18th March 2016
Britons are still hoarding their savings in cash despite £1,000 being worth less in real terms than it was 10 years ago.
At the beginning of March, was passed the seventh anniversary of historically low interest rates. The base rate has now sat at 0.5% since March 2009, when the Bank of England pushed it to its lowest point in the history of the then 315 year old institution.
This has hit savers hard but they still continue to put their money into low yielding cash accounts.
Alex Hoctor-Duncan, savings and investment expert at BlackRock, said: ‘Yet another round of rock-bottom interest rates means that the decimation of returns from cash continues. Despite the 5 March marking the seventh anniversary of historically low interest rates, our survey shows that Brits still hoard around two-thirds of their personal savings and investments in cash, even though almost six in 10 say investing rewards those that think long-term.’
He pointed out that £1,000 saved in a cash deposit account in 2005 for 10 years would be worth just £998 in real terms after the affects of inflation. However, investing this money would show a totally different story.
‘If this money had been invested in stocks and shares over the same period, £1,000 would be worth £1,821,’ said Hoctor-Duncan.
‘When shown the performance of stocks and shares versus cash over 10 years, more than two thirds of Brits surveyed would want some stocks and shares exposure, suggesting that education plays an important part in financial behaviour.
‘With record low base rates continuing to persist, perhaps it’s time to consider whether cash is the best home for our money. Whilst cash is like a safety blanket, it won’t keep you warm when it’s thread bare.’