For those who want to put their money to work and stay one step ahead of inflation, we launched the MyMap funds – a simple, risk-adjusted and low-cost range of funds that help your clients do more with their money and you do more with your time.

Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.

Inflation is taking a bite out of the nation’s savings

Lockdown has created a country of savers – a staggering £1.5 trillion is sitting in UK savings accounts right now¹. But inflation may be on the rise and that means higher prices, which can reduce your savings’ purchasing power. In 2020, the 12-month inflation rate was 0.6%, meaning the country’s £1.5 trillion in savings would have depreciated by £9 billion when adjusted for inflation². And by January this year, inflation had risen once more to 0.7%²- knocking another £1.5 billion off savers’ real spending power.

None of us want to see our savings depleted because our money isn’t stretching as far as it once did. But as the economy recovers from Covid-19, we are likely to see prices rise and the real-world value of our money fall.

Could our savings be doing more?

Investments in stocks and bonds have historically delivered better returns than cash and mitigated the risks of rising inflation.

Investing does, however, carry risks of its own as stocks and bonds can depreciate – as well as appreciate – in value. Clients should consider whether this is a risk to take. But there could also be a cost to doing nothing.

Investing could be a way to fight inflation

Investments in the right stocks and bonds may have delivered better returns than cash and mitigate the risks of rising inflation. For example, let’s compare £10,000 kept in a bank account with a portfolio of stocks and bonds between 2010 and 2020.

The purchasing power of the £10,000 cash investment is eroded by inflation to the tune of £1,300 over the 10-year period, despite inflation not being at particularly high levels historically.³

¹Bank of England Database - November 2020
²Office for National Statistics – Consumer price inflation, January 2021
³Bank of England and Office of National Statistics, as of 31 December 2020. Monthly interest rates on savings calculated from the BoE deposit rates estimates on instant access savings, excluding unconditional bonuses. 

The £10,000 investment in a portfolio of 60% stocks and 40% bonds, however, has almost doubled in that time, reaching £18,500 by the end of 2020⁴There will be a drop in the value of the investment for some periods, but for those who invest over the long term, the rewards can be worth it.

Source: Bloomberg, 31/12/2010 - 31/12/2020. Currency is in GBP (£). The figures shown relate to past performance. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. Multi-asset portfolio is comprised of 60% MSCI All Countries World Index and 40% Bloomberg Barclays Global Aggregate Index and shows the value of £10, 000 initial investment accumulated with the total return of the composite in GBP, adjusted with harmonized and seasonally adjusted UK CPI and with no fees and transaction cost embedded. Deposit shows the value of £10, 000 kept in a bank account which is calculated based on the Bank of England deposit rates estimates on instant access savings, excluding unconditional bonuses and adjusted with harmonized and seasonally adjusted UK CPI. This is intended to provide only an example of the potential of the investment strategy to be employed and do not take into consideration actual trading conditions and transaction costs. The figures are for illustrative purposes only and results cannot be guaranteed.

Note: Methodology changed from 2013. Inflation adjustment based on UK CPI index harmonized and seasonally adjusted.
⁴Bloomberg, as at 31 December 2020. Portfolio performance is a composite of 60% MSCI All Countries World Index and 40% Bloomberg Barclays Global Aggregate Index in GBP adjusted with inflation and is shown cumulatively between 31 December 2010 and 31 December 2020. The figures shown relate to past performance. Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration. Index performance returns do not reflect any management fees, transaction costs or expenses. Indices are unmanaged and one cannot invest directly in an index.

So through investing for the long term, this can help clients stay ahead of inflation and meet their long-term financial goals.

And how can we help in achieving all of this? By balancing return, risk and cost.

1. Choose a level of risk that’s right for your client

Each MyMap fund offers a different level of risk and potential return to match their long-term goals and financial situation.

2. Designed to offer lower fees for a higher level of expertise

We keep fees low while still providing access to BlackRock’s global expertise. The MyMap range of funds is built using low-cost funds that track the performance of stock and bond markets.

If your client is among the many savers who could benefit from investing, consider BlackRock’s simple, cost-effective and risk-managed MyMap range of funds – investment products designed to help them do more with their money and you do more with your time.