Can you inflation-proof your finances?
Our sponsor, accountants, Milsted Langdon based here in the South West, provides advice on the impact of rising inflation.
Inflation is rising at a rapid rate in the UK. In fact, according to the latest figures, it surged to 9.1% and expectations are that it will peak later in the year at 11%. The rapid rise of inflation is being fuelled by the Russian invasion of Ukraine which is having a direct impact on global energy prices. The pandemic is still heavily affecting China, resulting in the closure of their ports, which is impacting on product distribution.
The Bank of England has already acted by increasing the base rate to 1.25%, and for those with debts, this may mean that they face higher costs over time as the banks increase their interest rates.
Erosion of Purchasing Power
One of the key net impacts of rising inflation is that it kills the purchasing power of your capital, i.e. the pound in your pocket (or more likely your bank account) is effectively worth less in future – you will not be able to purchase as much with the same amount.
Currently, inflation is far out-pacing interest on cash saving accounts.
Is it possible to protect wealth and savings against inflation?
As with most things in finance, it often comes down to careful and regular planning.
We believe savers and investors need to adapt their current wealth, protection, and pension plans to ensure they are on track. Rather than waiting for things to improve, now is the time to be seeking independent financial advice so that you have the best possible chance of retaining wealth and achieving your financial goals through effective investment and saving strategies.
If you need assistance with weathering the storm of high inflation, please contact us.