Protecting deposit against inflation

orangefender

Hi,

I've read a few commentators' opinions that we can expect high levels of inflation over the next few months/years. My position is that I have a relatively healthy deposit of around £30k which I contribute about £2k to every month. I'm currently renting and happy doing so for the time being, but may look to buying something in the next year or so.

I don't want to get into a debate on what houses prices will or will not do, but am rather looking for tips of how I can protect my savings against inflation. I expect I should probably speak with IFA, but would be interested in any of your views.

Thanks

Ian

gozomark

If you are looking to buy property, then your concern shouldn't be about protecting yourself against general inflation, but against property inflation. However, as you write you "don't want to get into a debate on what houses prices will or will not do" then I've nothing more to add.

flotron

You can look at the NS&I index linked savings certificates, however they may not be suitable for you as you need to invest for either 3 or 5 years.

Also, this is based on the RPI inflation which is a lot more volatile than CPI, and is currently lower. Plus you may not believe these calculations for inflation anyway...

gozomark

As you say flotron, NS&I index linked savings certificates are linked to RPI, which has only a small property component, so won't protect against property inflation.

Reaper

If you are looking to buy in the "next year or so" and expect high inflation in a matter of months (I don't) then your options are rather limited. I suggest avoiding all fixed rate savings and stick to variable rate. In theory if inflation shoots up interest rates will too as long as you are in an account that follows the trend. I suggest the Investec High 5 which averages the current best 5 accounts. It is a 3 month notice account. Check the Referral board for an introductory bonus too.

Not much you can do to protect yourself from house price inflation other than investing the money in property which would be a bad idea at the best of times due to the short time scale, and these are not the best of times.

trenchwars

Do any of the spread betting firms allow you to bet on the average house price indices?

gozomark

trenchwars wrote: »

Do any of the spread betting firms allow you to bet on the average house price indices?

I believe they do, but the correlation on a 1-2 year view of changes in UK average house prices to changes in average house prices to wherever the OP is looking is probably so low as to make it of marginal value.