Inflation has ravaged cash savings, says BlackRock’s Hoctor-Duncan
On 5th anniversary of worldwide central banks co-ordinating an interest rate cut, Alex Hoctor-Duncan, head of European Retail at BlackRock, comments on inflation and low interest rates influence on cash savings.
Record low interest rates and inflation are a persistent fly in the ointment for British savers who are treating cash as safety blanket because of market uncertainty.
These figures show that even with a relatively low inflation rate, cash savers have seen their wealth decrease. There are three reasons why investors stay in cash: they like the income, they like the idea of their money being protected and they worry about volatility. Investors also like the capital preservation cash offers. But there is inherent risk. Returns are low so investors run the risk of seeing their purchasing power ravaged by inflation over the long term.
Investors looking to grow their wealth in the long term need to look beyond cash and re-assess their attitudes towards risk. Looking for investments which provide an element of more flexible income could be one step that less risk-averse investors could take.
Now is the time for investors to re-assess their investment portfolios and ensure they are reducing the corrosive impact of low interest rates and inflation on their portfolios.