Whilst I would normally save my comments on inflation for my Weekly Market Update, I feel I need to reiterate my call to action from earlier this year.
“LEAVING YOUR MONEY IN CASH DEPOSITS IS GUARANTEED TO COST YOU MONEY”
According to Moneyfacts, there is £236 billion sitting in bank accounts earning 0%. The average easy access bank rate is currently only 0.15% and the average cash ISA rate is 0.22%.
The latest inflation figures here in the UK have shown that the Consumer Price Index (CPI) is now 2.1% and rising with many, including ourselves, predicting that inflation could nudge close to 4%.
Some simple maths
Of course, we all need a buffer and we have to accept that to have instant access, we will receive a low level of interest. Yet, with many new clients, we are seeing large amounts of money sat in cash deposits. Unnecessarily high amounts.
If we consider £100,000 is sat in a bank account earning 0.15% and let’s say CPI reaches 3.5%, then the real value of this money, one year on, will have fallen by 3.35%. In other words, a loss of £3,350. Inertia could be expensive.
Okay smarty pants, what are the options?
I won’t give any specific recommendations here because advice depends on all manner of circumstances, but it makes sense to consider investments which offer inflation protection and seek to protect the real value of your money.
If you want easy access, it’s worth remembering that you can access invested money, without penalties, in just 10 working days. Any such investment should really be seen over the medium to long-term but there is no doubt that rising inflation will be a feature over the next year.
As reported in the Sunday Times this week, “inflation is the silent killer of your savings”.
If you want to explore your options or know someone who is paralysed by not knowing what to do, contact us at info@blueskyfp.co.uk and we’ll create a strategy which seeks to protect the real value of your money.
Don’t let inertia rule.
Gary
Gary Neild B.Sc.Hons. DipIP PFA
Chief Executive Officer
Risk warning
Please Note: This communication should not be read as giving specific advice regarding your personal circumstances. This would only be given following detailed assessment of your individual needs. The value of investments may fall as well as rise; you may get back less than invested. Past performance is not necessarily a guide to future returns.
