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Savers losing money in cash

THE VAST majority of Brits are worried about rising inflation this year but cash accounts that have lost money in real terms are still more popular than property or shares, new research from NFU Mutual has revealed.

A huge 86% of respondents to the nationally representative research admitted they were worried about inflation this year, and concern of the rising cost of living was high across all age groups.

Despite this, cash accounts (27% of respondents) are still more appealing than investments that have the potential to match or beat inflation, such as property (23%) or shares (16%).

Cash accounts are more appealing to women (31% of respondents) than men (22%) and shares were more appealing to men (23%) than women (9%).

Alison Fleet, a personal finance expert from NFU Mutual, said: “The average cash savings accounts would have lost investors 14% in real terms over the past 10 years, and that is only likely to get worse this year as inflation rises to levels higher than we’ve seen for a long time.

“It’s concerning that women are more likely to invest in cash accounts than men and less likely to invest in shares. As higher rates of inflation start to bite over time, this will create a gender gap.

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“Investing in property or the stock market has a better potential to keep pace with or beat inflation, but property isn’t a realistic investment for everybody because it often requires a large sum of money in the first place to pay for a deposit.

“You can start investing in the stock market with much less. The key is to make sure you have some cash reserves in place for any shocks, make sure your investments are diversified, and invest for the longer term so you can weather the ups and downs.”


Just over half of people (54%) plan to deal with inflation by spending less, while roughly a third (32%) don’t plan to change anything.

A significantly larger proportion of 18-24-year-olds (16%) plan to tackle inflation by investing in the stock market, higher than any other age group.

For example, just 2.6% of people over 35 plan to protect themselves against inflation by investing in the stock market.

Alison continued: “Younger people are becoming more and more enticed by the stock market thanks to the advent of online trading, but over 35s are more likely to have enough money to invest.

“When cash accounts are struggling to keep pace with inflation, it’s important to reassess your investments and make sure you’re not losing money in real terms over time.”


1. Try alternatives to cash savings

Keeping your money in a savings account may seem the most sensible and safest thing to do.  

 That can certainly be true in the short term, but if you’re planning for the long term, for five years or more, then it might be better to invest some of your cash, as the stock market has the potential to give better returns than cash over long time periods.   

If you aren’t sure whether investing is right for you, or how to get started, then talk to a Financial Advisor.  

2. Diversify 

If you invest, then you can reduce the risk of losing money by spreading it between different kinds of investments, known as ‘asset classes’. These typically include shares, government and corporate (company) bonds, property, as well as cash. 

A diversified portfolio doesn’t guarantee you’ll be protected from losses. But it can help lower your risk, as the values of different types of assets don’t always move in the same direction. In a diversified portfolio, a fall in the price of one investment has less of an impact overall. 

3. Reconsider your financial goals 

When inflation is high, it becomes particularly important to reassess your financial plan, to ensure it will still give you the outcome that you wanted. 

Again, you may want to speak to a professional financial adviser to help ensure you have the best possible plan in place for the circumstances. The sooner you start getting expert advice about your financial goals, the sooner you’re likely to reach them.   

4. Re-think your day-to-day finances

Inflation doesn’t just impact your savings and investments; it can also mean that goods and services you pay for in your daily life are getting more expensive. This can range from food and fuel to energy bills.  

 So, as part of your planning, be sure to factor in the impact of higher prices on your finances.  Inflation is a fact of life, and a challenge for savers and investors – but by planning carefully, you can do your best to minimise its impact.  

5. Don’t miss out on tax breaks: ISAs and Pensions

You can improve the returns on your investment by not paying more tax than you need to. 

ISAs – You can invest up to £20,000 in an ISA each tax year free for UK Income tax and Capital gains tax.

Pensions – For every £80 you invest HMRC will add another £20. 

If you pay higher-rate tax you can claim back up to an additional £20.