Cash as an Investment

by Arthur Childs, Chartered Financial Planner

We all use cash to fund our general living expenses, whether we actually handle paper money itself, or simply transfer our cash electronically.  However, how should we use cash as an investment and what are its limitations?

Some people think that there is no risk leaving money on deposit, but is this true? What about the risk of inflation currently running at 4.50% pa (Retail Prices Index to April 2007 National Statistics Online). Another important issue for cash investors is the security (ie the credit worthiness) of the bank or building society or other deposit taker.  Are you aware that there are limits to the amount that can be claimed from the Financial Services Compensation Scheme in the event of the failure of a UK regulated deposit taker?  The maximum amount that can be claimed is currently £31,700, so £100,000 on deposit in one account holds out the risk, however small that risk might be perceived to be, of a 68% loss. 

Do you have a simple way of checking whether you are getting a good deal from the money that you do hold on deposit?

Do you know why National Savings Pensioners Bonds may not be such a great idea for a basic rate tax payer?

A new section of our website now deals with the subject of cash as an investment. Our website also includes a regularly updated deposit account section under ‘offers’ which lists the best variable interest rates for deposit accounts and Mini Cash ISAs. Why not take a look and see what interest you may be missing out on?

Please note that this information does not constitute personal advice and should not be treated as a substitute for specific advice based on your circumstances.  If you are in any doubt as to whether an investment in cash is suitable for you, then you should discuss the matter with a suitably qualified independent financial adviser such as ourselves. If you would like to discuss how best to include an investment in cash into your investment portfolio, please ask your usual Arch adviser, telephone 0845 3700 661 or email enquiries@arch-fp.co.uk.

Unsubscribe: Click here if you no longer wish to receive issues of MoneyTalk from Arch Financial Planning Limited

Subscribe: If you have a colleague who would like to receive MoneyTalk please ask them to email us at subscribe@arch-fp.co.uk

Feedback: We hope you continue to benefit from this Arch service. Do please let us have your comments or feedback at anytime

Arch Financial Planning Limited, Arch House, Collins Court, 39 High Street, Cranleigh, Surrey GU6 8AS
Tel: 0845 3700 661, Fax: 0845 3700 662

AUTHORISED AND REGULATED BY THE FINANCIAL SERVICES AUTHORITY
This message is confidential and for use by the addressee only.  If you are not the intended recipient you must not use, disclose, distribute, copy, print, or rely on this message.  Please notify the sender by return email and then delete the message from your computer.  Arch Financial Planning Limited disclaims all liability of whatever kind (including for negligence) to anyone other than the intended recipient(s).  Arch Financial Planning Limited accepts no responsibility for changes made to this message after it was sent, nor for any loss or damage from receipt or use.  We have endeavoured to ensure that this email is virus free but we advise that, in keeping with good computing practice, the recipient should make his or her own checks.