When it comes to long-term investment, cash has typically been less advantageous than other assets.
With recent changes to the Bank of England’s base rate, cash is in a less favourable position than before.
As such, it is time to consider diversifying your investment strategy to ensure that you continue to get the returns you want.
Why is cash less effective as an investment strategy?
Despite the competitive savings rates of recent years, cash was never designed as a long-term investment strategy.
The volatility that comes from being tied so closely to external economic factors means that value is likely to change as inflation takes its toll.
This is paired with cash being a generally less tax-efficient form of investment, as it tends to be taxed as income rather than the more favourable rate applied to capital gains.
What are the better investment options?
Where your assets permit, you should aim to diversify your investment portfolio as much as possible.
Retaining some cash in savings is still a valid approach, but you should also seek to invest in stocks, bonds or property as the market trends tend to be more navigable for these, allowing you to respond more proactively.
There is also a greater likelihood of Return on Investment (ROI) with property and stocks and shares, allowing you to generate a greater passive income than is possible with just cash savings alone.
When is cash still king?
When you want the agility and versatility of short-term financial action, cash remains a strong option.
Some cash should be kept for emergency funds or to facilitate holidays and other expenses.
Ideally, you will invest excess cash to beat inflation and improve tax efficiency, without sacrificing your standard of living by forgoing spending power in the interim.
Our team can help you determine the best investment strategies for you.
For tailored investment advice that will protect your assets, speak to our team today.
