My wife, Sian, recently celebrated her 40th birthday and whilst, with that, came the dread that it was my turn next, conducting some research into the year of her birth for my speech, I unearthed some scary facts which I’ll share with you here:

• In 1970, a loaf of bread cost 9p and the average weekly wage was around £32.

• You could expect to pay £4,975 for a house.

• The Range Rover, which was launched in 1970, could have been yours for £1,998.

• The Mini cost around £600.

• A trip for two to the cinema cost less than 90p.

• A bottle of whisky cost £2.69 back then and a pint of lager in your local was 20p.

• Cigarettes were 20p for 20.

How’s that for the power of inflation? Inflation is one of those things that, from month-to-month or year-to-year you hardly notice but, over time, can severely damage your wealth. Although cash in the bank (or under the mattress) feels safe, you will ultimately pay for that safety through inflation. This is not to say that you shouldn’t hold any cash but, rather, it is a matter of accepting that any asset holds a risk and, before doing anything with your capital, it is vitally important to identify those risks and determine whether you are prepared to accept them. If the idea of doing nothing with your cash means that you end up losing 2% – 3% a year in real terms (as you are at the moment) then there are thousands of different investment solutions that you can consider as a means of putting cash to work in a relatively safe environment. Contact the office if you would like to discuss matters further.

Although Mervyn King, the Bank of England’s governor, is likely to be disappointed that the rate has remained outside the government’s 1%-3% tolerance range for another month, it remains unlikely that interest rates will be increased for the time being, Mr. King blaming temporary factors including the return of VAT in January to 17.5%, past rises in oil prices and higher import prices as a result of the depreciation in the pound since the middle of 2007.

He also said “there remains a significant probability that I will need to write further open letters to you in the coming months”. VAT is set to rise again, to 20%, in January next year, giving a further boost to headline inflation figures.

So what? Well, for savers, this is all bad news.

With interest rates at record lows, the real value of savings is being steadily weakened.

“Inflation is a stealthy enemy that quietly erodes the spending power of a saver’s hard-earned nest egg,” according to Darren Cook of the financial information service Moneyfacts.

For expatriates, finding an account that pays 3.1% ensures that cash maintains its buying power. In the UK, a basic rate taxpayer needs to find an account paying 3.88%, while a higher rate tax payer needs to find an account offering 5.17%, in order to maintain the real value of their savings.

However, according to Moneyfacts, the average instant access savings rate is still at rock bottom at a rate of only 0.77%. Indeed, only 91 out of a possible 1,020 accounts allow a basic rate tax payer to just break even at 3.88%.

In other words, the average savings pot of a cash saver is being eroded by at least 2% per annum. That is providing more than enough incentive for investors to seek out low risk, interest bearing alternatives and, if you fall into the same camp, contact the office today.