Advice re: my savings.

fimonkey

I see inflation is near 5%, (RPI/CPI both close to it) and interest rates are hotly tipped to come down shortly.

I have 24K in Birmingham Midshires earning 6.33% Gross, and 10K in an A&L cash ISA earning 6.25%. I'm a BR taxpayer.

I want to inflation proof my savings (but know nothing about buying gold other than a few bits and bobs from Elizabeth Duke ) but I also know I should keep 3 - 6 months salary in an easy access account, which for me is between 5.5K-11K.

So should I

1. Move the whole 24K from the Birmingham account to the AA 1 year bond paying 7.2% and use the ISA money as 'emergency'.

2. Keep 8K in the Birmingham account for 'emergency', move 16K to the AA 1 year bond, and keep the ISA as it is?
The money is for a house deposit, and seeing as I don't expect the housing market to pick up for a while I can afford to have it locked away for a year.

I just want to inflation proof it with minimal risk basically.

Any other suggestions also welcome.

Thanks in advance.

barak

fimonkey wrote: »

I just want to inflation proof it with minimal risk basically.

If that is your sole aim, and you can leave it untouched for 12mos (otherwise you will just get your money back) then you could protect up to £30k with NS&I.
http://forums.moneysavingexpert.com/showthread.html?t=528781&highlight=Index-Linked

....but this wouldn't necessarily give the best return.

fimonkey

Ah, very interesting. Not realised these were linked to RPI and tax free.

Is RPI the one that includes house prices though? (Whereas CPI doesn't). If so, should the housing market continue to slide, but price of other stuff go up, is there any chance that CPI will be higher than RPI and therefore these index linked saving certificates won't be much use after all?

Also, anyone got any thoughts on my two options above? (i.e move all teh 24K, or only some of it)?

Thanks in advance.