Where to put my money now that £ is tanking?

lpgm

funkey_monkey wrote: »

hence I decided to ask on here if it was something that people were still considering.

If you had actually mentioned this in your first post, there might have been less confusion.

But anyway, perhaps you should just get on and buy your property!

earlgrey_3

funkey_monkey wrote: »

What should I do with this money to avoid losses due to the pound tanking? Most of this cash is an inheritance I got to purchase a property and I really want to keep it safe.

You seem to have got things totally upside down. You intend to buy a house in the UK and are therefore now in a hugely improved situation with lower interest rates and falling house prices to the one you were in a year ago.

For the past few years house-price inflation has been around 10% pa while interest rates on savings has been around half that. Over the past year that has all changed; house prices have deflated by around 15% and are likely to do the same again next year.

If you want something safer than the banks then look at government backed savings as suggested by gozomark. As a general rule, the higher the return the higher the risk as Mr Makoff's clients have found.

Charles1968

MiserlyMartin wrote: »

The falling pound only really has significance if one were to leave the UK and/or buy a house abroad.

It's not quite so simple. The government is trying to stoke up inflation to counteract the expected bout of deflation the UK is about to experience. At some point, inflation is liable to rebound sharply and this could lead to rapid acceleration in the decline of sterling - especially if the government embarks on quantitative easing (printing money, effectively).

there is a real risk of soaring inflation destroying wealth held in sterling at some point in the next 2-3 years. Anyone with large sums in savings account, bonds, or other cash-type investments need to be alert to this danger. The time to protect yourself by diversifying out of stering is now, not 2 years down the line when 1 euro = £100.

Charles1968

gozomark wrote: »

nothing is 100% safe but Northern Rock and National Savings are as safe as you will get in £, as both backed by UK Govt

"Safe" only if you're happy to remain trapped in the UK for the rest of your life.

Remember that the violins kept playing as the Titanic went down... holding onto sterling in the current crisis is like continuing to play the violin while refusing to accept that anything is wrong.

earlgrey_3

Taking steps to avoid deflation, which can only lead to wage cuts and unemployment, is very different to "trying to stoke up inflation" as you put it.

The euro will continue to rise against the pound and the dollar until there are signs of big interest rate cuts in euroland as there have been in the UK and US. Until that happens manufacturers in the euro-zone wil become increasingly uncompetitive. A very large BMW dealership near me has gone bust and others will follow. At some point European jobs dependent on exports will become a priority.

The over-valued pound and high interest rates destroyed British industry in the '80s until we were saved when Lamont was forced to exit the ERM and allow the pound to plummet.

You could be right that we'll see inflation some years down the line if we don't get the correction just right, it needs deft footwork, but it's hardly the problem at the moment. It's like an anorexic refusing treatment in case she becomes too fat to get on buses - it isn't the current problem.

RayWolfe

Charles1968 wrote: »

"Safe" only if you're happy to remain trapped in the UK for the rest of your life.

Remember that the violins kept playing as the Titanic went down... holding onto sterling in the current crisis is like continuing to play the violin while refusing to accept that anything is wrong.

Is it being this cheerful that keeps you going, or are you on medication to keep that smile on your face? :rolleyes:

tradetime

Charles1968 wrote: »

It's not quite so simple. The government is trying to stoke up inflation to counteract the expected bout of deflation the UK is about to experience.

Actually the developed world is experiencing a bout of deflation currently and all governments and central banks are attempting to inflate their way out of it to varying degrees.

Charles1968 wrote: »

At some point, inflation is liable to rebound sharply and this could lead to rapid acceleration in the decline of sterling - especially if the government embarks on quantitative easing (printing money, effectively).

It is very possible, I think highly likely, that inflation will rebound sharply. The problem we have is the severity of this crisis, when you have a normal recession / slowdown in an economy the government and central bank have the luxuary of making an adjustment to monetary and fiscal policy and waiting for it to feed through to see the result thus when if they overshoot it tends not to be by too much. In this scenario the risks are felt to be so high that they are making dramatic adjustments continuously, and will continue until they get the desired reaction, the problem could be that the reaction is due to adjustments made months ago, and more recent adjustments still have to take effect, thus we are likely to overshoot by some way.

Charles1968 wrote: »

there is a real risk of soaring inflation destroying wealth held in sterling at some point in the next 2-3 years. Anyone with large sums in savings account, bonds, or other cash-type investments need to be alert to this danger. The time to protect yourself by diversifying out of stering is now, not 2 years down the line when 1 euro = £100.

I'm not sure why you imagine the Euro is some sort of magic currency, the ECB has been much slower to react than the rest of the world, this has kept the Euro quite strong relative to other currencies, perhaps they are right, however if they simply have failed to grasp the severity of the situation then they will have much more aggressive easing to undertake in the future, but by then they will be in a much weaker position and the Euro would be hit much harder. Whilst I agree that diversification is a good and prudent thing, most people do not have the wealth to truely diversify, particularly across currencies. The important thing to grasp here is that this is a global problem, where you gonna hide?

ed123_2

...saving is'nt investing, saving is'nt investing.....etc etc...deflation in rip off Britain???...I too will believe it when I see it....petrol down, gas/elec down, council tax down, fares down, food down, telephone/postage down...etc etc........we will see that........................not

tradetime

ed123 wrote: »

...saving is'nt investing, saving is'nt investing.....etc etc...deflation in rip off Britain???...I too will believe it when I see it....petrol down, gas/elec down, council tax down, fares down, food down, telephone/postage down...etc etc........we will see that........................not

You forgot wages......when they come down all the above are possible.

gozomark

ed123 wrote: »

etc...deflation in rip off Britain???...I too will believe it when I see it....petrol down, gas/elec down, council tax down, fares down, food down, telephone/postage down...etc etc........we will see that........................not

petrol - already falling
gas/electric - will come down over the next 12 months, possibly quite alot
council tax - won't come down, but its not in the inflation basket as its tax
fares - unlikely, but will go up alot less than in previous years
food - likely to come down given collapse in soft commodity prices
telephone - have been on downward trend for years and years
postage - unlikely, but will go up alot less than in previous years

then there is the cut in VAT

all in all, its easy to see why there could be deflation over the next 12 months