With RPI at 3.1% and CPI at 2.7% it is difficult to beat inflation
The latest round of inflation figures suggested that things remained much the same over the Christmas period with the Retail Prices Index edging higher to 3.1% in December, from 3.0% in November. The Consumer Prices Index remained at 2.7%.
However, the issue for savers is that even the best easy access savings accounts are paying around 2.0% in interest, with some slightly more, but the vast majority far less.
That means saving your money with the bank or building society effectively is losing you money over time. That is pretty worrying. I wrote in an earlier blog about common investing mistakes that one trap investors fall into is the easy route of taking too little risk with their money.
With the guarantee of losing money over time by holding it in the bank, you can easily see why just saving your money in cash is also a risky strategy. In fact, some would argue that it is not risky at all, because you are certain of losing money, the only risk therefore is how much you will lose.