How to Protect Your Wealth from Inflation Over Time

What Inflation Really Means for Your Wealth

Inflation is often described as a “silent thief,” and that’s not far from the truth. While it rarely makes headlines unless it spikes, its impact on your spending power can be profound – especially over long periods.

Over the past 20 years, inflation in the UK has averaged around 2.8% per year. That may sound manageable, but the reality is sobering: more than 40% of your spending power could have vanished in that time.

This means that if you’re holding a large portion of your wealth in cash or low-return assets, you may be losing ground – even if the account balance on your statement isn’t falling.

Key Insights

🔥 Inflation erodes your spending power – Even modest inflation adds up significantly over time.

📉 Cash is not risk-free – Keeping money idle can quietly shrink your wealth.

📈 Global equities can deliver inflation-beating returns – But patience is essential.

🕰️ Time in the market matters – Long-term investing increases your odds of success.

Why Cash Alone Won’t Cut It

Many people view cash as a “safe” option. And in the short term, it may feel that way. But when inflation is factored in, cash can be one of the riskiest places to leave your money for the long haul.

Consider this: if inflation averages at 2.8% annually, £100,000 in today’s terms will be worth the equivalent of just over £49,165 in 25 years. This means that your money would lose more than half its value over that time if left idle. That’s the cost of doing nothing – or not doing enough.

How Global Equities Can Help You Fight Inflation

The good news is, there is a way to protect – and even grow – your wealth despite inflation. Over the last two decades, including major events like the global financial crisis of 2007–2009 and the downturn during the Covid pandemic in 2020, global equities have delivered positive real returns.

This means that even after accounting for inflation, long-term investors in equities have seen their purchasing power increase.

Equities represent ownership in businesses around the world – businesses that can grow, innovate, raise prices, and adapt to changing economic environments. Over time, despite the ups and downs along the way, this ability tends to outpace the drag of inflation.

What This Means for Your Financial Plan

Your wealth isn’t just about what you’ve accumulated – it’s about what it enables you to do. Whether that’s retiring comfortably, helping loved ones, giving to causes, or simply maintaining your lifestyle, inflation is a threat to all of these goals if it’s not addressed.

Inflation is an unavoidable part of the economic landscape, but that doesn’t mean you’re powerless against it. With a carefully constructed, globally diversified portfolio and a long-term mindset, you can protect and grow your wealth – even in the face of rising prices.

If you’re concerned about how inflation may affect your future lifestyle or retirement plans, we’d be happy to help. Let’s explore how your investment strategy can evolve to meet the challenges of tomorrow, while staying grounded in your goals today.

For a more detailed discussion on this topic, please feel free to contact us. Our team are always available to answer your questions and to help you with any of your financial planning needs. Here’s what we offer: A cup of coffee… and a second opinion.

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