How you could keep rising prices at bay

If you have most of your cash in low interest accounts, your spending power could be slipping as prices rise faster than the value of your savings. You simply won’t be able to buy as much with your money in the future as you can now.

But investing some of your money for the long term – around five years or more – could see its value grow faster than rising prices, potentially preserving what your money’s worth.

According to the Bank ’s inflation calculator, something that cost £10 in 2011 would have cost £12.97 in 2021, with prices rising 2.6% on average every year over that decade.

That means you’d need an average return of 2.6% or more on your money to ensure it’s keeping up with rising prices.

And with the Bank ’s base interest rate, which influences savings account interest rates, sitting squarely below 1% in all that time, that’s hard to achieve. 

Investing has the potential to deliver inflation-beating returns, and therefore could see your money grow in line with – or faster than – inflation. 

There are risks, the value of investments can fall as well as rise depending on what’s happening in the world. But investing in a mix of assets, including bonds as well as stocks for example, could help deal with those risks. And with a service like our very own Ednites Credit Union Invest, you can choose how much risk you’d like to take.

Also, history shows that, over time, markets generally continue to rise. For example, the FTSE 100 index, which follows the performance of the 100 largest companies listed on the stock market, has delivered a return of 30.1% over the last five years (from 21st April, 2017 to 20th April 2022), including dividend pay-outs. And that’s despite some hefty ups and downs along the way.

Let’s be very clear though. There is very much an important place for your savings account in your financial set-up.

Such accounts are secure and grant you instant access to your money. You should put enough cash into one to cover any emergencies.

But with that emergency fund in place, you could consider other ways to grow any extra money you have for your future, like investing.

It’s quick and easy to start investing with our online platform Ednites Credit Union Invest. You choose from one of five funds, decide how much you’d like to invest – anything from £50 – and whether you’d like to set up regular contributions. Then you’re done. And if you’d like a little help deciding which fund to choose, our online automated advice service could help.

Your investment is managed by experts at Coutts bank who do all the heavy lifting for you. Navigating changing market conditions is their job after all. They invest on your behalf in a low-cost way and make sure your investment stays at a risk level you’re comfortable with.