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Peer2Peer Finance News | August 21, 2017

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Savers hit by “toxic combination” of low rates and rising inflation

Savers hit by “toxic combination” of low rates and rising inflation
Suzie Neuwirth

SAVERS are suffering from a “toxic combination” of low rates and rising inflation as even the highest paying easy access accounts can’t beat the cost of living.

Research by property investment platform Property Partner found an average easy access account based on the top savings rates currently offers 1.05 per cent.

In comparison, Property Partner offers investors seeking decent returns and the security of bricks and mortar average yields of 3.2 per cent, while peer-to-peer lenders such as Landbay offer 3.75 per cent or you can get 12 per cent with LandlordInvest.

Read more: Savers urged to look for cash alternatives 

Once inflation of 2.7 per cent is taken into account, Property Partner says a deposit of £1,000 based on the average mainstream savings rate would be worth £984 after one year.

Savings of £5,000 would be worth just £4,918 in real terms in 12 months’ time while £10,000 would be worth only £9,835 in today’s money.

“Interest rates are still near historic lows and right now we expect investors to be grappling with the difficult decision over where to keep their money,” Dan Gandesha, founder of Property Partner said.

“They need to protect it from inflation which has risen faster than anyone expected so it’s a race against time to find a return on investment at a risk level they feel comfortable with.

“Bricks and mortar has a reputation for reliability over the long term and we expect many to be looking at this asset class as property in some areas continues to offer yields which will allow investors to beat inflation even after running costs and taxes.”

Read more: SMEs feel the pinch as inflation soars
Read more: Overcoming inflation