Brian Tweedy: How much is the tenner in your pocket worth? Combat inflation through investment

JPCT 230913 Brian Tweedy. Photo by Derek Martin
JPCT 230913 Brian Tweedy. Photo by Derek Martin
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More and more these days I am reminded of my mother complaining about receiving no change from her one pound note when out shopping in the late 70s and early 80s.

The difference these days is I seem to be receiving very little change when handing over my £10 notes!

Roughly speaking a £1 note in 1980 is worth around 27 pence today using UK official government inflation data.

Inflation has always been the saver’s enemy and a source of worry for people with plans and objectives for the future.

Many are more worried now that they see governments around the world ‘printing money’ via quantitative easing and through cheap lending schemes such as the Money for Lending Scheme at the Bank of England.

Of course some will argue that governments around the world had no choice but to reflate or inflate the price of assets, stock markets and property markets, to avoid the panic that a deflationary spiral in these assets would bring.

The economist Milton Freedman once said that “inflation is a government tax and can be imposed without legislation” and of course inflation could be very useful method for indebted governments to reduce the value of their liabilities, perish the thought!

So how does that leave our poor investor? Well try to be organised and set your goals.

If you are saving up for a holiday or car short term money needs to be held in cash along with your rainy day funds.

We may need to accept the ravages of inflation here whilst still chasing the best interest rates to try to offset the damage.

However if you are looking at longer term goals such as saving for the long term future or retirement, perhaps provision of care when you are older or putting monies away for young children and grandchildren then some proper investment may be advisable.

To really beat the inflation trap we need investments with a price and yield that will keep up with prices and not be devastated by them like cash.

What about the risk? I hear you cry.

Only you can judge what level of risk you are comfortable with and you may have a different attitude with money that you can afford to put away without having to access for many years.

In this world of cheap money and quantitative easing the inflation risk to your cash may be worse.

Perhaps grandmother’s advice of not keeping all our eggs in one basket will be the correct one, some cash for rainy days and some investment for the future.

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Our new financial services columnist Brian Tweedy is a former previously the Client Relationship Manager at the Horsham Middle Street branch for six years. However, Brian’s experience originally stems from more than 20 years in the City, currency trading and buying and selling assets for companies such as Natwest and the World Money Centre. He moved to Horsham eight years ago with his wife in order to educate their son in a more rural environment. Drawing on his many years of extensive experience, his new venture Cavendish Legal Group Financial Services Ltd offers comprehensive advice on all financial matters, including investments, mortgages and pensions. If you have any questions or queries call Brian on 07778493661 or email b.tweedy@clglaw.co.uk