Where to put my money now that £ is tanking?

jon3001

Happychappy wrote: »

I bet your really glad you came on this forum to ask for simple advice and received nothing back :rolleyes: a simple question asking how to try and gain the maximum income from interest on your investments.

You shouldn't be trying to gain an income from interest on deposit accounts (unless maybe you're prepared to eat into your capital). Taking into account inflation and tax you can expect your purchasing power to fall year-on-year.

Deposits are for emergency funds and planned expenditure.

Happychappy wrote: »

The interest the following year if I reinvested in fixed rate bonds would be only around 30% ? or so. There is no other investment I would feel comfortable with other than this type. So if you do find the holy grail of investment ? let me know

Then I suggest that you need to get comfortable. There is no holy grail. Either go for deposit accounts, be tolerant of interest-rate fluctuations and be poor because of inflation. Or invest in other assets and be tolerant of capital fluctuations.

This article highlights some of the building blocks of income portfolios such as bond funds and equity income funds.
http://www.thisismoney.co.uk/investing/article.html?in_article_id=459569&in_page_id=166

dunstonh

I agree with gozomark. The question focused on sterling exchange rate. Unless you have some intention to have an overseas transaction, this doesnt really matter. So, this suggests that some overseas transaction in the future was likely, like the house purchase.

tradetime

Amv

I bet your really glad you came on this forum to ask for simple advice and received nothing back :rolleyes: a simple question asking how to try and gain the maximum income from interest on your investments.

Sorry to split hairs, but amv0 is not the original poster, unless you know something we don't so the sarcy rolleyes really isn't called for. The OP's post as gozomark has said was not really that clear.
amv0's questions were more rhetorical than anything, no-one knows if his telephone bill will reduce, or his TV license or his council tax, probably unlikely. If however deflation were to become a sustained feature then it is likely there would be some reduction in energy bills feeding through to the consumer. Energy prices at source have already fallen dramatically, but haven't fully fed through, similarly I'd expect a fall in food prices as commodity price reductions feed through. As for other general shopping there plenty of slashed prices in the high street right now.

tradetime

I also have quite a number of fixed rate bonds set up early to middle 2008 for 12month and 24 months at interest rates of 7.00% to 7.20% with ICICI, First Save, Close Bros, AA, West Brom, Nottingham BS etc etc, the interest this year will be just over £20k, when these mature.

The interest the following year if I reinvested in fixed rate bonds would be only around 30% ? or so. There is no other investment I would feel comfortable with other than this type. So if you do find the holy grail of investment ? let me know

As to your own points, there are no "Holy Grails" to investment, those who seek them generally end up at best disappointed and at worst in the hands of someone like Bernie Madoff. As others have said whilst saving utilizing the best rates available and moving your money regularly to ensure you stay at the top of the yield, (and you have done well so far it seems) carries little or no risk you will underperform careful well selected investments. Your safety has a price, as the old saying goes, "You have to speculate to accumulate." really there is no certainty here, and it takes a fair amount of work and research. Savings returns will always favour the banks.

MiserlyMartin

The falling pound only really has significance if one were to leave the UK and/or buy a house abroad. Its sad to think that our pound does not go very far abroad now as we have got used to it being far stronger than the Euro or US$.

But if the OP is interested in a bit of currency speculation, its sadly a bit late for that. We should have moved out of the £ early last year.

It looks to be a bit of a gamble to buy into other currencies. I still think it might be good to perhaps move 10-20K into gold or a foriegn currency as the UK will be harder hit next year.

All these forecasts of lower UK inflation I do not buy. Mervyn King keeps saying inflation will drop, but his track record is poor. They have overshot their inflation target for almost 2 years and his forecasts have been way off. The cutting of interest rates will only make things worse.

gozomark

MiserlyMartin wrote: »

. Mervyn King keeps saying inflation will drop, but his track record is poor. They have overshot their inflation target for almost 2 years and his forecasts have been way off. The cutting of interest rates will only make things worse.

sorry, but thats not true - the inflation target is CPI 2% +/- 1% - it was only in the Summer it went above 3%, and was within the 1-3% band throughout 2004, 2005, 2006 and 2007 (excl one month in 2007 when it went to 3.1% I believe) - the BOE record on inflation has actually been very good - see chart 5.3
http://www.bankofengland.co.uk/publications/inflationreport/ir08nov5.ppt#5

Even if you don't believe the BOE, economists are generally foreasting the same as the BOE

zzzLazyDaisy

I suspect that OP is not a seasoned investor, and what he really intended to ask is where should he put the money now 'his pound' is tanking (ie interest rates)

lpgm

Classic thread! Come on, let's be honest - we all clicked on this because we wanted to see what others would make of someone confusing exchange rates and interest rates!

funkey_monkey

I was considering moving my money into a foreign currency. I know of people still doing this, but I thought it was too late hence I decided to ask on here if it was something that people were still considering. I also believe that investment in precious metals is now also a boat which has sailed long ago.

Another suggestion for myself was to use Corporate Bonds but this is not a subject I know about, so I'll probably be passing on it.

I'm not sure now what to do with my cash. So I'd appreciate some advice on what I should do with it.

I'm not sure who lpgm is talking about. It certainly is not me as I do know and understand the difference between exchange and interest rates.

gozomark

well you say you want to keep it safe - in that case you shouldn't be considering foreign currency, precious metals or corporate bonds, as all of these mean moving into riskier assets than £ bank deposits, especially as you are "planning on purchasing a property in the near future"