Defensive strategies for dealing with high inflation..?

Cautious_Investor_3

luvpump wrote: »

A simple question & one that has relevance to most of us on here !!

What savings account are indexed linked ?

None to my knowledge at the moment.

NS&I used to run index linked certificates but these were withdrawn in the summer of 2010. National Counties Building Society also bought out a couple of index linked accounts late last year, they proved very popular and were withdrawn quickly.

The Cautious Investor

Masomnia

Cautious_Investor wrote: »

It is when interest rates are as low as they are.

We live in unusual economic times with inflation significantly higher than inflation. Furthermore with CPI closing in on 4% and RPI close to 5%, we also need to remember that research shows the actual rate of inflation suffered by older generations (60+) is significantly higher than those two figures.

A person of more mature years, paying say 20% tax and only wanting to use deposit accounts will, at the moment, be losing money each month in real terms.

So, whilst 4% might not sound high, it is a serious problem for many.

The Cautious Investor

I take your points; but what we're talking about here is people buying tinned food now in order to save money as it will be more expensive in future, when in reality that will save you pence!

Cautious_Investor_3

Masomnia wrote: »

I take your points; but what we're talking about here is people buying tinned food now in order to save money as it will be more expensive in future, when in reality that will save you pence!

I don't disagree with you there, hoarding food is going a little far!

The problem is real for many savers though, not helped by the fact people don't want to lock into long term fixed deals as they expect interest rates to rise over the next year or so.

The Cautious Investor

Jonbvn

Cautious_Investor wrote: »

We live in unusual economic times with inflation significantly higher than inflation.

Trust me. Inflation is exactly equal to Inflation.:D

Cautious_Investor_3

Jonbvn wrote: »

Trust me. Inflation is exactly equal to Inflation.:D

:rotfl:Good spot.....go to the top of the class!

C_Mababejive

It may seem trivial but this problem is real for all of us..!

Inflation my well be "only " 4% but its growth is exponential over time which has a significant long term effect.

Do you think that for example,a loaf of bread which has increased in price by 5p due to inflationary pressures of 4%,will ever reduce by any amount when in a couple of years time,inflation is then 2%?

Answer..no.

An effect of inflation is the stealthy increase in price of just about everything and couple with an annual pay settlement of 0% or below inflation = a double whammy so every penny counts!

Do not underestimate the effects of inflation and believe me,it will get a lot worse before it gets any better.

xrjtg

C_Mababejive wrote: »

Inflation my well be "only " 4% but its growth is exponential over time which has a significant long term effect.

With constant inflation price growth is exponential, but this is different from inflation growing exponentially.

I'm sure you understand this, but there's a lot of confusion over terminology out there, and I think it helps to be clear.