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Cash - a safe bet or a risky business?

In Keren’s experience as an independent financial advisor, she has found that women generally hold more in cash savings and less in investments than men. This is because they tend to be more risk-averse and consider cash to be a safe bet. But is it really?

Consider one of her clients, Patricia. She is from Argentina, where the annual inflation rate for 2021 is currently 52%. Imagine it’s a Tuesday and with $200 pesos you bought 1kg of tomatoes. You go to the same store on Friday and now the same kg of tomatoes costs $300 pesos. Understandably, Patricia does not feel that holding savings in cash is a safe option.

In the UK, consumer price inflation is currently running at 3%. This means that if you spent £1,000 in August 2020, the same things would have cost you £1,030 in August 2021. According to the UK’s Money Saving Expert, the best instant access savings account will currently give you 0.65% interest.

If these figures remained the same over 5 years, this is what your £1,000 would look like:

This means that any cash you are holding would effectively be losing 12% in value over 5 years if inflation continues at 3% and savings interest rates remain at 0.65%. If you pay tax, the difference will be even greater, as savings income is taxable.

How do these numbers compare to your country? Does cash still feel like a safe option?

Cash can feel safer than investments because the value does not fluctuate like that of shares. If you invest in shares instead of cash, you need to be prepared to see the value of your portfolio drop sometimes and grow sometimes. It can feel a bit hair-raising!

As we are always warned, previous performance cannot be used to predict the future value of stock market investments, but from 1984-2019, the FTSE 100 performance over 5 year periods averaged at 8.92% – much higher than inflation. The worst 5-year period average gave just a 4.25% return, which is still higher than inflation. Investing in the stock market feels riskier than holding cash savings, but in the past, has enabled investors to increase the value of their savings above the rate of inflation.

How does this performance compare with the performance of shares on your country’s stock exchange/s?

One potential issue that people often do not consider with cash savings is the risk of the bank failing. When the UK’s Northern Rock Bank failed in 2007, many savers faced significant losses. Luckily, the UK government stepped in and nationalised the bank to protect them. The Financial Services Compensation Scheme now covers up to £85,000 of savings per person per institution covered by the scheme.

How does this compare with protections in your country? Are some of your savings unprotected?

If you are beginning to think that cash savings are a bit riskier than you had thought, the answer is not to rush out and convert all your cash into shares! Keren usually recommends keeping 6 months’ expenditure in cash for working clients and 12 months’ expenditure for retired clients. And shares are not the only option for spreading and reducing your risk. Other options include investing in property, currency, classic cars or fine art.

Consider what the best options are for you, and take advice from professionals where you need it. If you are based in Switzerland, Keren would be pleased to provide you with independent advice on all financial planning matters, starting with what is important to you. Contact her at

We are always keen to share stories from other women about their experiences of financial planning. Do you have a story to share about your investments that other women could learn from? If so, please contact Julia at or Keren at We will, of course, keep your identity confidential if you choose.

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