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Savers left battling inflation headwinds

The latest figures from The Office for National Statistics have revealed a slight fall in inflation from a rate of 2.8% in July to 2.7% in August thanks to a combination of slowing fuel costs rises, summer discounting of autumn clothing and a lower rise in air fares.

But while the rate of inflation may have dipped slightly, it still remains high enough to hamper savers’ efforts and erode the spending power of any feeble interest payments.

Website Moneyfacts.co.uk reported that only three of the 840 ISA and non-ISA accounts on the market were able to negate the effects of tax and inflation on savers.

The website calculated that in order to beat inflation, a basic rate 20% taxpayer would need to find a savings account paying 3.38% per annum, while a higher-rate 40% taxpayer would need an account paying at least 4.5%.

Such is the effect of inflation, that had you invested £10,000 five years ago, allowing for average interest and tax at 20%, you would be left with just £8,844 worth of spending power today.

Savings accounts are heralded as a great way to preserve and grow your money but in the current climate, we’re seeing more stagnation than growth, leaving many savers, from the elderly needing a retirement income to the young trying to raise a house deposit, out in the cold.

Many Guardian clients have recently achieved 9% income in only 12 months from a specialist fund from the Royal Bank of Canada.  These kinds of investments are not open direct to investors and highlight the importance of seeking professional financial advice.  We always have a wide range of income, growth and protected investments available from a variety of highly respected financial institutes around the world.

If you would like to find out what we have available this month, then send us a quick e-mail here and we will send you through our suite of funds.

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