Divide 72 by 3.1. In 23 years, your cash buys half as much.
Picture a supermarket trip in 2003, the year Concorde made its last flight. Black Eyed Peas playing over the tannoy. Dido on your iPod. What's in the trolley?
A white sliced loaf, 58p. A pint of milk, 37p. A jar of instant coffee, £1.80. A box of tea bags, £1.45. A kilo of beef mince, £4.05. A kilo of cheddar, £5.48. A kilo each of apples and bananas, £2.19. At the till: £15.92.
Push the same trolley round in 2025. The loaf costs £1.40. The coffee costs £3.85. The mince costs £8.43. The bananas stayed close to their price: 92p a kilo in 2003, £1.02 in 2025. At the till: £28.761
Take the £15.92 you spent in 2003 back to the shop. It pays for the bread, the milk, the coffee and the tea. The mince, the cheese, the apples and the bananas go back on the shelf.
The £15.92 hasn’t changed. The prices have. They rose a few pence at a time, around 3% a year, and no bank statement recorded the loss. Money left in an account paying nothing would show the same balance in 2025 as in 2003. It would buy a little over half as much.
The sum behind the headline
You can see this coming. The tool is called the rule of 72. Divide 72 by a yearly interest rate and the answer tells you about how many years it takes for the value of something to double at that rate. At 6%, prices double in 12 years, because 72 ÷ 6 = 12. At 4%, it takes 18. The rule appears in print in 14942, in a maths textbook by Luca Pacioli, the Italian friar known as the father of accounting. He gave no proof. Historians take that as a sign that traders were already using it.
The same sum works for prices. UK inflation was 3.1% in the 12 months to August 20263. Divide 72 by 3.1 and you get 23.2. If prices keep rising at that rate, they double in about 23 years4. When prices double, each pound buys half as much. At the Bank of England’s 2% target, prices double in 36 years.
Twenty-three years from now is 2049. A £100,000 balance earning nothing would read £100,000 in 2049. It would buy what £50,000 buys today. An estimated £322 billion sits in UK current accounts paying no interest at all.5
The rate on your statement
People with savings generally know their interest rate to the decimal point. In a 2025 survey of 4,360 UK savers, 85% said they think about their cash at least once a month. Three in four6 said earning a competitive rate was very important to them. They compare their rate with the next account along. Fewer compare it with the price of the weekly shop.
A better rate helps. At September 2026 rates, a higher-rate taxpayer with £100,000 in a best-buy easy access account at 4.55% earns £4,550 before tax. After the £500 personal savings allowance and 40% tax on the rest, £2,930 is left: a 2.93% return in a year when prices rose 3.1%. The shortfall is about £170. For money you'll need soon, that might be a fair price for instant access. Many savers pay more. The average easy access account pays 2.49%, which leaves the same saver around £1,400 a year behind prices. In a current account paying nothing, the gap is £3,1007.
Why people hold cash
People who hold cash have reasons. The same survey asked savers with large cash balances why. The most common answer, from 53%8, was that they were in or approaching retirement and wanted less risk. One in six blamed stock market volatility.
The reasoning holds for money you’ll spend in the next few years. Retirement is where it breaks down. A retirement that begins at 65 can last 25 years or more, and at 3.1% prices double in 23. Money set aside at the start of retirement for its final years has the longest horizon of any money you own.
How much cash is right? It depends on what’s coming. Anything you’ll spend in the next few years belongs in cash: an emergency fund, a new car, a gift to a grandchild, the gap before a pension starts paying. Half of savers9 in low-interest-paying accounts told the survey they keep the money there for emergencies or easy access. They’re right to keep a buffer. The question is how big it should be, and what the rest of your money is doing.
Cash is useful for short-term needs, but isn’t a long-term strategy.
Where Pembroke comes in
At Pembroke, a conversation about cash starts with a calendar. What do you need in the next year, the next five, the next twenty? Your advisor maps those dates against what you hold. You see which money needs to be ready and which has time to work. Our cashflow planning shows what inflation does to the money you’d leave in the bank, year by year, in pounds you’ll recognise. Our portfolios are benchmarked against inflation, because keeping pace with prices is the least your long-term money should do.
Some clients finish that conversation holding more cash than they expected. Some move part of it. All of them know what their cash is for.
If you’d like to know what your savings will buy in 2049, talk to us. Fill in the enquiry form and an advisor will be in touch.
- 1. Office for National Statistics, RPI average prices: 800g white sliced loaf (CZOH), pint of pasteurised milk (CZNT), 100g instant coffee (CZNP), 250g tea bags (CZNQ), best beef mince per kg (CZPI), cheddar per kg (CZNW), dessert apples per kg (CZMY), bananas per kg (CZMV). 2003 annual averages and January 2025, the final month the series was published.
- 2. https://en.wikipedia.org/wiki/Rule_of_72
- 3. Office for National Statistics, Consumer price inflation, UK: August 2026, published 16 September 2026.
- 4. The rule of 72 is an approximation. The exact doubling time at 3.1% a year is 22.7 years.
- 5. Spring analysis of CACI's Current Account & Savings Database, as reported in Insignis, Beyond Inertia, revised edition, September 2026, p.7.
- 6. Insignis, Beyond Inertia, revised edition, September 2026, p.3. Survey of 4,360 UK adult savers, April 2025. https://www.insigniscash.com/news/beyond-inertia-revised-edition-understanding-the-role-of-cash-in-client-portfolios
- 7. https://www.insigniscash.com/news/beyond-inertia-revised-edition-understanding-the-role-of-cash-in-client-portfolios
- 8. Insignis, as above, p.5. Base: 1,975 savers holding large cash balances.
- 9. Insignis, as above, p.8. Base: 254 savers with cash in accounts paying under 2%.
The value of investments can fall as well as rise and you may get back less than you invest. Tax treatment depends on your circumstances and may change. Figures are illustrative.