{"id":2664,"date":"2021-11-08T12:35:17","date_gmt":"2021-11-08T12:35:17","guid":{"rendered":"https:\/\/new.contentdeployment.co.uk\/tomd\/?p=2664"},"modified":"2021-11-09T12:38:58","modified_gmt":"2021-11-09T12:38:58","slug":"cash-is-king-mentality-could-prove-costly","status":"publish","type":"post","link":"https:\/\/new.contentdeployment.co.uk\/tomd\/2021\/11\/08\/cash-is-king-mentality-could-prove-costly\/","title":{"rendered":"\u2018Cash is king\u2019 mentality could prove costly"},"content":{"rendered":"<div class=\"hd-block hd-block-paragraph\">\n<p><strong>For many\nyears, savers have seen cash as a safe, reliable option when building up a nest\negg for the future. <\/strong><\/p>\n<\/div>\n\n<div class=\"hd-block hd-block-paragraph\">\n<p>However,\ninflation has the potential to seriously reduce the value of cash savings over\nthe years. Whilst a modest level of price inflation is considered a marker of a\nhealthy economy, high inflation rates will gradually erode the spending power\nof money \u2013 especially when combined with low interest rates. The higher the\ndifferential, the worse the impact will be. <\/p>\n<\/div>\n\n<div class=\"hd-block hd-block-paragraph\">\n<p>For several\nyears, the Bank of England\u2019s (BoE\u2019s) target for inflation has been around 2%,\nallowing for inevitable short-term fluctuations; rates have typically been\nsubdued since the 2008 financial crisis, as have bank interest rates. However,\nthe Consumer Prices Index (CPI) \u2013 the official measure of UK inflation \u2013 has\ngrown much faster this year as the economy recovers from the pandemic, a trend\nwhich may well persist beyond 2021. On the other hand, the BoE reduced its base\ninterest rate to a record low of 0.1% during the first lockdown. Together, high\ninflation and low interest mean that those with excessive cash in the bank will\nsee the spending power of their savings eaten away rather quickly.<\/p>\n<\/div>\n\n<div class=\"hd-block hd-block-paragraph\">\n<p><strong>Cash is no\nlonger king<\/strong><\/p>\n<\/div>\n\n<div class=\"hd-block hd-block-paragraph\">\n<p>It is therefore\nsurprising that a NatWest survey of over 2,000 people found that, of the 76% of\nparents and guardians who are saving and\/or investing for their children, four\nin five are doing so exclusively in cash. Whilst commending parents for putting\nmoney away for their children, NatWest commented, <em>\u2018The purchasing power of\nthese \u2018safe\u2019 cash balances actually goes backwards over the longer term.\u2019<\/em><\/p>\n<\/div>\n\n<div class=\"hd-block hd-block-paragraph\">\n<p>There is no\ndenying that a healthy bank balance, in addition to appropriate protection\ninsurance policies, serves as a reassuring buffer against financial shocks.\nHowever, a bank or savings account is rarely the best place for significant\nsums.<\/p>\n<\/div>\n\n<div class=\"hd-block hd-block-paragraph\">\n<p><strong><em>The value\nof investments and income from them may go down. You may not get back the\noriginal amount invested. A pension is a long-term investment. The fund value\nmay fluctuate and can go down. Your eventual income may depend on the size of\nthe fund at retirement, future interest rates and tax legislation<\/em><\/strong>.<\/p>\n<\/div>","protected":false},"excerpt":{"rendered":"<p>For many years, savers have seen cash as a safe, reliable option when building up a nest egg for the future. However, inflation has the potential to seriously reduce the value of cash savings over the years. Whilst a modest level of price inflation is considered a marker of a healthy economy, high inflation rates [&hellip;]<\/p>\n","protected":false},"author":15,"featured_media":2665,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[32,89,38,90],"tags":[],"hd_content_source":[],"_links":{"self":[{"href":"https:\/\/new.contentdeployment.co.uk\/tomd\/wp-json\/wp\/v2\/posts\/2664"}],"collection":[{"href":"https:\/\/new.contentdeployment.co.uk\/tomd\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/new.contentdeployment.co.uk\/tomd\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/new.contentdeployment.co.uk\/tomd\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/new.contentdeployment.co.uk\/tomd\/wp-json\/wp\/v2\/comments?post=2664"}],"version-history":[{"count":3,"href":"https:\/\/new.contentdeployment.co.uk\/tomd\/wp-json\/wp\/v2\/posts\/2664\/revisions"}],"predecessor-version":[{"id":2676,"href":"https:\/\/new.contentdeployment.co.uk\/tomd\/wp-json\/wp\/v2\/posts\/2664\/revisions\/2676"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/new.contentdeployment.co.uk\/tomd\/wp-json\/wp\/v2\/media\/2665"}],"wp:attachment":[{"href":"https:\/\/new.contentdeployment.co.uk\/tomd\/wp-json\/wp\/v2\/media?parent=2664"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/new.contentdeployment.co.uk\/tomd\/wp-json\/wp\/v2\/categories?post=2664"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/new.contentdeployment.co.uk\/tomd\/wp-json\/wp\/v2\/tags?post=2664"},{"taxonomy":"hd_content_source","embeddable":true,"href":"https:\/\/new.contentdeployment.co.uk\/tomd\/wp-json\/wp\/v2\/hd_content_source?post=2664"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}