worth £1,364 at the end of 2021. That is a 36% rise.

In third place is the Fundsmith equity fund, which invests in a variety of global, well-established companies. According to Finder, the fund has been steadily rising since April. A £1,000 investment in the fund in January 2021 would have grown to £1,209 by the end of the year.

Here’s what a £1,000 investment in the other investments tracked by Finder would be worth at the end of 2021.

• FTSE 100 index fund – £1,125.25
• The US dollar – £1,033.16
• Union Bank savings account – £1,004.82
• Gold – £980.54

Gold is the only one of the tracked investments where investors would have actually lost money in 2021.

The key lessons for investors

Matt Mckenna, head of research and communications at Finder.com, says that it has clearly been a stellar period for riskier investments like Bitcoin and Tesla, despite a second year of Covid-19-related disruptions and mixed emotions.

According to McKenna, “This tracker highlights the potential returns that you can get if you’re prepared to risk your capital.” However, he cautions investors not to be swayed by the past performance of these assets as it is not a reliable indicator of future results.

This is especially true when it comes to crypto-assets such as Bitcoin. Despite its impressive growth over the last year, Bitcoin is still a relatively new asset operating in uncharted territory. It remains extremely volatile and speculative. That is why experts advise only investing what you can afford to lose.

According to Mckenna, “Higher potential reward comes with higher potential risk, and it is a real possibility that you could lose a lot, or all of your money.”

Of course, no investment, whether crypto or stocks, is risk-free. So how can you minimise your risk? The answer is simple: you need to consider diversification.

Diversification simply means having a wide range of different investments in your portfolio, like stocks and shares, crypto-assets, commodities, and so on. It’s highly unlikely that all assets will perform poorly at the same time. Any losses in one category will be offset by gains in the other. This reduces the overall risk that your portfolio will underperform or lose money.

Of course, diversification will not protect you if you make poor investment choices from the start. So, before you put your money into any investment, research it thoroughly to see if it has good long-term potential. 

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Some offers on The Motley Fool UK site are from our partners — it’s how we make money and keep this site going. But does that impact our ratings? Nope. Our commitment is to you. If a product isn’t any good, our rating will reflect that, or we won’t list it at all. Also, while we aim to feature the best products available, we do not review every product on the market. Learn more here. The statements above are The Motley Fool’s alone and have not been provided or endorsed by bank advertisers. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended Barclays, Hargreaves Lansdown, HSBC Holdings, Lloyds Banking Group, Mastercard, and Tesco.

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A side hustle is an increasingly popular option for people hoping to make a little extra money. But how much can you realistically make from one? Read on to find out how much the average person makes from a side hustle. I’ve also included some tips on how to maximise the earning potential of your side gig.

What’s happening with side hustles?

A side hustle is basically a second job that brings in extra money to supplement your income. Millions of people have them, and they’re on the rise in the UK. Indeed, recent research reveals that 46% of people in the UK currently pocket a second income through a side hustle.

Additional research by online freelance marketplace Fivver shows that 58% of those who have a side job started it after March 2020, that is, after the Covid-19 pandemic hit.

According to Fivver, more Brits have needed to earn some extra money due to irregular employment resulting from the pandemic and higher costs of living.

There are many side hustle ideas out there to choose from. Here are a few of the most popular:

• Freelancing (web design, article writing, or transcribing)
• Affiliate marketing
• Driving for a ride-hailing service
• Selling goods online (e.g., on eBay)
• Dog walking

What does the average person make from a side hustle?

According to the survey conducted by Fivver, those with side hustles added an average of £6,300 to their income last year. This equates to about £525 per month, which is quite a sizable sum to add to your regular income.

Of course, this is an average figure. Side hustles come in all shapes and sizes, so it’s not always easy to predict how much you might make. The exact amount will depend on the type of side job you do and how much time and effort you put into it, among other factors.

How can you increase the earning potential of your side hustle?

Here are four tips to help you maximise the income from your side hustle.

1. Choose a side hustle that you actually enjoy

When it comes to a side job, it’s best to pick something you actually enjoy doing. You’ll be more motivated to run it and increase your chances of success if it’s something you consider to be fun rather than something that feels like a chore.

2. Go for something that is scalable (if possible)

A scalable side hustle is one that has potential to grow into something bigger. You’ve probably heard or read about people who have been able to grow a small side hustle into a full-fledged business.

Not all side jobs are scalable. Take driving for Uber, for example. On one hand, it’s a great side hustle because you get to choose your schedule and set your own hours. However, you have to drive for every pound you earn. Because there are only 24 hours in a day, there are only so many hours you can drive, and thus, there is a limit to how much you can realistically make.

Online sales, blogging, and affiliate marketing, on the other hand, are excellent examples of scalable side hustles. The potential for growth here is almost limitless, not to mention that you can make money in your sleep with these side jobs.

3. Boost your skills

Developing the skills related to your side hustle is ultimately one of the best ways to increase your earning potential. You could, for example, take online courses or even seek advice and guidance from more experienced people in the field you are interested in.

4. Invest your earnings

Finally, you can significantly boost your side hustle money by investing some of it. Although investing is inherently riskier than, say, putting your money in a savings account, it has the potential for greater returns. Investing essentially means making your money work harder for you and it could help you build wealth in the long term.

Looking to boost your income in 2022 through a side hustle? Check out these three top sectors for generating a second income with a side hustle.

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Some offers on The Motley Fool UK site are from our partners — it’s how we make money and keep this site going. But does that impact our ratings? Nope. Our commitment is to you. If a product isn’t any good, our rating will reflect that, or we won’t list it at all. Also, while we aim to feature the best products available, we do not review every product on the market. Learn more here. The statements above are The Motley Fool’s alone and have not been provided or endorsed by bank advertisers. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended Barclays, Hargreaves Lansdown, HSBC Holdings, Lloyds Banking Group, Mastercard, and Tesco.

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Used in the correct way, a credit card can be a really useful tool. But it’s very easy for the debt to spiral out of control, swamping you in payments that you can never seem to get ahead of.

To help you reign in your debt, I’m going to explain how I finally managed to shift mine once and for all. I’ll also reveal some tools you can use and how people around the UK are saving on interest payments.

Using credit cards and getting into debt

Although the very idea of a credit card can seem scary, it can be a practical instrument in the right hands. For big purchases, you can get added protection and spread your spending with a credit card. You can also build up a good credit score. However, in my case, I got one before I really knew much about personal finance.

My credit limit was only £1,000, but after a while, I’d used it up and was just paying the minimum repayments. Then, my debt overlords gave me the option to double my limit to £2,000. And I thought, sure, why not! I did it mostly just to give myself some breathing room, because I was an idiot and had no idea about things like emergency funds!

I was always able to make my monthly payments, but I never made any decent progress on squashing the debt. It was always just lingering around like a bad smell. Even worse, as the months went by, the interest on the debt was compounding. I had no idea about the concept of compound interest, and many people still don’t realise it works for debt as well as investing.

How to use a credit card properly

Here are three tips for making the most of a credit card.

1. Use 0%

If you are going to use credit, one of the first things to do is make sure you get a top 0% purchase credit card – something I didn’t do. This will give you a chunk of time in which your spending won’t incur any interest. So you can pay it off without getting sucked into a debt spiral. Here’s more info on types of credit cards.

2. Pay it off

This sounds obvious. But if you’re using credit, you either need to be able to pay it off in full or at least have a plan to do so. Otherwise, it becomes extremely hard because you’ll have plenty of other things in your life that take priority.

3. Balance transfers

I didn’t find out about balance transfer credit cards for a number of years. If you have credit card debt and you’re struggling, using a top-rated balance transfer credit card can really help. It means shifting the money you owe to another card provider that offers a 0% interest period on your existing balance. This gives you time to get your debt back under control and stop the interest piling up.

How I paid off £4,000 from my credit card

Once my credit debt was at £2,000, I needed to act. So I used a balance transfer card that gave me 24 months of 0% interest. This meant only paying just over £80 per month for two years to clear it.

Getting an extra couple of years to pay should have been enough. But in that time I decided to leave my job and travel the world, which was fun but meant the debt was once again relegated down my priorities. I ended up doing another balance transfer to give myself more time.

Then, the coronavirus pandemic happened and I had to leave an international job. Without any income, the £2,000 card balance quickly doubled to £4,000. Thankfully, I picked up a new job and, like many people, the lockdowns gave me barely any opportunity to spend money. So, everything I’d normally budget for went towards paying off the credit card. And I was able to get it to zero in just a few months.

How much people in the UK are saving on credit card debt

Without the option of balance transfer credit cards, I’d probably still have debt today. And it seems I’m not alone. New research from TotallyMoney shows that not switching to a market-leading offer could cost you an extra £1,831 in interest.

Some top balance transfer cards offer up to 31 months of 0% interest on your existing debt. Most cards do charge a small percentage of the balance as a fee, so make sure you factor that in. But more people than ever can qualify for these deals, and it’s madness to be paying interest on your credit card if you don’t have to.

I wish I’d learnt about balance transfer cards sooner. Without them, I’d have paid hundreds or thousands more in interest. So make sure you review every avenue open to you. Don’t pay more than you need to with credit. And if you need support with your debt, MoneyHelper offers a wealth of advice.

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Some offers on The Motley Fool UK site are from our partners — it’s how we make money and keep this site going. But does that impact our ratings? Nope. Our commitment is to you. If a product isn’t any good, our rating will reflect that, or we won’t list it at all. Also, while we aim to feature the best products available, we do not review every product on the market. Learn more here. The statements above are The Motley Fool’s alone and have not been provided or endorsed by bank advertisers. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended Barclays, Hargreaves Lansdown, HSBC Holdings, Lloyds Banking Group, Mastercard, and Tesco.

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If you’re eager to give your finances a new year boost, maximising the interest rate on your savings is a good place to start.

Here’s the lowdown on the top-rated savings accounts. Plus, I’ve got four tips to help you get the highest return on your cash.

What easy access savings rates are available?

Right now, the highest easy access savings rate is 0.71% AER variable, via Investec. To open the account, you must make an initial deposit of at least £5,000.

If you have less than £5,000, then Cynergy Bank has an easy access savings account that pays a slightly lower 0.7% AER variable, which you can open with as little as £1. However, do keep in mind that Cynergy Bank’s headline interest rate includes a fixed 0.4% bonus for the first 12 months. This means that the rate will drop significantly in a year’s time. 

So if you’d prefer an easy access account without a fixed bonus, then Shawbrook Bank has an account that pays 0.67% AER variable. This is another decent option, and you don’t need a fortune to open it. That’s because you can open an account with an initial deposit of £1,000.

Will savings rates improve this year?

There’s no denying that 2021 was a sluggish year for savings rates.

While the Bank of England (BoE) finally raised its base rate towards the end of last year (from 0.1% to 0.25%) savings rates hardly budged. However, the good news for savers is that many analysts expect the BoE to raise its base rate again this year.

One analyst holding this opinion is Ruth Gregory, senior UK economist at Capital Economics. Following the BoE’s decision to raise its base rate last month, Gregory commented: “I don’t think this is a case of one and done.” Gregory suggested the base rate would rise to 0.75% in 2022.

How soon any further increases occur is a matter for the BoE’s Monetary Policy Committee. The committee will make its first base rate decision of the year on Thursday 3 February.

For savers, the sooner further base rate increases occur, the better. This is because a higher base rate makes borrowing more expensive which, in theory, should lead to higher savings rates.

For more on how a higher base rate can impact savings rates, see our article on whether the base rate will rise again in 2022.

How can you boost the interest rate on your savings?

If your New Year’s resolution includes taking a closer look at your finances, then these four tips can help you boost the interest rate on your savings.

1. Consider ditching big-name banks

The top-paying easy access accounts are rarely offered by big-name banks. In fact, many big-name banks, including Barclays, Lloyds, HSBC and NatWest, all offer at least one savings account paying just 0.01% AER interest!

So if you’re relying on your high street bank for a decent rate, you could be missing out. Remember, your money is just as safe when saved with a lesser-known bank, as long as it has UK FSCS protection.

2. Consider ditching your easy access account altogether

Easy access savings accounts allow you to add and withdraw cash at will. However, they generally pay lower interest rates than fixed savings accounts, where you lock away cash. So, if you don’t need instant access to your cash, it’s worth exploring these accounts.

Right now, you can earn 1.36% AER fixed for one year with Investec, compared to the top easy access deal of 0.71% from the same provider. See our list of top-rated fixed-rate savings accounts for more options.

3. Look at regular savings accounts

If you can save on a monthly basis, you may be better off with a regular savings account. These accounts usually trump the rates offered by easy access or even fixed accounts. However, you often need to be a customer of a specific bank to open one, and you won’t be able to deposit a big lump sum.

Right now, NatWest and RBS customers can access a regular savings account paying 3.04% AER variable. Meanwhile, Nationwide customers can grab an account paying 2% AER variable for one year.

See our list of top-rated regular savings accounts for more options.

4. Be prepared to move your cash regularly

The highest-paying savings accounts change frequently. As a result, it pays to be on the ball and move your cash regularly if you want to score the highest possible rates.

This is especially true for easy access accounts, where you can easy withdraw cash. For fixed-rate accounts, it’s more tricky, though it still pays to know exactly when your fixed period ends. That’s because after a fixed term ends, it’s often the case that your money will be transferred to a low-interest account.

Therefore, keeping on top of when your term ends will avoid your cash languishing in a sub-standard account.

Keen for more savings options? See The Motley Fool’s list of top-rated savings accounts.

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Some offers on The Motley Fool UK site are from our partners — it’s how we make money and keep this site going. But does that impact our ratings? Nope. Our commitment is to you. If a product isn’t any good, our rating will reflect that, or we won’t list it at all. Also, while we aim to feature the best products available, we do not review every product on the market. Learn more here. The statements above are The Motley Fool’s alone and have not been provided or endorsed by bank advertisers. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended Barclays, Hargreaves Lansdown, HSBC Holdings, Lloyds Banking Group, Mastercard, and Tesco.

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It goes without saying that 2020 and 2021 have not been the best years due to the impact of the Covid-19 pandemic. Many, especially vulnerable families, might already be facing financial difficulties, with expectations of more challenging times beginning April 2022.

Now is a good time to take steps to take control of your finances. With that in mind, here are six tips to help you get on track.

1. Review and understand your debts, expenses and income

It’s important to understand your incomings and outgoings to get a clear picture of how much you could save. If you have a number of debts, paying them off first, especially the costliest, makes a lot of sense before putting money aside.

It can get quite tricky trying to save money while struggling with debt. For peace of mind and to make it easier for you to save, aim to pay off your debts first, then see if you can put a significant amount aside as savings.

You might also consider consolidating your debts to save some money.

2. Save with a goal in mind

Having a goal motivates saving. A goal can be anything from buying a home or a car to going on an international trip. Something as simple as naming it can help you add meaning to the money you’re saving, which can eventually help you stick to a savings plan and build a saving habit.

3. Start an emergency fund

An emergency fund is different from saving money for a goal. This is the money you only withdraw when you have an emergency. A rule of thumb is that your emergency fund should be large enough to cover around three months’ worth of essential expenses. Start small, and don’t be discouraged if your fund doesn’t seem to be growing as fast as you want.

It’s advisable to save the money in an easy access saving account. It allows you to access the cash anytime, keeping in mind that emergencies aren’t predictable.

4. Take advantage of savings initiatives or benefits

If you’re on a low income, check whether you’re eligible for the government’s Help to Save scheme. The scheme allows you to get a bonus of 50p for every £1 you save over four years.

You could also consider a Lifetime ISA. According to the gov.uk website, you can save up to £4,000 each year, until you’re 50. The government will then add a 25% bonus to your savings, up to a maximum of £1,000 per year.

5. Look out for credit or debit card offers

It’s not uncommon to find credit or debit card providers offering money-saving deals, especially if you purchase items with the cards. It doesn’t hurt to read the terms of these deals to find out how you can benefit. This includes travel credit cards and business credit cards.

6. Take advantage of government benefits

If you’re struggling financially or having difficulties saving, there could be benefits that you’re eligible for that you haven’t claimed. Browse through the benefits on offer, keeping in mind though that eligibility is based on your unique situation. Accessing benefits you’re eligible for could free up some money that you can put into savings or investments. 

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Some offers on The Motley Fool UK site are from our partners — it’s how we make money and keep this site going. But does that impact our ratings? Nope. Our commitment is to you. If a product isn’t any good, our rating will reflect that, or we won’t list it at all. Also, while we aim to feature the best products available, we do not review every product on the market. Learn more here. The statements above are The Motley Fool’s alone and have not been provided or endorsed by bank advertisers. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended Barclays, Hargreaves Lansdown, HSBC Holdings, Lloyds Banking Group, Mastercard, and Tesco.

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NIO (NYSE: NIO) stock and Tesla (NASDAQ: TSLA) stock have had very different experiences in 2021. Indeed, while the Tesla share price soared over 50%, NIO’s dipped around 40%. As such, can Tesla continue its excellent performance this year, or is it better to buy NIO on the dip?