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 ...

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