Are you losing money in cash? Calculate your own personal inflation rate

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With interest rates at an almost all-time low and taxes seemingly rising every year the effect on inflation on a persons savings and investments is having a larger impact as we go forward.

The rate of retail price index inflation in the UK rose to 3.2% in October up from the rate of 2.6 % the month before. However your own personal rate of inflation may not be the same as the recognised government published rates. It really depends upon your own personal circumstances and where your money is spent. Pensioners seem to be the hardest hit at present.

The BBC has a nice calculator for you to calculate your own personal rate of inflation so you can estimate if you are in fact losing money by keeping most of your money in cash. Simply put, if your personal rate of inflation is higher than the net return you get after tax from the interest you receive from your bank or building society you are in fact making a loss on your savings.

Calculate your own personal rate of inflation and then determine how much money you should keep in cash. It is possible today to get stock market type of returns on your money with a very low risk to your capital by seeing a experienced independent financial adviser.

You can invest for a fixed term of 5 or 6 years and the rate of return will depend upon stock market returns. If markets fall you will get no return at all but you will get all your original capital returned. So by tying up your money for a fixed period and taking the risk of no return at all you get could a significantly better rate of return should  stock markets rise over the next few years.

As always independent financial advice will depend upon your own personal circumstances so please call us should you feel that you would like to achieve a better rate of return on your money.

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