Barry Coidan has the same burning question facing millions of households this year: How can he protect his hard-earned savings against runaway double-digit inflation?
The annual rate of rise in the cost of living reached 10.1pc year on year until July, its highest level since 1982. The most pessimistic forecasts indicate that it will exceed 22pc by next year , although freezing energy bills should help maintain this figure. under control.
Soaring prices will eat away at savings pots and pension plans and savvy households are now acting to move forward. Mr Coidan, 75 and retired, is keen to minimize the damage to his own finances.
He said, “We live comfortably. I like to go to the theater and, together with my wife, I go splurge from time to time during the holidays. But we’re really not big spenders and we save a lot of our pension each month.
“My biggest concern is protecting what we have already saved to try to keep inflation from eating away at it too much.”
Mr. Coidan is a shrewd saver. He receives an income of £2,500 each month from his civil service and state pensions, of which he can save £1,000.
The couple own their home and therefore have no mortgage or rent payments to pay. They have £90,000 in cash savings in accounts that pay between 0.6 and 3.05 per cent interest.
But Mr Coidan knows that keeping his savings in cash means they will lose value in real terms. The last time cash yields were this poor was in February 1976, according to analysis by insurer Scottish Friendly and the Center for Economics & Business Research, a consultancy.
Mr Coidan invested £10,000 in the conservative Schroders Personal Wealth portfolio last year using stock and Isa shares, but it did not perform well, its value having fallen by 8% since July 2021.
He is willing to invest more of his savings if it protects his funds from inflation, but he is relatively risk averse.
“Really, I’d like to know if it’s worth investing at this point in my life and in today’s market,” Coidan said. “I’m not interested in extra income, just to protect what I already have.”