Where to Put Your Cash Savings

Medical professionals in the UK often find themselves at a crossroads: should they prioritise cash savings accounts for security or explore investment opportunities for long-term wealth growth?

Of course, a combination approach to financial planning is best because both options provide benefits, and cash savings do provide peace of mind, especially in uncertain times, they may not be the most effective strategy for achieving long-term financial goals.

Dental & Medical Financial Services have been assisting doctors with their financial planning for over 30 years. Read on for more insight into the best ways to save your cash.
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This does not constitute advice and advice should be sought in all instances before acting on it. The Financial Conduct Authority does not regulate tax advice.
This article was approved by Best Practice IFA Group Limited on 4 December 2024.
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The State of Cash Savings

Currently, a massive £1.4 trillion sits in UK savings accounts, often referred to as “lazy” money, accruing minimal interest. This complacency can be detrimental, particularly as inflation erodes purchasing power.

For instance, if you saved £1,000 in an account yielding just 1% interest, but inflation averaged 2%, your real wealth would diminish over time. By the end of the year, your account balance might show £1,010, but the purchasing power of that amount would only be equivalent to £990 from the previous year.

The stark reality is that cash savings can struggle against inflation, especially over longer periods of time. Historical data illustrates that while cash may keep pace with inflation in the short term, investment options—especially stocks—have consistently outperformed cash over extended periods. Research from Schroders highlights that the chances of stocks beating inflation rise significantly over 20 years, reaching a definitive 100%, while cash only slightly improves its odds to 65%.

Financial Planning Strategies

For healthcare professionals contemplating where to invest cash from maturing fixed-term deposits, now is an opportune moment to consider market investments. Investment accounts such as Individual Savings Accounts (ISAs) and pensions offer tax-efficient vehicles for long-term growth, allowing you to shelter returns from income and capital gains tax.

Plus, diversifying your investment portfolio is essential. By spreading investments across various asset classes and sectors, you can mitigate risks associated with market downturns. Historical trends reveal that investors who remained committed during economic crises—like the Great Depression or the 2008 financial downturn—ultimately benefitted from significant recoveries, while those who liquidated their investments faced prolonged periods of stagnation.
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Consult a financial adviser for the best outcomes

While cash savings accounts offer a sense of security, they may not align with your long-term financial aspirations. However, by exploring investment opportunities and adopting a diversified portfolio strategy, healthcare professionals can better safeguard their financial future against inflation and achieve their wealth-building objectives.

For those ready to transition from cash to investments, consider discussing your options with a qualified financial adviser who can help build a financial plan with your risk profile and long-term goals in mind. Contact the experts at Dental & Medical Financial Services today to get started.

Free Financial Guide: Making the most of ISAs