Why bother saving?

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Why bother saving?
With bank accounts actually losing you money, we look at other ways to put your cash to work.



This week’s inflation figures painted a bleak picture for those of us who do the “responsible thing” and put money aside for a rainy day. With CPI (the Government’s preferred measure of rising prices) at 3.2pc, and RPI (which is closer to the level of price increases that most of us really feel) at 4.5pc, any money you have tucked away in a savings account is losing its value by the day.

Figures calculated for The Daily Telegraph show that if you have £1,000 in an average instant-access account and inflation stays where it is, it will be worth £217 less in five years time if you are a higher rate taxpayer. Those who pay basic rate tax would lose £208 on their savings, while even the non-taxpayer loses just under £200 over that five-year period for every £1,000 saved.

Small wonder, then that the household savings ratio has dropped sharply. This measure shows the share of disposable income put into savings accounts, and is traditionally seen as a measure of the health of family finances. However, we also tend to put more money away when we are panicking about the economy, and less when we do not see the point in doing so.

Source/Read Full article:
http://www.telegraph.co.uk/finance/personalfinance/savings/8147695/Why-bother-saving.html