The true impact of inflation on cash savings and pensions

Holding cash equates to a reduction in value and income in real terms

clock • 5 min read

Richard Hulbert looks at the impact of inflation on cash savings and pensions. The key, he says, is not to hold too much...

Over the next 25 years, due to inflation, the cost of an individual's lifestyle will double. If inflation remains above 5% that timeframe will reduce to less than 15 years. This is a significant issue for those who have their pension savings invested predominately or entirely in cash because of two key facts 1. Cash is one of the worst performing asset classes over a three-plus year time frame 2. The return on cash is connected to the rate of inflation but the interest paid is nearly always less. The result is that holding cash equates to a reduction in value and income in real ...

To continue reading this article...

Join Professional Adviser for free

  • Unlimited access to real-time news, industry insights and market intelligence
  • Stay ahead of the curve with spotlights on emerging trends and technologies
  • Receive breaking news stories straight to your inbox in the daily newsletters
  • Make smart business decisions with the latest developments in regulation, investing retirement and protection
  • Members-only access to the editor’s weekly Friday commentary
  • Be the first to hear about our events and awards programmes

Join

 

Already a Professional Adviser member?

Login

More on Pensions

Could an independent commission solve the state pension dilemma?

Could an independent commission solve the state pension dilemma?

'The next government needs to take a step back from political rhetoric'

Rachel Vahey
clock 17 June 2024 • 3 min read
Number of SIPP millionaires up 20% at Hargreaves Lansdown

Number of SIPP millionaires up 20% at Hargreaves Lansdown

Provider has 3,794 SIPP millionaires on its client roster

Jenna Brown
clock 17 June 2024 • 2 min read
Welsh firm declared failed by FSCS over pensions advice

Welsh firm declared failed by FSCS over pensions advice

Claims can now be made against Broadlands Partnership

Isabel Baxter
clock 17 June 2024 • 1 min read