What is rising inflation doing to your savings?
Unfortunately, the recent rise means that it will be harder than ever for your savings to generate real returns on your investments. The value of any money you have in a typical high street savings account will now be eroding more quickly than before.
The rise in inflation also means that it’s now even harder to find a savings option which will actually beat the 2.3% figure. Many of the accounts which exceed this rate are help to buy ISAs, but this makes them unavailable to anyone not saving towards their first home. Other options open to all savers struggle to beat the new inflation figure – even the new NS&I savings bond, which will pay 2.2% and was heralded by the Chancellor, Philip Hammond, as offering welcome respite for savers, will no longer be able to keep pace.
Away from savings accounts, peer-to-peer lending and stocks and shares ISAs offer higher rates of return and tend to keep pace with inflation, but equally come with an increased level of risk. Only those who have sought professional advice on this form of investment, and are willing to accept they may not get back all the money they invest, should go for these options.
Whilst the present situation doesn’t offer much positivity for savers, there is some hope for the future. Whilst inflation is expected to rise further in the next few months, with some predicting it will go above 3% before the end of the summer, it is unlikely to grow beyond this and is forecast to decrease once again towards 2% during 2018.