Red Alert on Cash Savings 2022
Published / Last Updated on 31/01/2022
If we thought the stock market had hit its high or if there were some major ‘shock’ events that may cause a stock market correction or crash, you would expect us to try and warn you.
Indeed, we have issued many ‘red alerts’ over the last 15 years.
We are now issuing a Red Alert for savings, bank and building society deposits and Cash ISAs.
We have long suggested that governments need inflation over a sustained period to devalue covid-19 debts before they are due to be repaid. If we had sustained inflation at 5% pa over a 10-year period, the compounded effect of that would be a 62% devaluation of the debt in real terms. This is why governments are not taking dramatic action currently to control inflation.
We made some assumptions and projections for the next 10 years and already, by 2023, we estimate the spending power of your cash could be reduced by over 15% by next year, when compared to 2021.
| Value Start Year | Interest pa | Value End Year | Inflation pa | Compounded Inflation |
Value Adjusted For Inflation | Equivalent Spending Power | |
| 2021 | £10,000.00 | 0.10% | £10,010.00 | 3.00% | 3.00% | £9,709.70 | 97.00% |
| 2022 | £10,010.00 | 0.50% | £10,060.05 | 5.50% | 8.67% | £9,188.35 | 91.34% |
| 2023 | £10,060.05 | 0.75% | £10,135.50 | 6.00% | 15.18% | £8,596.43 | 84.82% |
| 2024 | £10,135.50 | 1.00% | £10,236.86 | 6.00% | 22.10% | £7,974.92 | 77.90% |
| 2025 | £10,236.86 | 1.25% | £10,364.82 | 5.75% | 29.12% | £7,346.94 | 70.88% |
| 2026 | £10,364.82 | 1.50% | £10,520.29 | 5.50% | 36.22% | £6,710.06 | 63.78% |
| 2027 | £10,520.29 | 1.75% | £10,704.39 | 5.00% | 43.03% | £6,098.42 | 56.97% |
| 2028 | £10,704.39 | 2.00% | £10,918.48 | 4.75% | 49.82% | £5,478.60 | 50.18% |
| 2029 | £10,918.48 | 2.25% | £11,164.15 | 4.50% | 56.56% | £4,849.18 | 43.44% |
| 2030 | £11,164.15 | 2.50% | £11,443.25 | 4.25% | 63.22% | £4,208.98 | 36.78% |
We suggest you reconsider how much you are holding in cash accounts and consider stock market ISAs and other market related investments. Inflation is dramatically reducing the spending power of your cash savings at present. Do not leave it until it is too late. Do consider investment funds that will benefit or be driven higher by inflation.
