Making money is about to get much harder

Soaring inflation, geopolitical risk, bubbly stockmarkets - getting a return on your investment is going to get much more difficult – but not impossible, says Merryn Somerset Webb.

Gold bars
Gold: a millennia-long record of hedging against inflation
(Image credit: © Getty Images/iStockphoto)

I’ve had a letter from my auto-enrolment pension provider, Aviva. It tells me that my pension is worth £19,574.25. That’s nice (I have savings with other providers). But it almost immediately gets less nice. Aviva also tells me that “at retirement” my pension “could be worth £18,800.” I read that a few times to make sure I had not misunderstood. I had not: Aviva reckons that by the time I am 65, it will have lost me £600.

This is where it gets interesting. On page six of the confusing documentation, Aviva adds a little meat to the bones of all this. It turns out that £18,800 is not the nominal amount of money it expects me to have in 15 years’ time. It is the “real” amount. Aviva has “made an allowance for future inflation” to give me an idea of how much I may be able to buy with the income from the £18,800 (£42 a month should you be interested…) if I received it today.

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Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.