The value of investments can fall as well as rise, and you may not get back the full amount you invest. Past performance should not be taken as a guide to future performance. Eligibility criteria, fees and charges apply. You should continue to hold cash for your short-term needs. Capital at risk. 

When thinking about the future of your finances, there’s a lot you need to consider: your long-term plans, how much you can contribute to your savings and how often you can top up. But what you also need to think about is the value of your money compared to the rising prices of everything you buy.  

Inflation acts as a downward pressure on the purchasing power of your money. Something that would have cost £10,000 in 2018 would now cost £13,068.87 in June 2025, according to the Bank of England. This equates to a 30% increase in just 7 years, creating challenges to save towards those big lifetime moments. 

The Bank of England’s (BoE) target rate for inflation is 2% per year. But price changes can fluctuate due to varying economic factors, diverging away from the central bank’s target. When inflation rises too quickly, the BoE can take action to try and manage the unprecedented price changes by adjusting interest rates. For example, if inflation gets too hot, interest rates go up.

If you hold most of your cash in a savings account - where the interest you receive could change depending on the BoE's set interest rate - inflation could still outpace how much your savings grow by.  

James Hawkes, Senior Portfolio Manager at Coutts, the bank behind our investments, believes savings accounts come with their benefits, but there may be other alternatives to grow your cash for the future. 

James said: “Cash is often seen as a safe alternative and at times a good one. But over the long run, it is not a good way to build and preserve your wealth as inflation erodes the real value. The past 5 years being a great example of this.”

“In addition to cash savings, other means of growing your money such as investing offer the opportunity to grow your money further.”

Investing some of your cash in shares and bonds could mean growing your money at a greater rate than inflation over the long term – typically 5 years or more. The value of your investments could rise as well as fall, which is why it is important to maintain a long-term time horizon. This would result in potentially preserving and growing the real value of your money to build towards a dream holiday, a new home or a comfortable retirement.

Diversification remains key. Not just by investing as well as saving, but also by spreading your investments across asset classes and regions. This could help mitigate risk while positioning your investment for sustainable growth.