Cash is a great fluid asset to have however it does have the odd drawback, one of which is the effect that inflation has on its worth. Inflation causes the price of services and goods to go up so you have to pay more for them. Unfortunately it is very rare for the value of money to increase at the same rate and so you end up getting less for your money. The things you can buy today for £100 will cost much more 10 years from now but you’ll still have your £100.

This means that if you choose to save your money in even the best savings accounts with the top interest rates you’ll be lucky to keep up with the rate of inflation. So why do we bother saving if it isn’t going to pay for what we want in the future?

Experts say that you can save for a maximum of five years before the rate of inflation overtakes the interest that you’re making on your savings. So, if you’re saving for a major purchase or maybe for retirement it would be more beneficial to invest your money – as you normally get better returns than from saving alone. Investing is risky though and you may feel much more comfortable keeping your money where it is and foregoing a little bit to inflation in the long run.

Saying this, at the present time some of the top banks and building societies are offering interest rates on their savings accounts that are marginally higher than the current rate of inflation. This means that even though the prices of services and goods are continuing to increase each year, the interest that you get from your savings outweighs this increase. For this reason, now is a great time to open a high interest savings account and put in it as much as you can over the coming years. Nobody knows when the economic climate is going to change so that the rate of inflation shoots back up but while it is quite low you should take full advantage of it.

The rate of inflation tends to change from month to month and it has begun to creep up again since the start of 2009. This means the price of food, petrol and other goods are set to increase and again you’ll start getting less for your money. So make the most of your savings account and use the interest to pay the difference – then you won’t end up paying any more for your shopping than you need to and you don’t dip into your savings either.