Despite the Chancellor, George Osborne, pledging to help families with living costs and the price of oil in his Budget speech, UK personal finances remain squeezed. With inflation set to increase to 5%, stockbroking and investment management firm Redmayne-Bentley warns that savers and investors must take action to preserve the value of their cash.
Robert Hughes of Redmayne-Bentley in Beverley, said: “In his speech, the Chancellor also outlined that inflation is expected to remain at between 4% and 5% throughout 2011, yesterday we had confirmation that Consumer Price Index (CPI), the government’s official measure of inflation, had risen to 4.4% in February.
“Unless your income can keep pace with inflation, the value of your cash will diminish. If inflation ran at 5% for one year, £1,000 in one year’s time would be able to buy the same as £950 today. Protecting your savings and investments against inflation should be high on everyone’s priority list, but particularly those on a fixed income.
“There are a variety of investments that act to alleviate the impact of inflation on an investor’s real rate of return. Index linked gilts and corporate issues, gold, infrastructure funds and equities with a strong and growing dividend stream, can all be an important part of inflation proofing a portfolio, furthermore if invested within an ISA some of these can provide a gross return with no tax liability.
Robert Hughes also suggests “Individuals should consult an appropriate adviser such as Redmayne-Bentley before switching or taking out new investments to ensure suitability to their personal circumstances.
The Budget 2011 also confirmed the increase of the 2011/2012 ISA Allowance from £10,200 to £10,680 and confirmed details for Junior ISAs, the Government’s replacement for child trust funds, to be launched in October.
Robert Hughes said “It was pleasing to hear the announcement about Junior ISAs as this allows families to start saving for their children in the most tax efficient manner as early as possible. It can also serve as a useful tool for a child’s financial education which should encourage them to use the funds wisely once they become entitled to it at 18.”
