Tuesday, 5 July 2011

Why I think too much cash is not good for growing your own.

My mate has £10,000 in a safe. It's been there since 2004.

He told me about it a few days ago. I was pleased he'd managed to amass this amount but I was very surprised that he'd chosen to stick it in a safe.

We debated and he pointed out that my stockmarket investments have made losses and gains, depending on when you checked them.

I pointed out that he would need £11645.31 today in order to buy the same goods and services that 10 grand would have bought him six and a half years ago.

Check out the Bank of England Inflation calculator here.

Properly invested money will, generally, grow in value. Even during the bad periods, it has the potential to grow. His money, on the other hand, is wasting away like a withering vine.

Be careful that you don't confuse true value (buying power) with the face value of cash.