Where to put my money now that £ is tanking?

jamespir

funkey_monkey wrote: »

Hi,

I've got the following and am wondering what I shoudl do with it as interest rates are falling through the floor:

Sainsburys: £30k
Northern Bank: £30k
NS&I ISA: £30k
NS&I Index linked Cert: £15k

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.
I had a scare with Icesave and I don't want to go through something similar again. Any advice would be greatfully appreciated.

Many thanks.

if you got all that money why you here and why dont you just buy the bank instead

Charles1968

earlgrey wrote: »

Taking steps to avoid deflation, which can only lead to
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.

it needs more than deft footwork - it needs a miracle to get the correction right. Monetary policy is a very blunt instrument - the chance of the government steering a safe path between deflation and runaway inflation is nil.

Charles1968

RayWolfe wrote: »

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

I assume your irritation is caused by feeling uncomfortable with the idea that savings held in sterling are no longer a safe or risk-free investment. If so, that's a good thing. The usual rules about prudent saving and investing no longer apply. Anyone holding too much cash will need the vigilance of a hawk to keep their money safe over the next few years.

gozomark

Charles1968 wrote: »

it needs more than deft footwork - it needs a miracle to get the correction right. Monetary policy is a very blunt instrument - the chance of the government steering a safe path between deflation and runaway inflation is nil.

atleast the UK has control of interest rates, unlike the individual countries in the Eurozone, which is another reason the Euro may come under massive stress during this crisis. I'd say there is more chance the UK gets it right than Eurozone does (and in both cases its not zero)

Charles1968

tradetime wrote: »

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

I don't. Other currencies worth considering are swiss francs, australian dollars and yen. The sensible approach is to spread across several currencies, avoiding the dollar and pound.

tradetime wrote: »

The important thing to grasp here is that this is a global problem, where you gonna hide?

It's global but the risk is not evenly spread. The USA and UK are the major economies that gorged too much on credit during the boom and now face the toughest readjustment.

tradetime

Charles1968 wrote: »

I don't. Other currencies worth considering are swiss francs and yen. The sensible approach is to spread across several currencies, avoiding the dollar and pound.

That's actually fair comment, though the Swiss Franc is not the currency it once was, Swiss rates are set to go to zero, and the Yen, I'd say at the moment best of the bunch, but, a lot of it's strength is due to the unwinding of the carry trade, so you have to ask yourself where it goes when that cycle is complete, the Japanese have a history of currency intervention aimed at keeping the Yen low for export, in fact just this week you will notice a dollar rebound around Wed / Thur, due to the Japanese signaling that they were prepared to intervene. Again as I said that strategy favours those with a fair amount of wealth, and you are still speculating, if inflation is your primary fear, I would suggest currency is not your best shelter.

Charles1968 wrote: »

It's global but the risk is not evenly spread. The USA and UK are the major economies that gorged too much on credit during the boom and now face the toughest readjustment.

Definitely on the first part of that, possibly on the second, in an ideal world that would be how it should be, but I think you might be surprised how badly the Eurozoe fares.

Charles1968

tradetime wrote: »

if inflation is your primary fear, I would suggest currency is not your best shelter.

The immediate danger is not inflation but "quantitative easing", which amounts to printing new money. As far as I know, only the US and UK are considering devaluing their fiat currencies this way. In fact the US has already started doing it and the UK will probably follow suit in the new year. The dollar has the advantage of being the world's most important reserve currency, which will protect it somewhat from the loss of value caused by printing money. Not so for sterling. Once Gordon Brown starts rolling the presses, there's a real risk the pound will nose-dive.

gozomark

one risk is quantitative easing

in my mind an even bigger risk is not quantitative easing

yes, central banks will need to very very careful in reversing it, and also in the timing of their other monetary and fiscal tightening, but lets solve the definite current problem rather than the future possible problem. The US and UK are doing this - there is a real risk the ECB is way behind the curve (partly due to their mandate)

tradetime

Charles1968 wrote: »

The immediate danger is not inflation but "quantitative easing", which amounts to printing new money. As far as I know, only the US and UK are considering devaluing their fiat currencies this way. In fact the US has already started doing it and the UK will probably follow suit in the new year. The dollar has the advantage of being the world's most important reserve currency, which will protect it somewhat from the loss of value caused by printing money. Not so for sterling. Once Gordon Brown starts rolling the presses, there's a real risk the pound will nose-dive.

What exactly do you consider inflation to be?

Charles1968

tradetime wrote: »

What exactly do you consider inflation to be?

inflation is what happens later. In the meantime quantitative easing will cause sterling to dive because investors will pull out of sterling. So two stages to sterling's future devaluation: (1) run on sterling as QE begins and investors' fears are confirmed; (2) inflation soars a year or two after, devaluing sterling by an as yet unknown amount.