How much of your wealth do you hold in cash? Whilst it’s often viewed as the ‘safe’ option, there is a danger of your assets losing value in the long term and holding too much in cash too.

It’s easy to see why people choose to hold large sums in cash. As it’s something we handle every day, whether physically or digitally, it can seem more tangible than other assets. The Financial Services Compensation Scheme (FSCS) also protects up to £85,000 should a bank or building society fail per individual. The combination of these factors may mean you view cash as the most appropriate way to hold wealth.

However, cash does lose value and this is particularly true in the current low-interest climate.

Interest rates have been at a historic low for more than a decade following the 2008 financial crisis. The Bank of England has recently cut rates even further. In March, as it became apparent Covid-19 would have an economic impact, the central bank slashed the base interest rate to just 0.1%, the lowest level on record.

Whilst potentially good news for borrowers, the rate cut isn’t positive for savers. It means your savings likely aren’t going to deliver the returns they once were, especially if you compare the current rates to the pre-2008 ones. Before the financial crisis, you could expect to enjoy interest rates of around 5%.

At first glance, lower interest rates can seem frustrating but don’t mean there’s any need to change how you hold assets. After all, your money is secure and whilst it might not be growing very fast, it’s not going down, right? This is true if you’re just looking at the amount that’s in your account. However, in real terms, the value of your savings will be falling.

Inflation: Affecting the value of savings

The reason the value of cash savings falls in real terms is inflation. Each year the cost of living rises and if interest rates fail to keep pace with this, your savings are gradually able to purchase less and less.

The Consumer Price Inflation (CPI), one of the measures for calculating inflation, for April 2020 suggests the inflation rate was 0.9%. This figure was down on long-term averages due to coronavirus restrictions, however, it’s still higher than the base interest rate. As a result, the spending power of cash savings will have fallen.

Year-to-year, the impact of inflation can seem relatively small. Yet, when you look at the impact over a longer period, it highlights the danger of holding too much in cash.

Let’s say you placed £30,000 in a savings account in 2000. Following almost two decades of average inflation of 2.8% a year, your savings in 2019 would need to be £50,876.75 to boast the same spending power. With low-interest rates for more than half of this period, it’s unlikely a typical savings account would help you bridge this gap.

When is cash right?

Whilst inflation does affect the spending power of cash savings, there are times when it’s appropriate.

If you need ready access to savings cash accounts are often suitable, for example, if you have an emergency fund. When you’re saving for short-term goals (those less than five years), a savings account should also be considered. Over short saving periods, inflation won’t have as much of an impact and can preserve your wealth for when you need it.

However, when setting money aside for long-term goals, investing may be a better option that’s worth considering.

Investing: When should it be considered?

Investing savings means you have an opportunity to beat the pace of inflation with returns, therefore, preserving or growing your spending power.

However, investment returns can’t be guaranteed and short-term volatility can reduce values. For this reason, investing as an alternative to cash should only be considered if your goals are more than five years away. This provides an opportunity for investments to recover from potential dips in the market.

If you’d like to talk to one of our financial planners about the balance of your assets, please contact us. Our goal is to align aspirations with financial decisions, helping you to strike the right balance.

Please note: The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

The State Pension is an essential part of retirement planning and provides a foundation to build on. Whilst the basics are simple, it can be far more complex to understand what you’re entitled to and when than you’d think at first glance.

Our Complete Guide to the State Pension is designed to help you figure out how the State Pension will support your retirement goals alongside other income. From how the State Pension age is changing and when you’ll receive it to what the triple lock means for your future income, we look at the crucial things you need to know.

If your retirement date is approaching, taking some time to read our guide and understand the State Pension can help ensure your finances are in order. Click here to grab your free copy of the guide.

We are here to help answer your questions. Get in touch with one of the Ashworth Financial Planning team to start planning your retirement.

Sadly, the market news for April continues to be pessimistic as economies around the world continue to grapple with the impact of Covid-19. The good news is that some of the short-term volatility seen in March has calmed. However, when looking ahead for the next few months and beyond, there’s still a lot of uncertainty.

With countries in Europe and further afield in lockdown for much of April, it shouldn’t come as a surprise that recession fears continue. The World Trade Organisation suggests world trade could shrink by 30% in 2020, a bigger drop than the one that followed the banking crisis in 2008. The International Monetary Fund has also warned the world faces the greatest recession since the 1930s. The organisation now expects that global economy to shrink by 3% in 2020, rather than the 3.3% growth predicted at the beginning of the year.

As of the end of April, governments are looking at ways to begin lifting lockdown measures in many countries. How countries respond in the following weeks could give a better indication of what’s to come for the rest of 2020.

UK

The headline figures from the UK highlight how many businesses are struggling to continue operations amid the lockdown restrictions.

Figures from the Office for National Statistics revealed that one in four firms have temporarily closed amid the coronavirus pandemic. Of those firms still operating, many are using the government scheme to furlough staff, with the government paying up to 80% of wages. The scheme is due to close at the end of June but could be extended.

In a bid to support businesses getting back on their feet once restrictions are lifted, Chancellor Rishi Sunak unveiled the Bound Back Loan Scheme, which will help SMEs borrow between £2,000 and £50,000. The government will guarantee 100% of the loan.

The UK composite PMI slumped to just 12.9 in April, down from 36 in March. Anything below 50 indicates a contraction and the latest figure is worse than even pessimistic forecasts expected. Other readings show:

• UK factories cut jobs at their fastest pace since 2009 after both output and new orders fell, according to Markit
• Construction activity fell at its steepest pace since 2009, with an IHS Markit reading of 39.3 in March, down from 46

With the travel sector among the hardest hit, airlines have been lobbying the government. There has been growing pressure to bail out Virgin Atlantic, and Airbus and Rolls-Royce are among those calling for greater support.

As the vast majority of shops are shut, retail is another sector that’s suffering due to the restrictions. According to Springboard, UK retail footfall fell sharply by over 80% in the last week of March. Focusing on individual companies, Debenhams, which has been struggling for some time, filed for administration. Well-known high street brands Oasis and Warehouse also collapsed into administration in April.

Europe

The picture across Europe is broadly similar to that in the UK, with businesses struggling and fears of a deep recession growing.

Germany, often seen as the stalwart of the continent, is expected to see GDP shrink by 9.8% in the second quarter. This would be the biggest decline since records began in 1970. With this in mind, it’s not surprising that business confidence in the country is falling. The monthly IFO survey slumped to 74.3 from 85.9, a record low and the biggest monthly fall on record.

Looking at the eurozone as a whole, the PMI data indicates a sharp contraction, similar to the one experienced in the UK. The indicator hit an all-time low of 13.5 in April, down from a prior record low of 29.7 in March.

Once again, the airline industry has been one of the hardest hit in Europe. Iata, the European industry body, has stated that 90% of flights in Europe have been cut, placing 25 million aviation jobs at risk. One of the challenges facing the industry is handling refunds for cancelled flights. The body estimates airlines have £28 billion in tickets that are eligible for refunds.

US

One of the statistics from the US highlighting the situation is the unemployment figure. As jobless claims increased to exceed six million, unemployment reached 4.4%. With the Trump administration often using employment figures to indicate success, it comes as a blow. As restrictions start to be lifted in the US, it’s hoped the job market will begin to recover but how long it will take remains to be seen.

Mimicking other economies, US factory production also slumped. According to Markit, last month experienced the fastest rate of decline since the 2008 financial crisis a decade ago.

Asia

As Asia was the first area to be hit by coronavirus and lift lockdown restrictions, the region could indicate how other economies will fare in the coming weeks and months.

Trade data from China shows tentative signs of recovery. The figures for March show exports fell 6.6% and imports shrank by 0.9% year-on-year. Whilst still in decline, it’s a marked recovery when compared to January and February, providing some light at the end of the tunnel.

In a bid to get the economy moving, China announced it was slashing the amount of cash SME banks have to hold in reserve. It’s hoped this move will pump more liquidity into the economy and release around 400 billion yuan (£46 billion) into the market.

Japan has also announced a stimulus package worth 108 trillion yen ( £811 billion) in cash payouts to households and small businesses, as well as deferred social security and tax payments.

Whilst the market news paints a gloomy and uncertain picture, it’s important to remember that you’ve invested with a long-term goal in mind. Portfolios have been stress-tested and chosen in line with your risk profile and aspirations. If you have any concerns about your investments, please get in touch.

Please note: The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Restrictions on travel and concerns about the coronavirus pandemic may have affected your holiday plans for the summer months. There’s been a lot of contradictory information about what you’re entitled to and if you must cancel. So, we take a look at what your rights are and what your next steps should be if you’re affected.

Most people with travel plans in the next few months have had to abandon them. The Foreign Office currently advises against all non-essential travel, whether you’d been planning to visit a destination in the UK or abroad. On top of this, several countries have also, in effect, closed their borders and have stringent restrictions in place.

Even if the borders are open at your chosen destination, it’s likely restrictions and social distancing measures are still in place. It may mean that whilst you’d be able to get there, the activities you’d been looking forward to are no longer possible.

If you’ve yet to book a summer holiday but had hoped to, it’s strongly advised that you delay for a few months whilst the uncertainty remains.

So, if you already have a holiday booked, are you entitled to a refund? This will depend on how you’ve booked your holiday, where you’d planned to go and the travel insurance you’ve taken out.

Package holidays

If you booked a package holiday, you are entitled to a refund under current rules if it’s cancelled due to coronavirus. However, the Travel Association ABTA is calling on the government to make temporary changes as it argues the protection wasn’t designed to cope with current demands.

Whilst you should be issued a refund if your package holiday has been cancelled due to coronavirus, some consumers are finding they’re being refused. This is because, in the wake of thousands of holidaymakers asking for refunds, many companies are going to struggle. They may offer you a voucher or credit note instead. You don’t have to accept this; you’re legally entitled to a refund if you want it.

Keep in mind that some firms aren’t cancelling holidays far in advance. If your holiday isn’t for a few months, you’ll likely have to wait to see how the situation develops before a travel company will issue a refund. Some firms are cancelling holidays just three weeks in advance.

Flights

Flights are a little more complicated and will depend on the airline.

The good news is that all flights, on any airline from an EU country, as well as Iceland, Norway, Switzerland and the UK, and any flights on any EU carrier from any airport are liable for a refund. If this applies to you, contact the carrier directly, to start a claim. Some firms are dealing with this better than others, but delays in responses and getting through to a customer service team should be anticipated.

As with package holidays, some airlines that should be offering refunds under the EU rules are refusing to give them or insisting customers accept vouchers. Again, you are entitled to a refund by law.

Outside of the EU, refunds will likely depend on the individual airline and travel agent’s, so check their terms and conditions and get in touch.

Accommodation

If your hotel has closed and is unable to deliver the service promised, you’ll be entitled to a refund.

However, if you need to cancel accommodation due to not being able to reach the destination or for other reasons, a refund will be reliant on the goodwill of the hotel or website you have booked with. Many major hotel chains and booking platforms, such as Booking.com and Airbnb, have waivered their cancellation fees but there’s no obligation to do so.

Travel insurance

Finally, if you already had travel insurance in place before the coronavirus pandemic, you should be protected if you’re acting in line with advice given by the Foreign Office. Be sure to check what your individual policy covers and seek a refund from providers first. However, as a last port of call, travel insurance may cover the costs that can’t be refunded, this may also include the costs of transfers and excursions. If your travel operator tells you to claim on insurance, ask for this in writing.

If you don’t have travel insurance, it’s too late to get a policy that will cover you for coronavirus-related claims as providers have updated their terms and conditions.

Your next steps

If your holiday is being cancelled or you’d like to cancel it, your first step should be to get in touch with the providers. Many travel companies are offering the opportunity to postpone trips and are not taking bookings until later in the year or until 2021 in some cases. Speaking to them directly can help you understand what your options are.

However, this may be easier said than done. Unsurprisingly, customer service teams are dealing with large numbers of enquiries, whilst also managing with fewer staff due to social distancing measures. So, expect to be waiting a while for a response, whether you call or email. Many companies are working through the bookings in date order, so those with holidays in a few months may be forced to wait several weeks whilst the situation is assessed.

If you don’t have much luck with the provider, then contact your travel insurance company. Again, expect long delays before your query is resolved.

Chargeback also offers an alternative solution if you paid for parts of your holiday by credit card. Paying by credit card gives you added legal protection if the company you’re buying from doesn’t deliver what’s promised, in this case, a holiday. Section 75 of the Consumer Credit Act covers goods or a holiday costing over £100 and up to £30,000. You don’t need to pay the full price by credit card, paying the deposit is enough to get your legal protection.

To receive a chargeback, you should try to contact the travel company first. If they don’t respond or refuse a refund, write to your credit card company, stating what you bought, along with proof of purchase, and that you’d like to refund the purchase price into your credit card account.

Hoping to come out of lockdown with new skills? Why not try your hand at mastering new cooking skills and recipes? Not only is it an opportunity to pass the time, but you’ll also get to dig into delicious plates of food now and in the future. If you’re looking for inspiration in the kitchen, we’ve got seven challenges to set yourself during the lockdown period.

1. Make pasta from scratch

Pasta is one of the staples of our cupboard, and one of the items that quickly disappeared from supermarket shelves a few weeks ago. Whilst the shortage of pasta may no longer be an issue, it’s still worth turning your hand to make it from scratch.

It’s far simpler than you might imagine and all you need to get started are eggs and flour. You don’t even need a pasta roller, a standard rolling pin and a bit of elbow grease can work just as well to get the pasta thin enough. Once you’ve got your dough, you can start with the basics like cutting strips to create tagliatelle or experiment with tasty ravioli fillings.

2. Create a delicious sauce

Any fan of MasterChef knows that a sauce can make or break a dish. Whilst an often-overlooked part of a dish when it comes to home cooking, a sauce should be packed with flavour and bring all the different ingredients on the plate together. With more time on your hands, now is the perfect time to create a delicious sauce if you’re used to reaching for a jar instead.

Pick out a dish that you enjoy eating and focus on making a sauce with that in mind. There are thousands of recipes online to experiment, adapt and blend until you find the one that’s perfect for your taste buds.

3. Craft a vegetarian dish

If meat typically features in your food every day, why not set a challenge to create a delicious meat-free dish? Vegetarianism has been growing in popularity and that means there’s a huge range of ingredients and recipes to choose from. Gone are the days of bland and dull dishes, meat-free plates can be just as tasty and offer plenty to experiment with.

When looking for meat-substitutes, tofu is one of the most commonly used. But don’t settle for that if it doesn’t appeal to you. Chefs and home cooks have been using a variety of ingredients you can take inspiration from, including jackfruit, halloumi and lentils.

4. Check out recipes from celebrity chefs and restaurants

With restaurants closing their doors, many have been providing recipes online so fans can make their favourite dishes at home. If there’s an eatery that you’ve been missing during the lockdown period, it’s worth checking out if they’ve posted any recipes for you to try. Among the high street chains doing so have been Pret, Pizza Express and Wagamama.

Celebrity chefs and award-winning restaurants have been getting in on the action too. A search online will bring up recipes from the likes of Marcus Wareing, Georges Blanc, and Julia Komp. It’s a great way to step out of your comfort zone and learn some new skills too.

5. Try a different cuisine

Travel and going out to eat might not be on the cards just yet, but that doesn’t mean you can’t try new foods from around the world. If you’re used to sticking to a few tried and tested recipes, making cooking up dishes from around the world can mean learning new skills. You might just find a favourite new dishes that will regularly make it to your table too.

You can be as adventurous as you want. Whether it’s trying a new dish from Italy that’s similar to existing family favourites or researching dishes from cuisines we don’t eat as often here, from Peru to Korea, it could really spice up your usual menu.

6. Find a signature bake

Don’t forget about dessert either. If you’ve got a sweet tooth, working through different baking recipes to perfect one is a great way to spend your time in lockdown. Once you’ve found a recipe you love, work on perfecting the skills and getting it just right. With a signature bake in your repertoire, you’ll be able to whip it up for special occasions or simply when you want a treat. We’re sure it’s something family and friends will appreciate and look forward to as well.

At times we all feel stressed and anxious. Amid the current circumstances, you may feel more stressed than usual and not able to access your usual way of unwinding, whether it was hitting the gym or meeting up with friends. Mindfulness can help you feel calmer and better deal with the challenges of the day.

Mindfulness has become something of a buzzword recently and you’d no doubt heard of the term. But what does it actually mean? It’s a technique that focuses on being present in the moment without judging anything. It has links to Buddhism and meditation, but you don’t have to be spiritual to benefit from mindfulness.

Among the aims of mindfulness are helping you be more self-aware and feel calmer. With uncertainty over the pandemic, it’s not surprising that more people have concerns about their daily life. Making mindfulness part of your routine can help improve day-to-day wellbeing now and in the future.

How does mindfulness help ease stress?

When we’re stressed is often down to things that are outside of our control or concerns that haven’t yet materialised. Mindfulness is about focussing on the present and what you’re feeling now. Mindfulness can help you reduce stress by pulling our focus away from those areas that may be causing concern.

There are plenty of mindful activities to try too, so you’re able to find something that suits you. Meditation is one exercise that often springs to mind when thinking about mindfulness. But if you prefer to keep active, yoga may be better suited and those that enjoy getting creative can find colouring or other artistic projects just as relaxing.

5 tips for practising mindfulness

1. Switch off the electronics

Electronics provide numerous distractions. If you’re someone that is always looking at your phone or has music playing in the background, mindfulness exercises allow you to put down electronics for a short period. With the opportunity to connect with people at our fingertips, it’s not surprising that it can be difficult to focus on what’s happening now in your space only. Taking some time away from gadgets, even if it’s just five minutes, could be just what you need.

2. Start small when it comes to meditation  

If you’re not used to it, you can get frustrated with mediation. Perhaps you’re annoyed at yourself because your thoughts keep drifting to worries or you can’t sit still. But it’s something that defeats the object of mindfulness! Start small when it comes to meditation, even just a few minutes clearing your mind can help you reset. Don’t worry if your thoughts drift either, it’s natural. Instead, acknowledge them, being mindful of why they’re coming to your attention, and try to let go.

3. Focus on what’s happening now

If you’re typically a multi-tasker, mindfulness can help slow you down in a good way. Even when we’re trying to focus on a project at hand, it’s easy to slip into thinking about past experiences and worrying about what the future will bring. Mindfulness aims to bring you back to the present and allow you to focus on what’s happening now. It’s a step that can help shut out concerns and worries that may not be useful when you look at the task objectively.

4. Focus on the positive and practice gratitude

Part of mindfulness is being grateful for what you already have. Amid hectic lifestyles, it can be easy to overlook the positive things that are already in your life, both big and small. Taking some time to think about them can deliver more confidence, improve your mood and allow you to focus on priorities. Some people prefer to write down what they’re grateful for, like a journal, but just pausing from time to time to appreciate the good things in life can be just as effective.

5. Enjoy just doing ‘nothing’

Finally, enjoy the time you set aside for being mindful. In our day-to-day lives, we’re often busy and focused on numerous things at once. Some people can feel guilty when they’re doing ‘nothing’, but sitting down and just being can be just as useful. Even if it’s just for a few minutes, it can provide you some time to focus on yourself and rest. Rather than seeing meditation or mindfulness activities as a waste of time, enjoy the feeling to get the most out of it.