If Inflation takes off ?

JayBrun

Having retired with life savings in the 'bank' and some equities, I'm in a better position than many - age apart.
However with RPIX at 5.1 % and the likelihood of it getting worse, possibly much worse, it's no time to be complacent.

I'm not thinking of a year or so of inflation at this rate but the possibility of a more sustained period at these levels or higher.
I suspect there are few if any easy options but if inflation really takes off, doing nothing doesn't seem a good idea.

I assume property is a possibility and whilst there could be further reductions in property values, raging inflation could moderate such falls - CGT wouldn't help.

Gilts presumably are a possibility but I fear I may have missed the boat on that option.

Gold is tempting but again prices seem historically very high and buying and stashing away gold may not be so easy.

I'm not trying to beat inflation, simply trying to retain as best I can the value of what I've spent my working life building up.
Having run out of ideas any reasonably practical advice would be appreciated.

purch

Gilts presumably are a possibility but I fear I may have missed the boat on that option

Gilts would be the last thing you want to have under those conditions.

DavidHayton

My personal favourite are public utilities. They pay good dividends and there is scope for those dividends to rise with inflation as long as they allowed to put their prices up in line with inflation (and folks keep buying electricity, gas and water). As dividends rise the share prices should rise also.

One way is to buy individual stocks. That comes with its own risks unless you have enough money to buy lots of stocks.

Unfortunately this isn't a sector that funds tend to follow. I am aware of one ETF, though this follows European utilities rather than purely British ones (though, that said, most of our utilities seem to be part of larger European groups in any case):
http://www.etfsecurities.com/fund/etfs_fund_utilities_fund_en.asp

Anything within an ISA will be free of any CGT.
David

JayBrun

purch wrote: »

Gilts would be the last thing you want to have under those conditions.

Sorry I should have said Index-Linked Gilts which I assume could have some merit.

Thanks David - the reference to CGT was the liability which I think would apply if a 'second' property was involved.

I stopped buying shares a while back partly because they are long term ie to me at least 5 years and I wanted to keep it simple.
If things deteriorate I may well consider them although in the short term, as always, they could suffer badly.

I'd forgotten that Public Utilities tend to fare better than most in bad times.

If unrest spreads to Saudi Arabia I suspect most bets are off, including most shares.

DavidHayton

JayBrun wrote: »

If unrest spreads to Saudi Arabia I suspect most bets are off, including most shares.

Yes! I have tried to hedge against such things this ETF
http://tmx.quotemedia.com/quote.php?qm_symbol=xeg&locale=EN

It invests in Canadian energy companies (Canada has the second largest oil reserves in the world. Much of it is in shales and tars so it is expensive and messy to get it out. However if the oil price rockets then it becomes more and more economic). It has done very nicely in recent weeks!

Best wishes
David

JayBrun

I used to be much more active in these matters but as the years passsed by I sat back with some shares and rather more in cash which until recently worked out fine.

If things look as if they are going pear shaped I will have to get off my backside and accept there could be no simple solution and get myself up to date.

By fluke I've got some shares in Canada but not those you referred to of course.

I'll keep an eye on them.

sabretoothtigger

purch wrote: »

Gilts would be the last thing you want to have under those conditions.

Not even the inflation tracking ones ?

If Inflation takes off ?

IF
:huh:

If inflation stayed at 4% for next ten years and doesn't 'take off' thats an increase of 48% or petrol at 177p a litre

If unrest spreads to Saudi Arabia I suspect most bets are off, including most shares.

Oil went to 120 a barrel recently, after being at 30 previously. It then fell to 112 apparently because Saudi promised to increase production.
If there was no Saudi production for some reason it'l bring the price to like 140 or more I guess which costs all companies more and shares down yep

lvader

You can still lose money on index linked gilts if you don't buy when first issued and sell at maturity.