Russell’s view – March 2026

With Easter just around the corner, I’d like to talk about chocolate.

In fact, one particular type of chocolate: the Freddo bar.

Those of a certain age may remember this piece of confectionery with great fondness – not so much for its taste, which was, well, chocolatey, but more for its value for money.

Freddos were cheap.

So cheap in fact that right up until 2006 you could buy one for as little as 10p.

From 10p to £1: how inflation reduces your spending power

Sadly those days are long gone.

A Freddo these days will set you back around 35p and, in some cases, as much as £1 a bar.

Even with increases in pocket money, that chocolate hit is no longer as attainable as it once was.

The plight of the once-cheap Freddo illustrates an important point about the value of money: it never stays the same.

Inflation and why it matters

Inflation is the silent assassin of your wealth, affecting everything from buying a once in a lifetime holiday to grabbing a sweet snack.

While the rate of inflation fluctuates, it rarely if ever recedes. Just like the oceans continually erode the coastline, inflation does the same to cash in bank accounts.

The effect on your cash over time really adds up – in a bad way. This picture tells the real story:

It’s a sobering illustration of the power of inflation – even more so when you realise that this is inflation at just 2% rather than the 3% it was in January, let alone the 10%+ it hit in January 2023.

Is cash really king? The hidden risk of holding savings in cash

If you still think that ‘cash is king’ or that your money is always ‘safe’ in cash, you may want to think again.

The unfortunate fact of the matter is that interest rates on bank or building society deposits rarely keep pace with inflation.

Your money may be ‘safe’ in a savings account (providing you have deposits of £120,000 or less and your account provider is covered by the FSCS deposit guarantee). However, the value that it represents is not.

Building up an ‘emergency’ fund of savings which you can quickly and easily access is a great idea, but putting all your ‘rainy day’ money in such an account risks losing some of the value of what you have put aside, particularly over a longer timescale.

Cash vs investments: understanding the balance of risk

We in the financial services sector rightly have to warn of the risk involved in investing – that returns are not guaranteed, the value of what people invest can go down as well as up and people may not get back the full amount they invest.

However, there is also a type of risk involved in placing all your spare funds in a savings account: you may find your money is not worth as much as you had thought and, with tax rates on interest from non-ISA savings accounts increasing, you may not earn as much in interest as you had anticipated.

You may also miss out on the additional returns which could have come with investing over the long term – while past performance does not mean the same will be repeated in the future, it remains a fact that over a long period of time, returns from equities have typically outperformed cash by several multiples.

Beating inflation: taking a balanced approach to saving and investing

Financial decisions should always take into account your individual circumstances, but taking a balanced approach to saving and investing could help to mitigate both types of risk involved.

And you could end up being able to buy a Freddo or two.

Investing for the future: matching your goals with your risk appetite

It’s easy to find out more about how investing has the potential to improve your financial future, what products are out there and how to match your goals with your appetite for risk.

Get in touch with a Fairstone adviser to discover more.

Disclaimer: This article is for informational purposes only and does not constitute financial, tax, or legal advice. Tax treatment depends on individual circumstances and may change. The value of investments can go down as well as up and you may not get back the full amount you invested. Past performance is also not a reliable indicator of future performance. Always seek professional advice before making financial decisions.