Cash vs investing calculator
Cash that earns nothing loses buying power every year prices rise: at 3% inflation, £10,000 kept for 10 years buys what about £7,441 buys today. Add a savings rate and a stated investment return to see three paths in today's pounds, and the gap between them: the opportunity cost of holding cash.
The investment return is a scenario you choose, not a forecast. Investments can fall as well as rise and you may get back less than you put in. Not a recommendation to invest or to hold cash.
Worked example, illustrative only
Keep £10,000 for 10 years while prices rise 3% a year. Earning nothing, it buys what £7,441 buys today; in savings at 3.5% after tax, £10,496; invested at a steady 5% a year, a scenario rather than a forecast, £12,121. Prices will have risen by 34%, and cash earning nothing buys half as much after about 23 years. Illustrative only, not advice.
How it works
- Inflation is the rise in prices over time. If prices rise 3% a year, something that costs £100 today costs £103 next year and about £134 after ten years.
- Cash that earns nothing keeps its number but buys less each year. Its buying power in today's pounds is the amount divided by how far prices have risen.
- Savings keep pace only if the interest you keep after tax is at least inflation. An investment return is shown as a steady scenario; real returns move around and can be negative for years.
- The gaps between the three lines are the point: what inflation takes from idle cash, what a savings rate wins back, and what the savings rate gives up against the stated return.
Cash as a bond with a negative real yield
A bond pays interest for the use of your money, and its real yield is that interest after inflation. Cash works the same way: its real yield is the interest it earns after tax, less inflation (strictly, the ratio of the two). When that is below zero, holding the cash is like holding a bond that pays back less, in what it buys, than was put in. The calculator shows how that compounds over time.
Opportunity cost, in one line
The opportunity cost of holding cash is what the same money would have done elsewhere, less what it did as cash. It is only ever measured against an assumption, so this page shows it against a return you state, as a scenario. A higher expected return comes with the chance of losses along the way.
Frequently asked questions
What inflation rate should I use?
The Bank of England's target is 2% a year, measured by the Consumer Prices Index (CPI). Actual inflation has been well above and below that target, so it helps to try a few rates. Your own inflation can also differ from the official figure, depending on what you spend your money on.
Why does cash lose value when the number in my account does not fall?
The number stays the same but prices rise, so each pound buys less. The loss is in what the money can buy, not in the balance, which is why it is easy to miss.
Does interest stop the loss?
Only if the interest you keep after tax is at least as high as inflation. The calculator shows the savings rate after inflation, known as the real rate. When it is below zero, the cash loses buying power even while the balance grows.
What is the opportunity cost of cash?
The difference between what money did as cash and what it could have done elsewhere. Because nobody knows future returns, it is always measured against an assumption; here, a steady investment return you choose, shown as a scenario, not a forecast.
Should I invest my savings instead?
This calculator does not say. Cash has jobs investments do not, such as an emergency fund or money you will need within a few years. Investing generally suits money you can leave for many years and could afford to see fall in value. The page shows the arithmetic of each at rates you choose.
Is this financial advice?
No. It illustrates arithmetic from figures you choose and does not recommend anything. The value of investments can fall as well as rise, you may get back less than you put in, and past performance is not a guide to the future.
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This calculator illustrates arithmetic from the figures you enter. It is not advice or a recommendation, and it does not forecast inflation or returns. CoreFi is a trading name of JG Core Ltd (company 16218779). Figures reviewed September 2026.