In today’s uncertain markets, it is understandable that many investors are safeguarding their money by holding it in cash and putting their investment portfolios ‘on hold’ for now. But not focusing on your financial future today could mean your portfolio won’t meet your needs over the longer term. Therefore investors may need to reassess their portfolios and consider other investment options.
Inflation eats away at the real value of cash
The impact of a 3% inflation rate on the purchasing power of a £100,000 cash pile over time is illustrated here (for simplicity, assuming no interest returns):
Source: BlackRock. The above graph is provided for illustrative purposes only. If you place your money on deposit with a bank or building society, interest rates may fluctuate but your original capital investment will remain constant. Past performance is not a guide to future performance.
"So what do I do with my money?"
Cash is an essential part of everyone’s finances and plays an important role in saving and investing, inflation and taxes can erode the purchasing power– what you can buy with your money – on all investments, but historically returns on cash have struggled to keep up with inflation over the long run. That’s why you may need to reevaluate your attitude to risk and rethink your portfolio. We believe that even small steps to change your portfolio today can make an important difference in the future.
Investors should be aware that moving out of cash in search of higher returns to meet their long -term goals will involve accepting a higher risk of capital loss.
Rethink the cost of cash with Ewen Cameron Watt
Some investing ideas to consider
BlackRock’s breadth of capabilities
For investors building a well-diversified portfolio, BlackRock offers a broad range of investment solutions, spanning different asset classes, geographies and strategies.
BlackRock’s equity income funds
BlackRock’s family of equity income funds, including Global, Continental European and UK funds, seek income above the market average and provide scope for capital growth over time.
iShares – Full range of exchange traded funds (ETFs)
For investors building a well-diversified portfolio, iShares offers a broad range of transparent and cost-efficient indexing investments across asset classes, geographies and different styles.
iShares – Fixed Income ETFs
iShares ETFs provide low-cost and transparent building blocks for your fixed income portfolio, including a range of government, corporate and inflation-linked bonds in developed and emerging markets.