It’s shocking, isn’t it?
Well, it shows how damaging cash inflation is over time.
Janus Henderson, head of the city foundation, has done some research on just that.
Its cash value shows the following:
· Inflation has burned a record £ 98 billion in deposits in 2021 and will consume even more in 2022. Investors put an additional £ 106 billion in cash in 2021, leaving a total cash balance of a record £ 1.9 trillion
· Retirees own a third of the UK’s savings and have seen interest income fall from £ 1,100 a year per capita in 2000 to just £ 69 in 2021
· Since the start of the pandemic, UK depositors have poured £ 283 billion into savings accounts in banks, construction companies and NS&I, up more than one-sixth (17.8%). This is equivalent to £ 10,012 per family, but is certainly not evenly distributed.
· Cash deposits now make up 18 months of all UK consumer spending
· But interest income has fallen to a record low on all this money – only 2.5 billion pounds
Does Janus Henderson have a solution for this?
Well, he thinks you should invest in Stock Exchange instead. Obviously, this is not a selfless view.
James de Sousmares, head of investment funds Janus Henderson, said: “Inflation has burned almost all the money added to deposit accounts last year, and 2022 will hurt even more if prices rise. The tragedy unfolding in Ukraine will only worsen the situation. “
So he wants me to buy what he sells?
Shocking, but true. The stock market isn’t for everyone, but Janus makes sense. Last year, global stocks rose 23.5% and exceeded cash for nine of the last 10 years. Investors tend to consider cash “safer” than stocks, but it just depends on what risk you’re looking at.
James de Sousmares once again: “The British are simply neglecting their future, leaving such huge sums of cash. People who put off for the long term, for example, to retire, need to look for asset classes that can protect their savings from inflation and also ensure real growth. ”
Again, his view is not selfless. But look what happened to the 20p part.
So much money are we sitting on?
Nearly 2 trillion pounds. This is roughly the size of the UK’s GDP. Janus suggests that people could keep some money on hand for disasters and invest the rest more wisely. Obviously, there are many people for whom the idea of savings, not to mention savings, is a fantasy.
James de Sousmares: “Stock prices are falling and rising, especially in such uncertain times as today, so investors need to be prepared to take risks and keep their stocks in the medium and long term. But when the stock market sometimes has a bad year, most companies still pay dividends to their shareholders. But even after you add interest income to the total, cash loses value every year for 12 years in a row. ”
So how did your stock market investment go?
As for individual stocks, my track record is inadequate. Some flew, some crashed, some stayed the same. The mutual funds I pay into have done very well.
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