Inflation

Inflation is the Enemy!!

We often hear that “cash is king” and this is true… just not all of the time. Cash is excellent for holding money short term (though certainly not entirely free from risk) but over the longer term money held in cash can actually lose its spending power - this is the same as your investment falling in value.

To give an example; current bank savings rates for money on deposit are in the region of 2.5% p.a. and inflation is currently at 3.4% p.a. – this means that the money you have saved in the bank will actually lose 0.9% in value this year alone!

Because we are so accustomed to prices always rising, particularly with the relatively small increases of recent years, it is often overlooked and the degree of damage it does to savings and investments goes unnoticed.

Click here to see how bank rates are performing against inflation (RPI)

The best protection against inflation over the longer term is a well balanced portfolio providing returns in line with your tolerance for volatility. This needs to be well diversified to help weather all storms and hold enough cash for your short term income needs to avoid drawing on and shrinking your principle.

To find out how much inflation is attacking the value of your investments contact our Investment Team today on (+350) 200 49750.