Inflation

coxy17

I just read about inflation being higher than a savings rate causes you loose money. So, my question is; how are you supposed to save money in the current climate? Inflation is running at around 5% and most, if not all savings accounts are well under 4%. I know there are some regular savings accounts but if you don't qualify for those accounts then it seems a difficult situation.

Lokolo

2 options:

1) Put up with it for the time being and wait til the reverse
2) Riskier option of investing

opinions4u

National Savings Index Linked Savings Certificates.

Alternatively, you could do what the low rate policy is intended to get you to do: Buy now before the price goes up.

lisyloo

As already stated you can go for NSI (which guarantee above inflation returns) or riskier investments.
Personally I think this situation will be relatively short term.
The VAT rise will drop out of the inflation figures in 6 months time, plus oil and food prices are now starting to go down.
I think inflation will drop.

NSI are great if you can tie your money up for 12 months, otherwise you jsut ahve to do the best you can like the rest of us.
I presume you have no debt to pay off as that's another option.

coxy17

I currently have some credit against two sofas and a bed but they are 0% for the term so I thought it would prove a better idea to save the cash instead of paying them off now. I also have some on an M&S credit card but that's also 0% for another twelve months.

Are National Savings Index Linked Savings Certificates a good option? I've not heard of them before. I can probably put my money in for between 12 and 18 months. I take it they count towards your ISA allowance; is it Cash or Stock & Shares?

Reaper

coxy17 wrote: »

Are National Savings Index Linked Savings Certificates a good option? I've not heard of them before. I can probably put my money in for between 12 and 18 months. I take it they count towards your ISA allowance; is it Cash or Stock & Shares?

No they are nothing to do with ISAs. You can have both.

You should be aware you only get the full rate of RPI + 0.5% if you hold them for 5 years. However as long as you hold them for at least a year you will get back RPI plus a bit.

Sceptic001

coxy17 wrote: »

Are National Savings Index Linked Savings Certificates a good option? I've not heard of them before. I can probably put my money in for between 12 and 18 months. I take it they count towards your ISA allowance; is it Cash or Stock & Shares?

They are the only savings product currently available that will protect the value of a taxpayer's savings (plus a bit more) against inflation (if held for more than a year).

Look here http://www.moneysavingexpert.com/savings/inflation-linked-savings
or there are numerous threads on this forum - search for ILSC

lisyloo

First year is RPI + 0.25% I believe, but before 12 months you get nothing.
Bear in mind you'll get future RPI so no-one knows what that will be but whether it's high or low your savings are linked to inflation so guaranteed to go up in real terms as long as you keep them for 12 months.

coxy17

Thanks for the help and information.

Does anybody have any experience with Money Market accounts through First Direct/HSBC. They offer a fixed rate of interest as well. I'm not sure how high though.

Ark_Welder

Sceptic001 wrote: »

They are the only savings product currently available that will protect the value of a taxpayer's savings (plus a bit more) against inflation (if held for more than a year).

If you are prepared to tie up your cash for 5 years then KRBS have another index-linked Cash ISA offering: RPI over the term plus 2.6% bonus (APR 0.51%). Unlike NS&I, there are penalties if the ISA is not held for the full term, i.e. not interest payment

bigfreddiel

coxy17 wrote: »

I just read about inflation being higher than a savings rate causes you loose money. So, my question is; how are you supposed to save money in the current climate? Inflation is running at around 5% and most, if not all savings accounts are well under 4%. I know there are some regular savings accounts but if you don't qualify for those accounts then it seems a difficult situation.

i would love some loose money - is it like a loose woman!

seriously is this a windup -inflation's been on the up for ages - do people not read newspapers or listen to the news anymore?

look at it this way - you can sit back - do eff all and live with the consequnces

or you can do 10 mins research - 10 mins organising - once a year and minimise the effects of inflation

or you can just read the sports pages like all the other people addicted to soccer otherwise known as the "opium of the masses"

you'll all thank me for this advice next year

fj