It is “surprising” how many savers have forgotten about inflation as more clients look to put money in cash, advisers have said.

Joshua Gerstler, chartered financial planner and owner of The Orchard Practice, warned that although the interest being paid on savings accounts is now higher than it has been for “quite a few years”, this couldn’t be looked at in isolation.

“If inflation is 8 per cent and you lock your money away for one year at 5 per cent, you are guaranteeing yourself a minus 3 per cent return.

“Could your investments grow by less than this? In the short-term, yes.

“However, history shows that if you remain invested in a well-diversified investment portfolio, over the long run your returns will be far superior to those available from a savings account.”

The Kushman Group property developer and portfolio landlord, Kundan Bhaduri, explained that, while rates may appear attractive, they “pale in comparison” to the “eroding power” of inflation.

“In real terms, cash in savings accounts loses its value,” he added, “so those seeking to preserve and grow their wealth would do well to explore appreciating assets such as property and equity.” financial adviser, Gary Bush, added: “Obviously with inflation running at 7.9 per cent, even a high savings rate of 6 per cent isn’t going to keep pace.”

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