Many people hold large amounts in cash because it feels safe. The balance stays the same, the risk feels low, and the money is always available. But what looks safe on the surface can quietly cost you more than you realise.
Your money isn’t standing still - prices are rising
Inflation increases the cost of everyday items over time. If the interest on your cash account doesn’t keep up, the real value of your money falls. You’re not losing pounds, but you are losing purchasing power.
A simple example
Imagine something that cost £7,176 in 2015. Today, the same item could cost around £10,000. Even if your cash earned interest, it’s unlikely to have kept up with that kind of rise.
This is why many people find their savings don’t stretch as far as they expected, even if the number in the account has grown slightly.
