In a thought provoking article titled “First it was loo roll, now it’s cash”, Ben Kumar, a senior investment strategist at 7IM, discusses cash hoarding by clients as a result of not being able to spend on items such as eating out, going to the movies or short holiday breaks.
“Restaurants and bars are (for now) open again, but the saving trend is likely to continue at a level well above pre-crisis levels. That is because Covid-19 has not only impacted our ability to spend but the way we think about spending money.”
“Indeed, the hoarding of cash is not just a reaction to something that has happened, but a preventative measure for the hard times that are likely ahead.”
“This kind of hoarding reaction was very obvious in the early days of the lockdown. We saw loo roll, pasta and tinned products all in short supply as demand for the essentials sky-rocketed. Now we are seeing this across the broader economy, and people are putting a little more cash than usual aside as a result.”
“Having a little more money set aside is certainly not a bad thing, but if your client has a proper plan in place your client should not necessarily need this inflated cushion. This is not just about staying invested but increasing these investments to make sure a plan stays on track.”
Click here to read the full article published in Citywire.
