Tumultuous financial markets create fear, and fear drives people into cash.
In recent years, harsh cuts on savings accounts and a dogged rate of inflation, have left people with an almost impossible task of seeking a real rate of return on their money.
With the Government’s preferred measure of inflation, the Consumer Prices Index (CPI) currently running at 1.8%, basic-rate tax payers need a rather rare 2.25% p.a. to retain the spending power of their money. Higher-rate tax payers require 3.0% p.a.
Even if inflation were a bit lower, a rate that beats these price rises is hard to find on easy-access accounts or one-year fixed-rate bonds from High Street players.
Yes, cash can provide a short term safe haven, but ask yourself is it the right place for the longer term?
Warren Buffett, an 82-year-old American worth about $46 billion and nicknamed the “Oracle of Omaha”, is the most quoted investor on the planet and countless financial experts swear by his words of wisdom:
‘Today people who hold cash equivalents feel comfortable. They shouldn’t. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value’. Warren Buffett.
When the world’s richest investor speaks, people listen…
If you have any questions about this article call Paul Holiday at GreenSky Wealth on 01603 340800.
This article is for general use only and is not intended to address your particular requirements. It should not be relied upon in its entirety and shall not be deemed to be or constitute advice.
GreenSky Wealth Ltd is an appointed representative of Financial Limited which is authorised and regulated by the Financial Conduct Authority. FCA No: 516410