It is 10 years since the the Bank of England last raised interest rates with the base rate now at a record low 0.25 per cent.
And during this time, the cost of living has hit highs of 5.2 per cent, eroding the value of money.
The toxic combination has battered returns from traditional saving accounts.
It means that £15,000 saved in cash in 2007 would have earned an average of just £691, according to analysis by Fidelity.
On the other hand, Britain’s premier stock index has reached record highs.
The same £15,000 kept in the FTSE All-Share index would now be worth £25,270.
With rates set to remain low and inflation predicted to reach almost three per cent this year, savers have been urged to consider turning to investments to make a return.
The difference between cash and investment returns are too big for savers to ignore, according to Tom Stevenson, investment director for Personal Investing at Fidelity International.
He said: “I would be surprised to see any rate hike at all this year. Even when last year’s quarter point cut to 0.25 per cent is reversed, I would caution against assuming that the Bank is setting off on a more determined tightening path.
“Cash remains trash in today’s environment.
“With this in mind, anyone with savings still sitting in cash will continue to struggle to generate a real return.”
Of course investment values can go down, however savers can takes steps to help protect portfolios.
Spreading risk across a number of different types of investments, means returns in one area can help offset any poor performance in others.
And to reduce the risk of putting in cash at the market height, it can be a good idea to slowly drip feed money into portfolios.
Investors should look to shelter holdings from tax in a stocks and shares ISA, which can hold a mixture of bonds, equities and funds.
It is also important to make a note of charges and investment fees that can damage returns over the long term.
Look at annual and ongoing charges, as well as any exit fees charged by platforms.
It can be alarming when your investments are falling, but selling too early and locking in losses is a mistake that many investors make.
Make a rational assessment of value before selling up – stocks often sell-off and later recover.
Investors should look to have cash in holdings for a minimum of three to five years, which means that any market falls can be recovered over the long-term.
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