Is inflation about to steal your savings?

Savers in the UK have been getting a rough deal since the global financial crisis with interest rates held at 0.5% for a long eight years. In August 2016, when Brexit became reality, it was cut still further to a measly 0.25% and experts are predicting that the rate could go as low as 0.1% in late 2016 or early 2017.

As if that’s not bad enough news, the recent figures released by the Office for National Statistics reveal that inflation is now rising. As the price of fuel, clothes and hotel rooms go up, UK consumers are experiencing the highest rate of inflation since November 2014 and economists are predicting further rises with food and clothing from abroad becoming more expensive as the pound crashes.

Inflation is often referred to as the silent thief because it robs us of buying power as prices increase and the value of our money falls. It can have a devastating effect on savings too. With inflation currently at 1% and interest rates at just 0.25%, bank deposits are actually falling in real terms – to put it bluntly, you are losing money simply keeping it in the bank. If interest rates fall and inflation rises as predicted, the gap will widen and the risk to your savings will increase.

Obviously we all need to keep some liquid funds to cover both everyday living expenses and an emergency fund but you need to look elsewhere for any savings you have over and above that. Money that you are squirrelling away for your retirement or to pay for your children’s education needs to be invested more wisely to provide significant capital growth.

Here at Infinity we can help you fight inflation and meet your financial goals by making smart investment decisions. We provide a professional portfolio management service for lump sums and regular savings. We take the time to help you clarify your investment goals and your attitude to risk and then leave the actual investment decisions to our award-winning partner, wealth management specialists, Tilney Bestinvest.

If you are concerned about the effect of inflation on your savings, why not get in touch?