Over the past five years, £80 billion has been wiped off the value of the average saver’s funds, according to a new report.
Low interest rates have done nothing to offset the effect of rising living costs, which has come with an attached price tag of approximately £116 billion since 2010, while savers have only received £36 billion in interest during the same period.
As a result of this, the average British household has lost almost £3,000 from their savings.
Since 1990, cash has given a return of 69 per cent, whereas over the same period cash invested in property has given a 289 per cent return, while the figure for British stocks and shares is an impressive 700 per cent.
Despite the poor returns on cash, however, half of the UK’s total financial wealth is said to be invested in cash savings accounts, which are viewed by many as ‘low-risk’.
Although the cost of living has fallen during 2015, over the last five years many savers struggled to find a savings account that paid an inflation-beating rate of interest.
Anyone saving for a deposit on their first home is likely to experience the problem of seeing the potential house they wish to purchase gaining value at a faster rate than their cash.
To avoid losing any saved money to the effects of inflation, experts are urging people to seek out advice on the types of investment that are more likely to produce a higher income.