Being unaware of the impact inflation could have on your cash can be problematic, unless you take action. The problems arise as millions of savers have taken no action on their savings, despite cash earning very little in interest in comparison with rising inflation. In some Countries, more than half of all savers currently keep their money in cash over the long term, too.

The price of your coffee last year may have been CHF 4.00, whilst today you could be paying CHF 5.00 instead. Excluding any growth from interest or additional savings, if we presume that during this period your CHF 100’000 savings have been sitting in cash, you could have bought 25’000 coffees last year. However, it can now only buy you 20’000 coffees this year. That comes to a massive 5’000 less coffees!

Of course, it would be surprising if you did consume such vast amounts of coffee, but the principle of the impact of inflation on your cash savings over time remains. Your real purchasing power decreases when inflation is higher than the growth you receive.

The unfortunate reality is that inflation is eating away at millions of savings accounts. Whilst it is essential to keep some cash in the bank for an emergency fund, savers might want to consider other options to make their money work harder.