When we discuss the concept of investing money with our clients, we often find that the money that they wish to remain in savings accounts is higher than is recommended.

And they are not alone.

A new report has revealed that the UK’s working adult population has missed out on a staggering £94 billion over the past five years through failing to invest in the stock market and holding their money in savings accounts. The figure comes from public policy think tank, The Social Market Foundation, which has also found that more than £200 billion worth of cash is being held by savers above the recommended three months’ worth of income or ‘rainy day’ level of savings that should be kept available.

The arguments for remaining in cash are always the same: this can be an emotional draw, due to the liquid nature of savings accounts and the ability to ‘see’ the money, plus it is deemed as being ‘risk free’. However, interest rates remain stubbornly low and with inflation starting to move upwards, this liquid asset is continuing to lose money in real terms.

Punter Southall Focus will always consider cash as an excellent asset class, for the purpose of security or as a guarantee of capital. Put simply, it is an ideal place to hold money for a purpose. However, it very rarely offers any more than that. It is so important to consider your savings as part of your investment portfolio.

We encourage our clients to invest in a multi asset proposition, and that should include any capital in excess of your ‘rainy day fund’.

It may feel nice to have cash to hand, but how much is that really costing you?

Posted by Gary Hunt

Topics: Lifestyle

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