Long term savings? Gold?

atush

Gold has a part (a small part) in a good well diversified portfolio. But not for somone like the OP who doesn't have a lot of savings.

Join a pension if you aren't in one already, and save in cash til you have 6 months salary for emergencies in easy access. Then for long term (10 years+) savings look at equities with maybe a small gold holding alongside

Glen_Clark

Unless your employer is running a good scheme I would give up on pension schemes. Financial advisers recommend them because most charge such high fees they struggle to maintain your capital even in a rising market - link: http://www.guardian.co.uk/business/2011/dec/17/treasury-warned-over-traders-fees?

Wouldn't be so bad if you can invest with a foreign provider - eg those run by Dutch providers apparently produce about 50% higher pensions than the traditional British rip off.
You would be better off investing yourself, either in shares you hold directly, or Investment trusts with low charges and a good discount to net asset value to offset some of the charges.

melly1980

Glen_Clark wrote: »

Unless your employer is running a good scheme I would give up on pension schemes. Financial advisers recommend them because most charge such high fees they struggle to maintain your capital even in a rising market - link: http://www.guardian.co.uk/business/2011/dec/17/treasury-warned-over-traders-fees?

Wouldn't be so bad if you can invest with a foreign provider - eg those run by Dutch providers apparently produce about 50% higher pensions than the traditional British rip off.
You would be better off investing yourself, either in shares you hold directly, or Investment trusts with low charges and a good discount to net asset value to offset some of the charges.

what about the tax breaks though.

I currently put ~15% into a pension (company pension) to avoid 40% tax.

Ark_Welder

It is also possible to select your own investments within certain types of pension savings, so individual shares, ITs and other funds can be used. Plus other asset types too, if so inclined.

GeorgeHowell

There is no way of attempting to beat inflation without taking significant risk. If there was everybody who knows which end is up would be doing it. Gold is like any non-cash investment : "The value of your investment can fall as well as rise", and it's also potentially one of the most volatile since investment in it is almost entirely speculative. In addition property and shares are not seen as good bets in the medium term by most independent experts.

Nobody should be taking significant risks with their life savings, only with money they can afford to lose. The only sensible strategy for the average punter is to minimise the inflation hit by maximising tax relief -- ISAs, NS&I Certs, pension contributions, tying as much money as possible up for as long as possible in order to benefit from the highest interest rates, watching out for the FSCS limits if applicable, and maybe tucking a small percentage of the total in ISA funds around commodities/shares/corporate bonds as bit of a hedge in case the experts are wrong.

Linton

GeorgeHowell wrote: »

There is no way of attempting to beat inflation without taking significant risk. If there was everybody who knows which end is up would be doing it. Gold is like any non-cash investment : "The value of your investment can fall as well as rise", and it's also potentially one of the most volatile since investment in it is almost entirely speculative. In addition property and shares are not seen as good bets in the medium term by most independent experts.

Nobody should be taking significant risks with their life savings, only with money they can afford to lose. The only sensible strategy for the average punter is to minimise the inflation hit by maximising tax relief -- ISAs, NS&I Certs, pension contributions, tying as much money as possible up for as long as possible in order to benefit from the highest interest rates, watching out for the FSCS limits if applicable, and maybe tucking a small percentage of the total in ISA funds around commodities/shares/corporate bonds as bit of a hedge in case the experts are wrong.

I think you are mixing up two uses of the word risk. The common-usage one is the risk of loosing all or a large proportion of your savings and ending up in poverty. However what is normally meant in investment discussions is volatility - the tendency for a share value to rise to high values and fall to low ones.

So as an example, a general fund in Far East shares is considered higher risk by investors as values can be volatile in the short term. BUT if you are thinking long term would you really consider the risk of the Far East economies collapsing (outside of a catastrophic global collapse when all bets are off for anything, including the value of savings) to be very high?

Your "sensible strategy" really is not very sensible. In the long term you are unlikely to match inflation with interest, whereas with a broad portfolio of shares you are likely to exceed it. So if you are investing for the long term (>5-10 years), then you should have a high % of your money in shares. If you are not thinking long term, then you should not be in shares at all.

DiggerUK

plarka wrote: »

We want to beat inflation.....We just read about buying gold online.........We calculated that if we had bought gold with this £3000 10 years ago......it would be worth £14,000 now.....

I would have no problems if you put all your spare loot in to gold, but then again I'm regarded as quite mad by one or two around here.

What is your understanding of inflation. If it is 'just prices rising' then you are only considering half the picture. Inflation in it's traditional economic translation, is about the real value of the cash in your pocket. I'm taking it as read that you understand the concept of too much 'printy printy' devaluing what you have in your pocket.

Gold will not make you rich, it just preserves the real value of what you have at present.

Consider why your 3K 10 years ago, would be 14K now.
Do you think it would be 14K because people are mad, or is it because the real value of paper money has crashed.

Buy a few sovereigns and learn all you can along the way. They can never become worthless.
..._

GeorgeHowell

Linton wrote: »

I think you are mixing up two uses of the word risk. The common-usage one is the risk of loosing all or a large proportion of your savings and ending up in poverty. However what is normally meant in investment discussions is volatility - the tendency for a share value to rise to high values and fall to low ones.

So as an example, a general fund in Far East shares is considered higher risk by investors as values can be volatile in the short term. BUT if you are thinking long term would you really consider the risk of the Far East economies collapsing (outside of a catastrophic global collapse when all bets are off for anything, including the value of savings) to be very high?

Your "sensible strategy" really is not very sensible. In the long term you are unlikely to match inflation with interest, whereas with a broad portfolio of shares you are likely to exceed it. So if you are investing for the long term (>5-10 years), then you should have a high % of your money in shares. If you are not thinking long term, then you should not be in shares at all.

I don't there are two uses of 'risk' -- risk is risk. What you refer to are degrees of risk. To someone with £100K to their name, losing £10K of it in a year may well represent a risk too far, even if someone is telling them not to worry it will all come out alright in the 'long term'.

The old conventional wisdom that over time shares will beat anything is surely now disproven. The FTSE100 is still substantially below it's 1999 peak. Certainly by dipping in and out at the right times it would have been possible to stay ahead of the game. But that's not investing, it's speculating, and just as likely to result in greater losses as in gains. Most professional fund managers can't beat the FTSE so what chance has the average punter got ?

Financial advisors despair of the millions who stay mainly in cash and relatively risk-free investments, come what may. They think those people are ignorant, stupid, inert, and overly-conservative. I have heard it described as 'reckless caution'. I believe that many, if not most, people of modest means trying to protect their nest eggs or life savings against losses are much less risk-oriented than the financial services industry thinks they ought to be, or would like them to be. And I would argue that the evidence of the last decade largely corroborates the approach of the risk-averse majority, because amateurs dabbling about in shares, commodities, property or most other non-cash areas would probably not, given average luck, have produced a killing, to put it mildly.

Even some professional experts are now coming round to the idea that cash does not look so bad after all relative to just about everything else. With present high inflation and low interest rates there is no method of investing relatively modest sums with a high probability of beating inflation overall, ie in terms of capital gain/loss + net income.

Masomnia

DiggerUK wrote: »

Consider why your 3K 10 years ago, would be 14K now.
Do you think it would be 14K because people are mad, or is it because the real value of paper money has crashed.

Buy a few sovereigns and learn all you can along the way. They can never become worthless.
..._

So is the real value of paper money the same now as it was in 1980?

The value of the top 100 British companies will never be 0 either, so by that argument a FTSE 100 tracker fund is just as appropriate.

Glen_Clark

melly1980 wrote: »

what about the tax breaks though.

I currently put ~15% into a pension (company pension) to avoid 40% tax.

Well in your case I am sure you are doing the right thing.
Its very different to someone who only pays basic rate tax paying into a private pension, because in that case the pension provider seems very likely to take more out of it than the taxman would.