A family are wondering if they should interfere, to help their mum overcome her fear
I wouldn’t worry too much about a scenario like this, but the risk is not zero. Perhaps more pertinent to your situation are the various risks associated with your mother not being invested now. While the initial value of her bank savings should be safely retained if held in cash, the purchasing power of this money will diminish over time due to inflation, even if higher interest rates persist for another year or so.
You don’t say if your mother is working or not. If she is, she can boost her pension pot by up to this limit of £60,000 a year or by 100 per cent of her qualifying earnings, whichever is lower. If she is not working now, she can still contribute up to £2,880 a year and the government automatically adds £720 a year for a total of £3,600 a year.
It’s also important to remember that wealth that is held in a pension is currently exempt from inheritance tax should the holder pass away while funds remain in the pension. So beyond its income tax efficiency, a pension can also be a very useful inheritance tax planning tool and is typically the last pot that one wants to draw from if there are other sources of income. Isas, for example, are tax free to draw from but will count towards IHT if left within an estate.
Long-term returns from stock markets and bonds have historically – and often meaningfully – outperformed the returns from cash in savings accounts. Assets such as gold and other commodities, property and infrastructure can also do well from year to year. Considering stock markets more broadly, you can access the growth potential of companies from around the world, in developed and emerging markets.
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