Cash
Performance of indices over 30yrs
Bank of England Base Rate ( 149.1 %) UK Consumer Price Index ( 96.2 %)
160 % |
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140 % |
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120 % |
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100 % |
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80 % |
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60 % |
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40 % |
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20 % |
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0 % |
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-20 % |
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Nov92 |
Nov95 |
Nov98 |
Nov01 |
Nov04 |
Nov07 |
Nov10 |
Nov13 |
Nov16 |
Nov19 |
Source : FE Analytics
a place in a portfolio , it is not a cash proxy . Investors have been looking for other cash alternatives such as absolute return funds , but these have disappointed and certainly not provided the stability of cash .
“ Cash has a place in the defensive part of a portfolio to protect the value of investments and manage risk in trickier times .” That said , investors cannot get round the age-old drawback of holding cash : savings rates may be higher , but they do not match inflation . Rick Eling , investment expert at Quilter , says : “ Cash savings rates in isolation don ’ t mean anything : to get the full picture , they must be tested against the current rate of inflation . “ It is unusual for savings rates to offer a real-term gain for no risk . This only happens when a bank rate , after any tax , exceeds inflation .” This may be a difficult concept for younger investors to get their heads
Issue 89 - November 2022 / 27 /