Warning: Investing in cash is bad for your financial health
It’s still seen by many as the safest way of investing their hard-earned cash.
Put it into a bank or building society account. There. Job done. Safe as houses. Worry over.
I hate to be the messenger of bad news, but investing this way is guaranteed to lose money.
The UK owns hundreds of billions of pounds in cash and many people quite willingly put theirs into savings accounts thinking it’s the best place.
But where’s the health warnings that come with that? The inflation rate stands at 3% and if they’re lucky, they’ll get a 1% interest rate at the bank or building society.
So, they are guaranteed to lose 2% on their investment. We get health warnings on cigarettes, on the side of perishable foods, on household cleaning products, so why aren’t we getting a health warning on cash investments because the impact can be equally dire.
When people go into hospital for an operation, say to have an in-growing toe nail removed, before anything happens, doctors will run through the risks of what could happen.
It’s then up to the patient to decide whether or not to go ahead with the operation, a decision they make based upon knowledge of the full facts.
Similarly, legislation ensures that the professional financial services industry has to advise clients of all the implications of investments they make – good and bad.
It’s that independent advice based upon in-depth industry knowledge that builds client-practitioner trust, and more importantly maximises returns on investment.
From helping novice investors understand the difference between savings and investments, through to working with investors needing the most complex of investment strategies, professional financial advice is a must.
As qualified advisors, we have a duty to fully understand a client’s attitude to risk.
A thoughtful and consistent approach to investment based on understanding a client’s needs means financial advisors can regularly review portfolios, suggest changes to take advantage of market conditions and explain the reasons behind these recommendations.
It’s really that simple. Ask the experts. It could prove to be the best investment you’ll ever make.