The short version
- Cash lost buying power in 50 of the last 150 years: about one year in three.
- £100 kept in banknotes from 1970 to 2020 lost 92% of its buying power. In cash earning interest, it grew to about £184 in 1970 money.
- The same £100 in UK shares grew to about £1,663 in 1970 money, with big falls along the way.
- Cash still has a job: money you might need soon belongs there.
Part of Worries and myths. For the big picture, see how often UK shares have lost money since 1871.
- 1 in 3years in which cash lost buying power (50 of 150)
- 92%of their buying power lost by banknotes kept from 1970 to 2020
- 16.6×growth in buying power for UK shares over the same years (cash: 1.8×)
Why cash loses
Cash in the bank earns interest. Prices rise with inflation. If interest is lower than inflation, your balance still goes up, but it buys less each year. Economists call the difference the real return, and for cash it has often been below zero.
Since 1871, cash earned less than inflation in 50 of 150 years. It isn’t a crisis-only problem: it happened in quiet decades too.
Cash lost buying power in 50 of 150 years
The return on cash each year after inflation (bars below the line are years cash fell behind prices)
Source: Jordà-Schularick-Taylor Macrohistory Database (R6), UK, 1871–2020. Total returns with dividends reinvested, before fees and tax. Analysis: Invest in ETFs. Chart licensed CC BY-NC-SA 4.0.
Show the data
| Year | Cash after inflation | Inflation |
|---|---|---|
| 1871 | 1.2% | 1.4% |
| 1872 | −0.8% | 4.7% |
| 1873 | 1.3% | 3.1% |
| 1874 | 6.9% | −3.3% |
| 1875 | 4.9% | −1.9% |
| 1876 | 2.2% | −0.3% |
| 1877 | 3.1% | −0.7% |
| 1878 | 5.6% | −2.2% |
| 1879 | 6.4% | −4.4% |
| 1880 | −0.7% | 3.0% |
| 1881 | 4.0% | −1.1% |
| 1882 | 2.4% | 1.0% |
| 1883 | 3.5% | −0.5% |
| 1884 | 5.2% | −2.7% |
| 1885 | 5.3% | −3.0% |
| 1886 | 3.8% | −1.6% |
| 1887 | 2.9% | −0.5% |
| 1888 | 1.7% | 0.7% |
| 1889 | 1.3% | 1.4% |
| 1890 | 3.5% | 0.2% |
| 1891 | 1.9% | 0.7% |
| 1892 | 1.0% | 0.4% |
| 1893 | 2.8% | −0.7% |
| 1894 | 3.0% | −2.0% |
| 1895 | 1.8% | −1.0% |
| 1896 | 1.8% | −0.3% |
| 1897 | 0.3% | 1.5% |
| 1898 | 2.4% | 0.3% |
| 1899 | 2.5% | 0.7% |
| 1900 | −1.4% | 5.1% |
| 1901 | 2.6% | 0.5% |
| 1902 | 3.0% | 0.0% |
| 1903 | 3.0% | 0.4% |
| 1904 | 2.9% | −0.2% |
| 1905 | 2.2% | 0.4% |
| 1906 | 4.0% | 0.0% |
| 1907 | 3.2% | 1.2% |
| 1908 | 1.8% | 0.5% |
| 1909 | 1.8% | 0.5% |
| 1910 | 2.2% | 0.9% |
| 1911 | 2.8% | 0.1% |
| 1912 | 0.6% | 3.0% |
| 1913 | 4.8% | −0.4% |
| 1914 | 3.2% | −0.3% |
| 1915 | −7.9% | 12.5% |
| 1916 | −10.9% | 18.1% |
| 1917 | −16.3% | 25.2% |
| 1918 | −15.1% | 22.0% |
| 1919 | −6.0% | 10.1% |
| 1920 | −8.0% | 15.4% |
| 1921 | 14.4% | −8.6% |
| 1922 | 19.3% | −14.0% |
| 1923 | 9.2% | −6.0% |
| 1924 | 4.1% | −0.7% |
| 1925 | 3.8% | 0.3% |
| 1926 | 5.4% | −0.8% |
| 1927 | 6.8% | −2.4% |
| 1928 | 4.5% | −0.3% |
| 1929 | 6.2% | −0.9% |
| 1930 | 5.4% | −2.8% |
| 1931 | 8.2% | −4.3% |
| 1932 | 4.2% | −2.6% |
| 1933 | 2.7% | −2.1% |
| 1934 | 0.7% | 0.0% |
| 1935 | −0.1% | 0.7% |
| 1936 | −0.1% | 0.7% |
| 1937 | −2.7% | 3.4% |
| 1938 | −1.0% | 1.6% |
| 1939 | −1.4% | 2.8% |
| 1940 | −13.5% | 16.8% |
| 1941 | −8.8% | 10.8% |
| 1942 | −5.7% | 7.1% |
| 1943 | −2.3% | 3.4% |
| 1944 | −1.7% | 2.7% |
| 1945 | −1.8% | 2.8% |
| 1946 | −2.5% | 3.1% |
| 1947 | −6.1% | 7.0% |
| 1948 | −6.7% | 7.7% |
| 1949 | −2.2% | 2.8% |
| 1950 | −3.3% | 3.9% |
| 1951 | −7.8% | 9.0% |
| 1952 | −7.6% | 10.7% |
| 1953 | −1.3% | 3.6% |
| 1954 | −0.5% | 2.3% |
| 1955 | −1.3% | 5.1% |
| 1956 | −0.2% | 5.2% |
| 1957 | 0.9% | 3.8% |
| 1958 | 1.6% | 2.9% |
| 1959 | 2.8% | 0.6% |
| 1960 | 4.1% | 0.8% |
| 1961 | 1.8% | 3.3% |
| 1962 | −0.0% | 4.2% |
| 1963 | 1.5% | 2.1% |
| 1964 | 1.3% | 3.2% |
| 1965 | 1.6% | 4.3% |
| 1966 | 2.0% | 4.0% |
| 1967 | 3.5% | 2.2% |
| 1968 | 2.9% | 4.0% |
| 1969 | 2.3% | 5.2% |
| 1970 | 0.5% | 6.5% |
| 1971 | −3.5% | 9.4% |
| 1972 | −1.6% | 7.2% |
| 1973 | 0.0% | 9.3% |
| 1974 | −3.8% | 15.7% |
| 1975 | −10.2% | 22.7% |
| 1976 | −3.9% | 15.7% |
| 1977 | −6.3% | 14.9% |
| 1978 | 1.0% | 7.5% |
| 1979 | 1.5% | 11.4% |
| 1980 | −0.0% | 15.2% |
| 1981 | 1.0% | 11.8% |
| 1982 | 3.0% | 8.1% |
| 1983 | 4.4% | 4.9% |
| 1984 | 4.8% | 4.3% |
| 1985 | 6.4% | 4.9% |
| 1986 | 6.8% | 3.3% |
| 1987 | 5.8% | 3.2% |
| 1988 | 5.8% | 3.8% |
| 1989 | 7.6% | 5.2% |
| 1990 | 6.7% | 7.0% |
| 1991 | 3.1% | 7.5% |
| 1992 | 4.5% | 4.3% |
| 1993 | 2.6% | 2.5% |
| 1994 | 3.1% | 2.0% |
| 1995 | 3.6% | 2.7% |
| 1996 | 3.3% | 2.4% |
| 1997 | 4.6% | 1.8% |
| 1998 | 5.2% | 1.6% |
| 1999 | 3.7% | 1.3% |
| 2000 | 5.0% | 0.8% |
| 2001 | 3.5% | 1.2% |
| 2002 | 2.6% | 1.3% |
| 2003 | 2.2% | 1.4% |
| 2004 | 3.1% | 1.3% |
| 2005 | 2.4% | 2.1% |
| 2006 | 2.3% | 2.3% |
| 2007 | 3.1% | 2.3% |
| 2008 | 0.7% | 3.6% |
| 2009 | −1.6% | 2.2% |
| 2010 | −2.7% | 3.3% |
| 2011 | −3.8% | 4.5% |
| 2012 | −2.4% | 2.8% |
| 2013 | −2.2% | 2.6% |
| 2014 | −1.1% | 1.5% |
| 2015 | 0.4% | 0.0% |
| 2016 | −0.5% | 0.7% |
| 2017 | −2.2% | 2.7% |
| 2018 | −1.8% | 2.5% |
| 2019 | −1.1% | 1.8% |
| 2020 | −0.9% | 0.9% |
What £100 could buy
Follow £100 from the start of 1970 to the end of 2020. Kept as banknotes, it lost 92% of its buying power. In cash earning the going rate, it grew to about £184 in 1970 money: ahead of prices, but not by much. In UK shares, with dividends reinvested, it grew to about £1,663, through several crashes along the way.
Since 1970, cash in the bank has barely kept pace with prices. Banknotes lost 92% of their value.
What £100 at the start of 1970 could buy each year, in 1970 prices (log scale)
- UK shares
- Cash (government bills)
- Banknotes (no interest)
Source: Jordà-Schularick-Taylor Macrohistory Database (R6), UK, 1871–2020. Total returns with dividends reinvested, before fees and tax. Analysis: Invest in ETFs. Chart licensed CC BY-NC-SA 4.0.
Show the data
| Year | Shares | Cash | Banknotes |
|---|---|---|---|
| Start of 1970 | £100 | £100 | £100 |
| 1974 | £37 | £92 | £63 |
| 1979 | £88 | £76 | £32 |
| 1984 | £193 | £87 | £21 |
| 1989 | £395 | £119 | £17 |
| 1994 | £495 | £144 | £14 |
| 1999 | £1,114 | £176 | £13 |
| 2004 | £901 | £206 | £12 |
| 2009 | £1,074 | £221 | £11 |
| 2014 | £1,403 | £195 | £9 |
| 2019 | £1,853 | £185 | £8 |
| 2020 | £1,663 | £184 | £8 |
| £100 from the start of | Shares | Cash | Banknotes |
|---|---|---|---|
| 1900 | £32,031 | £189 | £1 |
| 1950 | £8,498 | £190 | £4 |
| 1970 | £1,663 | £184 | £8 |
| 2000 | £149 | £104 | £66 |
Values are at the end of 2020, in the money of the start year, so they show what the £100 could buy.
You can explore any period yourself, before and after inflation.
When cash wins
Over shorter stretches, cash can come out ahead. £100 put into UK shares at the start of 2000 was worth about £96 in 2000 money ten years later. The same £100 in cash was worth about £126. Stretch it to twenty years and shares were ahead again: £166 against £105.
Cash is safe from falls. It isn't safe from prices.
Cash still has a job
- An emergency fund belongs in cash: a few months of essential spending you can reach quickly.
- Money you’ll need within about five years is usually better in cash too, because shares can fall sharply over short periods.
- Money for the long term is where inflation does the most damage to cash. That’s the money worth thinking about investing, and from April 2027 the cash ISA limit drops to £12,000 for under-65s.
About the data
- Source: the Jordà-Schularick-Taylor Macrohistory Database (release 6), which economists use for long-run returns. These figures use its UK series for 1871 to 2020, the latest year it covers.
- Shares means the UK stock market’s total return: price changes plus dividends reinvested, before fees and tax. An index ETF tracks something similar, minus its small annual fee.
- Cash means the interest on short-term government bills, a standard stand-in for savings. Real savings accounts have paid more or less than this at different times.
- After inflation means adjusted using the UK consumer price index.
- Periods are whole calendar years, overlapping: 1871–1880, 1872–1881 and so on. Yearly data hides falls that recovered within the same year.
- This is the UK market only, and the past is no guarantee of the future.
The analysis script and the derived data are kept with the site’s source files, so anyone can check the sums.
This page describes what has happened in the past. It isn't a forecast or advice about what you should do. Investments can fall as well as rise, and you may get back less than you put in. Read the full disclaimer.
Sources
- Macrohistory Database, release 6, Òscar Jordà, Moritz Schularick and Alan M. Taylor. Consulted 13 October 2026. Licensed CC BY-NC-SA 4.0.
- Jordà, Knoll, Kuvshinov, Schularick and Taylor (2019), "The Rate of Return on Everything, 1870–2015", Quarterly Journal of Economics 134(3).
- Jordà, Schularick and Taylor (2017), "Macrofinancial History and the New Business Cycle Facts", NBER Macroeconomics Annual 2016, volume 31.
Analysis run 13 October 2026.