Tax and inflation ignored by savers

31 January 2005
Two in every three savers are not aware of the effects of inflation and tax on their savings income, according to a new report.

National Savings and Investments found in its study that this situation has barely improved since last year's report.

It found that the number of people taking tax into account is especially low.

Only one person in three said they considered tax when choosing an investment - fewer than in 2004.

Moreover, 64 per cent said they do not take inflation into account when finding somewhere to save their money.

"It is something of a worry that peoples' attitudes towards inflation seem to have frozen,” said John Prout, National Savings and Investments sales director.

He added: "Even though we are experiencing a period of relatively low inflation, people who invest their money for more than a few years in an account that doesn't protect against inflation could see the value of their money diminish as inflation takes its toll.

"Inflation really can affect savings and I would urge people to think about this when choosing a home for their money, especially when considering a medium-term investment."

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