How to protect your savings from inflation

Savers are being squeezed between high inflation and low interest rates. We asked two personal finance pros what, if anything, Canadians can do to protect their savings.

Canadian savers have long been dogged by low interest rates on low-risk investments like guaranteed investment certificates (GICs) and bonds. At least inflation, which erodes the purchasing power of money, used to be low as well.

With the price of anything from food to gasoline soaring in recent months, that’s no longer the case.

Canada’s inflation rate reached 4.4 per cent in September, the highest it’s been since 2003. Meanwhile, the Bank of Canada has yet to raise its trend-setting interest rate.

With investors now caught between the rock of rising inflation and the hard place of still-low interest rates, Global News asked two personal finance pros what, if anything, Canadians can do to protect their savings.

Here’s what they said.

If you’re feeling the urge to move some or all of your spare cash into higher-yielding investments to help thwart the impact inflation is having on your finances, resist that impulse, says Bridget Casey, founder of Money After Graduation.

“I’m a big advocate of having cash on hand,” she says.

Your emergency fund and anything you’re saving for – short-term goals with a time horizon of two years or less – should stay in cash, she adds.