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A Long Time Coming - 03/03/2023

A rare opportunity to inflation proof the value of your deposit capital – via Barclays Bank

It has been well publicised that there have been dramatic increases in the cost of living, with the prices of goods and services rising faster than household income, resulting in a fall in real incomes. Whilst many around the globe have felt this struggle, few developed countries have been harder hit than the UK, seeing inflation over the last twelve months stubbornly staying in double digits. Clearly the value of deposits held even in the highest interest-bearing bank account are losing spending power day by day. A situation that has been the case for almost 15 years where leaving money in a ‘safe haven’ has effectively guaranteed losses in real terms.

Consumer Price Index (CPI),the Government’s chosen measure of inflation has increased 18.9% over the last four years, however the more traditional measure of inflation Retail Price Index (RPI)_has increased 27.3%. The UK RPI All Items reflects the prices of goods and services calculated by the Office for National Statistics on a monthly basis and is generally higher than CPI. Over the twelve months to January CPI increased by 10.1% but RPI rose 13.4%.

Whilst we are all hoping that inflation falls significantly, the latest deposit plan from iDAD is a deposit plan that can secure the real value of your savings by linking their value to the rise in RPI over four years. So even as inflation falls as expected, as long as there is inflation in the economy, again expected, the deposit will generate equivalent interest.

iDAD’s Barclays Inflation Linked Deposit Plan will pay interest at maturity after four years equivalent to 100% of the rise in UK RPI between January 2023 and January 2027. There is also opportunity for an additional 2% interest at the end of term if the FTSE 100 Index is not lower over the investment period. As a deposit, the plan is designed to return capital in full at maturity so in the very unlikely event that we have a prolonged period of deflation to the extent that the Index is lower after four years full capital should still be returned – subject of course to the continued solvency of Barclays Bank (standard FSCS protection limits of £85,000 per eligible person apply).

The rate of annual inflation increases is likely to fall but for many savers this solution may be just what the doctor ordered to protect their deposit capital against the potential ravages of inflation over the next four years.

If you would like to see full details of iDAD Barclays Inflation Linked Deposit Plan April 2023, please click here.

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