Cash savings are often regarded as a safe investment choice, but how much financial costs?
Over the past decade, cash at the bank has provided a real negative return (taking into account the effect of inflation). Record low interest rates, combined with persistent inflation, has eroded the cash value in a savings account, with a cash asset cash such as shares.
It is important to understand the difference between real and nominal returns when thinking about inflation and investment. Nominal investment returns can be praised with inflation – because if prices generally rise from time to time, your investment price will also rise.
Mistakes made by people when thinking about cash savings are ignoring the impact of inflation. Even the relatively simple inflation rate of 2% means that your money has lost one third of the purchasing power for 20 years.
People tend to support clear cash security rather than the perceived investment risk. But while direct investment risks may seem unpleasant for some people, this must be determined to the risk of long -term cash savings eroded by inflation. This is the opposite of investment, where the longer you invest the lower the risk of negative return, and the better your chances of exceeding inflation.
Choosing whether to invest, or put your money in cash, no need to be a binary choice between low or high risk. There are various low -risk investments, such as government bonds, which rise and fall are generally more limited.
That is why we believe that, when we have to invest, it is important to seek advice directly with wealth managers. This will help you determine your goals and formulate a personalized plan. Well, that’s a worth doing conversation.
In an increasingly complex and competitive world, expert financial advice is the key to securing your future. So, contact us today to consult free financial planning and get all your financial matters in sequence.
Important information
The value of investment, and income from them can go down and increase and that past performance is not a guarantee of future returns. You can’t restore what you invest.
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This information does not take into account the specific investment objectives, financial situations or special needs. Suggestions must be sought from licensed financial advisers before making a decision. While we have taken all the reasonable care to ensure that the information contained in this article is not true or misleading during publication, we cannot guarantee the accuracy or completeness. Every opinion or estimate contained in this article can change without notice. AAM Advisory Pte Ltd License by Singapore Monetary Authority, FA License No. 100032.
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