To avoid losing value, your savings and investments need to grow at the same rate as prices are rising. In the current climate of lower interest
rates, however, achieving this could be a challenge.
During periods of rising inflation, those who save into deposit accounts may look to redirect their savings into investments in a bid to achieve potentially better returns, but it’s important to appreciate the risks. Unlike cash bank accounts, investments can fall as well as rise, and you could get back less than you invest, or lower returns than you might otherwise have achieved.
Interest rates on deposits in Cash Individual Savings Accounts (ISAs) have generally remained below inflation over the past few years. Some savings accounts offer higher rates, but most pay interest below the current rate of UK inflation – even if you tie your money up for three years.