You’ve worked hard to earn your money, so why not do all you can to help protect and grow that wealth? Unfortunately, most people seem to underestimate how much of an impact low interest rates and rising inflation can have on their savings. If rates remain low and inflation stays high, then savers could be in serious trouble this year.
This does not constitute advice and advice should be sought in all instances before acting on it.
The truth is the real value of your money plummets thanks to inflation, so even if interest rates make a comeback, your bank account will still be affected.
BoE base rate increase and the damage of inflation
In order to combat the effects of high inflation, the Bank of England (BoE) might raise the base rate this year on top of the recent hike at the end of 2021. This might help some savers, but as most savings account rates are minimal, it’s unlikely the change would make any significant difference.
Recovering from the effects of the height of the pandemic is the priority for us all, but it’s hard to do when cost of living has risen, wages aren’t increasing at the rate they need to, and most people don’t have enough money left over to save anyway.
The purchasing power of your money dwindles during periods of high inflation, which is something many people might have forgotten after years of low inflation.
Savers need to think carefully about what they do with their money if they won’t need it in the near future. Anything beyond what you tuck away for emergencies you should consider investing, which can potentially help you beat inflation in the long run. You can be as aggressive or conservative as you like, depending on your attitude toward risk, but it almost always provides a way to shield your money from inflation and will grow more quickly than if it just sits in savings.
Concerned about your savings?
It’s highly likely inflation will either keep rising or at least stay where it is for the foreseeable future. But what that means for your money is entirely up to you. To discuss how to alleviate the effect of inflation on your financial plans, get in touch with us today.
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Dental & Medical Financial Services have been helping doctors and dentists to build and protect their wealth, whilst saving tax for over 25 years.