What is the best way to protect savings right now?

23 May 2022

Question by Geraldine

What is the best way to protect savings right now?

Answered by Boring Money

Hi Geraldine,

Thank you for your question.

I am assuming you are referring to the effect inflation is having on savings right now.

This will depend on your long-term goals, but it's certainly tricky with inflation being so high. Focusing on your financial goals and long-term plans is the most important thing when thinking about money.

Cash savings have their place in a long-term financial plan. However, with inflation recently hitting 9% and savings rates barely at 1%, you'll be losing more in real terms. 9% inflation is irregular and it's expected to reduce to normal at some point. 'Normal' is around 2-3%, so even at this rate savings accounts are unlikely to keep pace with inflation.

Normally, we recommend keeping 3-6 months worth of outgoings in easy-access savings (banks/premium bonds etc). Plus any large expenditure you have planned over the next few years.

For your longer-term financial goals (5 years+), investing could be considered. Investments have historically outperformed cash but must be given time. Even in times of high inflation, evidence shows that global stock markets perform well.

The above should all be considered as part of a long-term financial plan. A good financial planner can cover all of these areas and we would be pleased to help.

Kind regards


Answered by

Boring Money