Should I Continue to Invest?

The saying, “inflation is the enemy of saving” is inarguable, but have commentators, journalists, and the media taken the time to put this current financial conflict into context and, more importantly, perspective?

If prices go up, you have less money. That makes perfect sense. So, let’s say, even when you have adjusted your shopping habits, cut your full satellite television package to just the channels you love, and promised yourself fewer meals out takeaways, the £200 a month you were able to save has become £100.

The current climate might make you believe your financial future is over.  However, by taking a pause and a deep breath, you can see the bigger picture.

Fuel prices are often used as a barometer for the cost of living, and these have been rising, bit by bit, for years. Yes, the logistical issues during the pandemic and war in Ukraine saw a dramatic increase, but inflation has been creeping up for some time now. The same with food prices – does anyone remember when you could have change from 30p when buying a chocolate bar? It is the recent speed of change that has been the surprise, not the principle of it.

When it comes to savings and investments, they are much clearer and easy to see. If investments go up by 5% in one year, an investor is happy.  If they go down the following year by 6%, it is a cause for upset. That is completely understandable, but what else would you have done with that money? 

A rise in inflation should lead to a rise in interest rates in banks and building societies, but will it be a dramatic one? How will it compare to the rise in inflation? Will a modest rise in interest rates be better than the rise and then a fall in other investments? In other words, how has the current and comparatively low return on investments been offset by the previous (and future) highs?

Some invest in property and niche areas like art, wine, and jewellery, but they are as susceptible to markets (people wanting and able to buy) as stocks, shares, and investment portfolios. The alternative is keeping money in cash; we have all seen how currency depreciates in value this year.

A positive way to look at it is that £100 you can still afford to save will have more purchasing power in an uncertain market and go a long way to gathering the same strength for the future when you can increase your saving to be in a stronger market.

It is hard for those who have only entered the market in the last couple of years to see – they could think they have made a mistake – but saving money and investing is all about the long-term, looking at the alternatives and understanding the advice and guidance you receive.

The value of an investment with St. James’s Place will be directly linked to the performance of funds you select, and the value can therefore go down as well as up. You may get back less than you initially invested.

Equities do not provide the security of capital which is characteristic of a deposit with a bank or building society.