Investing Insiders Weekly #20

Inflation is on the rise again: Are your savings keeping pace?

It’s back. Inflation – the rate at which prices rise – is once again in the headlines with the news that the UK is forecast to see the biggest rise in inflation of any of the powerful G7 group of nations this year. 

That’s worrying news for savers. Why? Because even though savings accounts are generally a safe way to hold spare money, there is one big danger to keeping money in cash savings: loss of purchase power. 

Think of purchase power this way: if you hold your life savings in an account that pays 3% interest, you might think of that as free money – 3% you’re ‘winning’ on top of your original amount. But in actual fact, you need that interest to keep up with rising prices (inflation). If inflation is rising at 4% per year, you’re actually worse off with your savings in an account that earns 3% interest. 

If you want your money to buy the same things tomorrow as it does today, the interest on your savings needs to be rising at the same rate as, or more than, inflation. Otherwise, it’s a loss of ‘purchase power’.

So what can you do when inflation rises and you’re a saver? Shop around! There are still accounts out there that will keep your money growing at a fast enough rate. 

Some are even offering significantly more than the inflation rate. That’s when you’re really winning! 

We’ve scoured the interest rates across dozens of UK savings accounts to bring you our round-up of the Best Cash Savings Accounts with the highest rates of interest.

Student debt: The £100k club no-one wants to join

New research by Royal London has revealed the number of graduates in more than £100k of student loan debt has jumped by a third this year.

One likely factor is the build-up of interest on old student loans, with some graduates finding the interest on their loan is building up faster than they can repay it. 

A graduate earning £50,000 per year, for example, paying back a £50,000 loan, might repay

£170 a month based on ‘Plan 2’ figures (Plan 2 loans were introduced for students starting in September 2012). 

But that loan could feasibly be racking up £283 per month in interest at the same time. 

And while student loan debt isn’t quite the same as credit card debt or a home loan, because it only needs to be repaid when the borrower is earning over a certain amount, having any kind of debt can take a psychological toll.

If you’re worried about existing student debt, start by getting to grips with the details. Establish which plan number you were signed up to, because key details such as the rate at which you make repayments, and when loans get written off vary according to the plan type. 

The UK government website is a good place to start. From there you can log in to your student loan account, discover repayment terms, and see what your balance is.

If you’re a current or upcoming student, and you’re worried about getting into too much debt, take a look at our Student Budgeting Tips.

TIP OF THE WEEK Salary Swap Pension Hack

If you’re earning £50,000 or more per year, you might be able to reduce the amount of income tax you pay through “salary sacrifice.”

(No, there aren’t any rituals involved 😂)

Salary sacrifice basically allows you to swap part of your salary for a workplace pension contribution. 

This reduces your overall annual salary, meaning you might pay less income tax. 

So, how does it work? Here’s a quick example:

⚠️ Lowering your salary could affect how much life insurance cover you’re eligible for, the size of mortgage you can borrow and your entitlement to statutory maternity pay and the State Pension.

So be sure you get professional advice before making the swap to make sure it’s suitable for your circumstances!

How to avoid the tax traps & keep more of your earnings

Once your annual salary passes the £50k mark, the tax office starts taking a bigger bite from your earnings. For every £1 you earn over £50,270, 40p is eaten up by income tax. 

A similar hike in tax happens at the £100k threshold. Although this time it’s not because you move into the top rate tax band (that happens at £125,140). 

It’s because your tax-free Personal Allowance shrinks at £100k, so you’ll be paying tax on more of your earnings. 

It’s known as the £100k tax trap!

There are ways to reduce your tax liability perfectly legally, however. 
Try out our new £100k tax trap calculator and read our guide on the best ways to keep more of your earnings.

Act NOW to avoid an energy bill shock this winter

Energy bills will rise by 2% (around £35 per year) for millions of households from 1 October! 📈

That’s because the energy price cap set by Ofgem (the energy regulator) is going up to £1,755 per year for a typical dual-fuel bill. 

The good news is that there are a couple of ways to avoid getting caught out: 

1. Submit a meter reading – this is especially important if you’re on a standard tariff and don’t have a smart meter. Get yours in before 1 October to avoid your September usage being charged at a higher rate. 

2. Switch to a fixed rate deal – a fixed rate energy deal could help you cut the cost of your energy and lock in a cheaper tariff before the new price cap kicks.

DEAL OF THE WEEK: Up to £2,000 Cashback from Fidelity

Fidelity is currently offering new customers between £200 and £2,000 cashback if they apply to transfer or invest a lump sum into a SIPP.  The offer ends 10 November 2025.

The cashback you receive is tiered and dependent on how much you transfer or invest into your SIPP.  

The catch: You’ll need to transfer or invest at least £35,000 to qualify for the minimum cashback amount of £200. This offer isn’t available if you transfer or contribute to the SIPP using an adviser or intermediary.

JARGON BUSTER: FINANCE TERMS EXPLAINED

Inflation: the rate at which the prices of goods and services we all need to buy increase over time. If your income doesn’t rise at the same rate as inflation, your money can no longer buy you as much.

Interest rate on savings: a reward for saving with your provider, paid as a percentage of your total savings amount.

G7 nations: a group of seven major advanced countries. The 7 nations are Canada, France, Germany, Italy, Japan, the United Kingdom and the United States.

Energy price cap: the maximum amount that suppliers can charge households for each unit of gas and electricity they use.