How to inflation-proof your savings
- Inflation persists as the main topic of conversation and cause for concern during our client meetings this year.
- Many commentators now believe that inflation will be more persistent than was originally thought.
- What should people do to protect the spending power of their savings in a time of high inflation and 0% interest rates? I encourage people to separate the way they look at their money in to three distinct pots.
- An emergency fund should be at least three months’ take home pay and six months’ take home pay for a self-employed person or someone with less stable employment.
- Regular savings each month for a specific life event such as a house deposit, a wedding or even an education pot for your children. This money should be put to work to protect the spending power of that money, as holding cash over the long term will slowly destroy the value of that money.
- Lastly, savings that will not be needed for 10 years plus. The approach here can be best described as invest and forget. Proper diversification and having time on your side are very important here.
Adrian White is a financial planner with FDC Group within the West Cork region.
FDC Financial Services Ltd is regulated by the Central Bank of Ireland.