Britons have been urged to have a look at long-term investments as a solution to develop their financial savings and beat excessive ranges of inflation.

Rob Burgeman, funding supervisor at wealth supervisor RBC Brewin Dolphin, warned the worth of money can decline considerably with present excessive ranges of inflation, slashing the buying energy of money.

He mentioned: “Inflation results in the ‘real’ value of your money declining as price rises erode its purchasing power.

“A thousand pounds of cash would have dropped in value to £858.73 after five years, with real inflation at three percent. But with real inflation at 10 percent, the £1000 would only be worth £590.40 after five years.

“For savings over and above your emergency fund, it’s really important to look for ways to mitigate the impact of inflation over time.

READ MORE: Nationwide Building Society increases rates on all variable rate accounts

“Although the stock market is volatile and investing comes with risks, history shows that over long periods it tends to perform more strongly than cash and above the rate of inflation.”

The Bank of England has continually increased the base rate over the previous 12 months in efforts to curb rising inflation, with the bottom price at the moment at 4.25 %.

Many banks and constructing societies have increased the rates on their variable charges accounts because of this.

Mr Burgeman mentioned though rising rates of interest are typically negatively have an effect on investments and inventory costs, the case for long-term investing stays sturdy.

The wealth professional mentioned: “The economy tends to go through different interest rate cycles – sometimes they are relatively low and sometimes they are relatively high – and the timing of these cycles can vary from one country to another.

“In addition, different sectors perform differently in changing economic conditions. When the economy is doing well, very growth-orientated sectors – housebuilders, for example – tend to do very well, while when interest rates are rising, more defensive areas – e.g. like pharmaceuticals – do much better.

“This is why it’s important to diversify your portfolio, not just by asset class but also by region and sector.”

Mr Burgeman urged individuals to pay attention to their long-term objectives when planning their investments.

He mentioned: “Rather than basing your investment decisions on interest rates – which are just one factor affecting performance – your best bet is to focus on your long-term goals and ensure your portfolio is managed by an expert with experience of different economic cycles.

“Good quality financial advice will also help you to navigate through the often stormy waters of the world of investment.

“Interest rates and what you can earn on deposit are important things, of course, but what is really important is that your capital keeps pace with inflation over time and is worth what you need it.”

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