Investors more worried about inflation and low interest rates than Brexit

15 November 2017
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Investors view high inflation and low interest rates as more of a threat to their wealth than Brexit, according to new findings from Rathbone Investment Management.

The financial provider, which surveyed over 1,500 investors, found that over four in 10 (42%) considered the prospect of rising inflation as a major threat, while a further four in 10 (42%) believed consistently low interest rates were a concern.

In comparison, just three in 10 (30%) saw Britain’s forthcoming exit (Brexit) from the European Union as one of the biggest obstacles to building and maintaining their wealth.

Inflation remained unchanged at 3% in October, the latest figures from the Office for National Statistics revealed this week. However, 3% is inflation’s highest peak in five years.

Earlier this month, the Bank of England increased base rate in response to rising inflation from its historic low of 0.25% to 0.5%. But many financial providers are yet to pass this on to savers in the form of higher interest rates.

A poll carried out by Moneywise.co.uk in September found that seven in 10 (69%) of the 1,023 people who voted wanted the base rate to rise due to concerns about low cash savings rates.

Robert Szechenyi, investment director at Rathbones, comments: “This period of high inflation has left many facing a squeeze on their savings. Those savers with their capital predominantly held in cash will have seen its value depleted as the rate of inflation moves upwards. It is perhaps unsurprising, therefore, that almost half of the UK savers we surveyed cited inflation as being the biggest threat to their wealth.”

He adds: “Investing in the stock market, property or other alternative asset classes can be effective ways for investors to ensure their savings weather the storm of a growing rate of inflation and the current political and economic uncertainty of the UK economy.”

See Moneywise’s {First 50 funds for beginners} if you’re considering investing.

If you want to stick with cash, check out the Six accounts that beat 3% inflation and view our Model savings portfolios, which achieve inflation-busting returns of up to 3.28%. 

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