Why Cash might not be King

With UK interest rates now at their highest level since 2008 and market volatility continuing, Advisers are telling us that their clients are finding cash (and money markets as a whole) an increasingly popular option for their savings.

• Returns on cash are at their highest rates since 2008. However, although good at supporting capital preservation, cash is no friend of inflation. For example, £100 in 1992 ,is now worth only £48.
• Timing entry into equity markets is challenging, some of the best days in the market quickly follow the worst days. Had investors missed the 10 best days over the past 30 years, their return would be over 2% p.a. lower than had they been invested for the whole period.
• Over the long-term we expect risk to be rewarded and therefore equity markets to comfortably outperform cash and inflation.

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