Tax cuts and interest rate hike reaction: Wesleyan’s Nick Henshaw warns of inflation risk to cash savings

by | Sep 23, 2022

Share this article

inflation

It’s been a week packed with news of interest rate hikes, market turbulence, currency fluctuations all capped off by today’s “fiscal event” announced by Chancellor Kwarteng with a raft of tax cuts and incentives aimed at stimulating economic growth.

In the light of this week’s news, Nick Henshaw, Head of Intermediary Distribution at Wesleyan Group, said: “Much of the reaction to the announcement of a 0.5% hike to interest rates yesterday has focused on the impact on mortgage payments.

“That’s entirely right, but let’s not forget that people’s cash savings are losing value every day that interest rates are outpaced by inflation, which is currently around four times higher. That situation doesn’t look like changing any time soon. Meanwhile, we have seen more stock market volatility this week amid concerns about declining company earnings, further rate increases ahead and the ongoing situation in Ukraine.

“So, where to invest? The market’s track record show’s it’ll outperform cash savings over time. Putting money in smoothed managed funds offers the opportunity to invest in equities and therefore bring the potential for higher returns over the long term, while the process of smoothing brings some protection from market volatility as returns are balanced out in good and bad years. Having conversations with clients around these options will now be more important than ever.”

 

 

Share this article

Related articles

Winners of the Protection Guru Awards 2022 are announced

Winners of the Protection Guru Awards 2022 are announced

Protection Guru, has today announced the winners of Protection Guru Awards 2022. In this, their second year, the awards have been established to recognise the leading lights of the protection industry. The team at IFA Magazine extends our congratulations to all this...

Trending articles

IFA Talk logo

IFA Talk is our flagship podcast, designed to fit perfectly into your busy life, bringing the latest insight, analysis, news and interviews to you, wherever you are.

IFA Talk Podcast - listen to the latest episode