Nearly one-in-five wealthier Brits have at least GBP100k in cash
During the pandemic some parts of the population have managed to put away more money than ever before. For those who already had substantial amounts of money in cash, including those with GBP250k in investable assets, it is vital they invest the money.
Quilter research reveals that 18per cent of those with GBP250k or more in investable assets have 40-60 per cent of these assets in cash, or at least GBP100k.
This group have also benefitted from the lockdown as 35.5 per cent have said they have more money to invest than usual.
However, by leaving the money sitting in cash this group are losing out on substantial returns. The rates of return on cash accounts are extremely low and have plummeted further still since the Coronavirus outbreak with the average currently below the rate of inflation.
The research reveals this group are aware of the opportunities as 42 per cent, the largest of any wealth group, think there are good opportunities in the current market. Indeed, 29 per cent would like to move their cash to investment but don’t know what to do, and 37 per cent will be more active with their investments overall.
Olivia Kennedy, financial adviser from Quilter Private Client advisers, says: “Every investor needs a cash buffer in case of emergencies, but too much can negatively impact on returns. A good rule of thumb is save six months of your salary in cash and then invest in a spread of different assets that can deliver a long-term return.
“For wealthier people it is important to do this tax efficiently. Make sure you make the most of your allowances, including the ISA allowance and the pension allowance.
“Speaking to a financial adviser can often identify the best ways to make the most of your cash and ensure it can deliver for you over the long-term, and not make your goals out of reach.”
Jonathan Raymond, Investment Manager at Quilter Cheviot, says: “Historically, cash has not been a good store of value for individuals due to the corrosive nature of inflation eating into its purchasing power over time. This is particularly acute in the current environment where deposit rates on cash have tumbled and with inflation likely to accelerate into next year. Individuals with excess cash balances should strongly consider investing to help protect and grow their capital.
“Investing does of course carry its own risks but a well-structured and well diversified portfolio tailored to individuals’ requirements and managed sensibly ought to protect capital from inflation and the decline in the purchasing power over time. Seeking professional advice might also be a sensible option so that individuals can have a globally-diversified and broad-based investment portfolio built for their needs without having to spend lots of time researching the whole of the investment universe for appropriate investments.”