🎯 (12 exclusive reads) Cash or Equities: what are the chances of beating inflation? 👇
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(12 exclusive reads) 👇
🚨 Savings rates have trebled in 12 months, and UK savers can earn over 5% on one-year deposits. So doesn’t it make sense to cut risk and stick to the safety of cash?
- “Cash savers are benefiting from the highest returns in almost two decades.”
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📢 CASH OR EQUITIES: WHAT ARE THE CHANCES OF BEATING INFLATION?
✔ “Low inflation will see the money retain its spending power to some degree, but high inflation will erode it quickly.”
✔ “Time is the critical factor. Over short periods cash is likely to fare better against inflation. Over long periods, cash fares worse, even where inflation is relatively low.”
✔ “Over very short periods – three months or less – there has not been much difference in the likelihood of cash or shares beating inflation.”
✔ “But for longer periods the gap widens conclusively.”
✔ “The likelihood of stock market investments beating inflation has reached 100% where the investments are held for 20 years.”
✔ “So while stock market investments may be risky in the short run, when viewed against inflation they have offered far more certainty in the long run.”
🔔 The recent era of ultra-low interest rates, from which we’re now emerging, has meant that cash has been unattractive for investors. That is despite the fact that inflation until recently has been low.
STOCK MARKET INVESTMENTS ARE A BETTER BET FOR LONG-TERM REAL RETURNS? 👇
✔ “There are lots of reasons to hold cash, and savers’ individual timeframes will differ.”
✔ “While long-term historic data strongly suggests stock market investments stand a better chance of beating inflation than other investments, they are also volatile.”
✔ “So investors who opt for stock markets over cash need to be prepared for a bumpy ride.”
In approximately half of the past 50 years markets fell by at least 10%.
In a quarter of the past 50 years markets fell by at least 20%.
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Disclosure
This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. This material has been prepared for informational purposes only. Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice or interpreted as a recommendation.