skip to Main Content
How to beat inflation: invest

How to beat inflation: invest

  • Blog

With inflation rates currently at a six-year high of 3.1%, savers are being hit hard with the lowest interest rates in history. So, if you’ve got some money to save, how can you ensure you get the most out of it in the long-term and beat inflation? Cathy Smith, independent financial advisor with Jones & Co, has some answers.

“Many people think that their saving are safe in a bank account but the value in ‘real’ terms continues to be eroded by inflation. High levels of inflation, like those we have recently been experiencing and those back in 2008 and 2011 when inflation soared to 5%, are simply bad news for savers.

“0.25% is a typical interest rate offered by high street banks on instant access savings accounts. The following example puts into perspective how poor this rate is:

“If you invested £10,000 today in an Instant Access Savings account with a 0.25% interest rate, left it there for ten years and, assuming no inflationary adjustment, the actual buying power of your savings would be just £7,369 in ten years time.

“Or to put it another way, to achieve that same buying power of £10,000, in today’s money, you would need to replace the £10,000 with £13,570 so the value of your savings has actually decreased.

“This hypothetical calculation highlights how it’s never been more important to reconsider and review your mid- to long-term savings and look at the many other options available.

“A large part of my job is what is referred to as ‘wealth management’. In simple terms, that’s managing people’s pensions, investments, savings etc. and ensuring they’re working as hard as possible to deliver a good return.

“Rather than opening a traditional savings account with a low interest rate, you could alternatively use that money to create a bespoke investment portfolio. With specialist advice, it’s possible to achieve a diversified investment portfolio that is tailored to your individual attitude to risk.

“For someone who is risk averse we can create a low risk portfolio. For the more adventurous investor, we can increase the level of risk and tailor the portfolio more towards stocks and shares. Irrespective, however, of your personal view of risk, it is our common aim to ensure we deliver the very highest levels of return. And, busting a common myth, if you do take out an investment plan it doesn’t mean your money is locked away and you can’t access it. Quite the contrary as it usually takes a matter of days to request and approve a ‘withdrawal’ and payment to your bank account within ten working days.

“To sum up, it’s a fact that in the last 15 years, interest rates on savings have reduced and reduced until they’re almost non-existent. The days of having several savings accounts and generating a good return from them are long gone. Hence, if you’re looking to get the very best from your money, investments can no longer be ignored.”

Please note: You should be aware that investments carry varying degrees of risk and as their underlying value can fall as well as rise, you may not get back the full amount invested.

Back To Top