Cash savers in the UK are £37bn down on their cash pots, as inflation continues to take a hit to their savings, Janus Henderson Investment Trusts has found.

In its latest ‘cost of cash’ research, the firm revealed that since January 2023, savers in the UK have earned £32bn in interest.

However, as a result of inflation, the value of savings has been cut by £69bn across the same period.

The research also found that cash savings in the UK fell by £1.95trn in July, which is down by £5bn since the start of the year, reflecting on the cost-of-living pressures on family budgets.

Interest rates are currently at their highest level since 2007.

Janus Henderson said that those who have managed to save may be considering themselves in a better position than in recent years.

Yet, despite these high interest rates, the firm found that almost a quarter (22%) of people think that keeping cash in deposits or physically in notes and coins is the best way to protect their savings from the impact of inflation, with one in six (17%) selecting shares in various forms, such as investment trusts, via funds or company stock.

As part of the survey, which was carried out by Opinium on behalf of Janus Henderson, a third (33%) of respondents said that they don’t know what investments were typically good long-term shields against inflations, which is up from 28% 12 months previously.

Janus Henderson has said that this highlights the need for greater awareness and education around financial decision-making.

Head of investment trusts at Janus Henderson Investors, Dan Howe, said: “The current environment is undeniably difficult to navigate. We are presented with the reality of rising costs not only as we go about our daily lives, but as we read the headlines too. Interest rates, despite being at their highest level in 15 years, are still not enough to fight the corrosive effects of inflation. Taken together, it’s no wonder that many UK savers are struggling to decide how to best protect the value of their hard-earned savings.

“Environments like the one we currently find ourselves in can make us understandably wary about investing our savings, but the research shows that keeping them in cash has not protected them from inflation in the long-term. Since the beginning of 2021 savers have seen inflation consume one-sixth of their cash savings, even after interest income has been added. In 25 of the last 34 years, equity investments have delivered superior returns compared to holding cash and can provide investors with a much-needed boost to income in terms of capital gains and dividend payments, particularly when those dividends are reinvested.”

Share Story: