As bad financial habits go, ‘saving too much’ does not, on the face of it, seem too bad a position to be in. However, according to data issued by pension provider, Royal London, the amount of money squirreled away in low-interest cash Isa accounts could be costing the nation’s savers more than £100bn.
Low interest rates, combined with rising inflation, has meant that cash savings, in real terms, are going backwards – in fact, over the past decade, money invested in cash Isas has lost 9% in aggregate. Royal London’s report has dubbed this situation as ‘The Curse of Long Term Cash’ and the message is that savers should really be considering an inflation-beating strategy rather than being preoccupied by sheltering their interest returns from tax.
Having the reassurance of a rainy day fund cannot be underestimated, but with inflation hitting 1.6% in December and rising, and the best interest rate provided by a cash Isa coming in at 1.35%, this clearly demonstrates that money is actually being lost, but despite this, nearly £60bn was invested in cash Isas in the last tax year.
Here at The Financial planning Group we manage our clients’ assets to an investment strategy that is designed to achieve their financial goals. Where those goals are longer term, we use shares and bonds to provide the growth required to achieve a positive return, above inflation.
Of course, the value of shares can rise and fall from day to day, month to month and even from year to year – but over time – they have provided a higher return than many other comparable assets.
We always advise investors to look for a structured, disciplined approach, rather than gamble their life savings away chasing unrealistic returns. Our aim is to change the fundamental relationship people have with their money, and to give them confidence and clarity in their own future.
If you would like to arrange an investment consultation, please call Tim Norris or Alan Clifton on 0800 731 7614 and we would be delighted to arrange a meeting at our offices in the heart of Teddington.