05/02/25
News, Resources, Insight and Opinion from Browning Financial Planning
Inflation - a cancer on your Wealth
05/02/25
It is commonly believed that when you retire, your number one priority should be the preservation of your capital.
Whilst in principle this sounds fine, in reality it comes at a great cost. Let me tell you why.
If you don't want to lose money in ACTUAL terms, you are limited to saving accounts. The rate of return on savings accounts generally means that in REAL terms, you will lose money over the long term. Year after year your cash will buy you less and less and your reserves will be like a house eaten away by termites.
A typical retirement of a couple in the UK is around thirty years. So if you retired on an income of £20,000 in 1995, you would now need over £53,000 per annum to maintain the purchasing power of your money.
So, your number one priority should NOT be the preservation of your capital, it should be the preservation of your purchasing power.
Only stockmarket-linked investments can do this but too many people shy away from them because of their volatile nature. This is a mistake.
INFLATION IS TO RETIREMENT WHAT CARBON MONOXIDE IS TO YOUR HEALTH.