New to Saving & Investing

Forever

I am in my fourties and I have 30k and no property. But I have no idea how to stop my sum of money eroding from inflation.

I forecast that the property prices will go down in the UK due to the national and global economic situation but still with some up pressure due to shortage of housing. My guess is that in the long term they will either go down or flat-line.

I also think that the UK is going to be entering a number of years of low interest rates and high inflation (unfortunately) whilst the UK becomes a bit poorer. But we need to do this to compete at a global level so it's not all miserable It's only miserable for me right now because I have a small sum of money that I don't want to loose.

So does anyone have any suggestions how to stop my small sum slowly going down the toilet?

I have a cash isa and I am about to do a shares and stocks isa

For the rest, I have considered:

- investing a small amount in silver and gold sovereigns. Value seems to go up with inflation but it's currently in a bubble...

- it looks like certain equities such as food, energy and pharmaceuticals etc are good to invest in but I believe this is high risk. Especially as I am a noob at this!

- buy uk gilds but they already seem to be in a very big bubble

- get a temporary job in Asia like South Korea or China (or any place that takes tefl teachers where interest rates and inflation are ok and have sound economies). Then open a savings account and transfer some of my money across to my account over there.

- try to work out how to have a savings account in Australia which has good interest rates and low inflation at the moment whilst I remain in the uk. I have seen I can open an Australian savings account but I will have to pay tax on any savings. I currently have no idea much this tax charge would be?

Does anybody have any feedback or any other ideas? As you can tell from my list above, I am happy to be a little unconventional in my ways to save my money

Edit: I speak Spanish and a bit of French and German if this helps at all

Linton

My take on your situation as I understand it:

If your total assets in your forties amount to £30K (no pension funds?) I believe focusing on defensive measures is ignoring the major problem. £30K is not enough to make the difference between struggling and a reasonable life in your old age, losses in your existing savings due to inflation are a secondary concern. You should be looking at how you can significantly increase your savings during your expected working life.

You need a few months living expenses in an easily accessible account to cope with emergencies. The rest could be put into an S&S ISA and be augmented by a consistent monthly deposit. By paying in a steady monthly amount you take advantage of temporary falls in prices - during the bad times you get more units for your money. Suggest you use a few broad funds eg a Global Growth Fund and similar. In what is I assume your circumstances I wouldnt try and predict specific growth sectors.

Putting savings in a foreign account is hassle from a tax point of view and high risk because of changes in currency valuations. To take the Australian case, the £/$A rate has risen by 50% since the start of the credit crunch, it could easily drop the same amount in the next say 5 years leaving you with much less in £ terms than when you started even with good Australian interest rates.

Totton

You don't need property, you can always rent if you prefer. Governments are most likely to inflate their way out of the debt they now have, protecting 30k will be difficult without taking some risk. I'd max out any tax-free options each year if possible and go for some Investment Trusts such as RIT Capital Partners (RCP), Caledonia (CLDN), Worldwide Healthcare (WWH), perhaps Personal Assets (PNL) if cautiously optimistic and possibly Blackrock World Mining (BRWM) now that it has taken a battering although it could fall further until the world picks up.
Overall I'd look to ISA's & Deposit accounts paying above inflation.

By the sound of it you could go to Australia, if I had that choice I would disappear out of this country asap.

grey_gym_sock

Forever wrote: »

- it looks like certain equities such as food, energy and pharmaceuticals etc are good to invest in but I believe this is high risk. Especially as I am a noob at this!

there are funds investing in equities run by funds managers who have similar opinions to you about the direction of UK economy and which sectors look good. most likely equity income funds. there is less that can go wrong in buying funds like that than in picking individual shares yourself.

you mentioned overseas accounts, etc. there is no need to work overseas in order to put money overseas. savings accounts in other currencies are quite high risk (assuming you intend to spend your money in sterling), because exchange rates can move rapidly and unpredictably. there is a good case for putting some of your money where it will be affected by other economies instead of the UK. but the case is much stronger for overseas equities, rather than savings accounts. returns on savings accounts don't generally gain a lot if the economy is booming, but equities often do. there are plenty of possible funds you can use to buy equities in other parts of the world, without leaving the UK. (not that i want to discourage the idea of travel or working overseas - it has other advantages!)

I have a cash isa and I am about to do a shares and stocks isa

bear in mind that cash ISA are quite simple, but S&S ISAs are just a wrapper, i.e. you can buy almost any funds or shares you like inside them. so you should look to put an S&S ISA in shares/funds that match your overall objectives.

cashbackproblems

Personally you should be trying to get on the property ladder as how will you afford rent once you are retired, you will continue renting and wasting money for rest of your life as it gets harder to get mortgages 50+.

DiggerUK

Well, it seems you are considering everything; with the financial mish mash that you are looking at, you could end up with a very diversified portfolio, with no strength, as you are here, there, and everywhere.

Do some more research, you will figure it out.

What we have done coming up to retirement, is go heavy in to gold. But then again we have researched it, and are happy with gold as a long term saving. Would not consider going short term ourselves. We view silver as a busted flush with no future.

Best of fortune.
..._

Laze

Rather than ask the stupid question in it's own thread, if you have £30k, how would it erode? Or do you mean based on what you COULD earn?

If you have £30k, and it's in several savings accounts and ISA(s) over the coming years, the interest would only be a positive, would it not?

grey_gym_sock

Laze wrote: »

Rather than ask the stupid question in it's own thread, if you have £30k, how would it erode?

inflation. £30k's real value - how much it can buy - can erode.

over the last few years, interest rates in savings accounts have not been high enough to keep up with inflation. though that has not always been the case.

jimjames

Regardless of any views on investing in property as an asset to live in it seems to me like a pretty good idea. Rather than paying rent you end up with an asset you can live in that should keep up with inflation.

Personally I would sort that out before looking into more extreme asset classes.

Forever

Thank you everyone for all your feedback. It really has been of immense help.

@Linton, I have 7 more years of NI contributions to make and then, according to the current rules, I will be eligible for the full state pension. I realise I am going to be pretty poor when I retire. But I am also planning to work for as long as possible either here in the UK or abroad.

As for the Global Growth Funds, that does look interesting. Do I need to contact a financial planner with a building society or an IFA to find out more about these?

@nearly everyone, to everyone who commented on savings abroad, thank you very much for highlighting the pitfalls of this approach. I've now dropped this as a too 'risky' idea to pursue

@Totton, investment trusts sounds like a good idea. Who do I contact to find out more information about this? Do I need to see an IFA or a financial planner?

As for leaving for more promising parts of the world, I do agree with you but alas, I am over the age where I would be welcome to emigrate to Australia, New Zealand etc. I would encourage people who are younger than I to do this without any hesitation!

However, I can see that I could still earn a reasonable amount in Asia for a few years so this is still an option for finding work, making a living, saving a bit and all whilst leading a full life.

@grey gym sock, thank you for confirming the investing in equities idea, the extra info on investing in equities abroad and to find someone to manage it. I will probably see a financial planner soon and will ask about this.

@cashbackproblems and @jimjames, I feel very mixed about owning property. At the moment, I work part time and this gives me free housing so I am not paying any rent or a mortgage. I feel extremely grateful with my current situation.

I also like the idea of being able to go 'anywhere' to find my next job or even go away for a few/6/9 months to work and then return here (for as long as the owner doesn't mind me doing this).

However, I don't want to do this long term. I think ideally I would like to save up money initially without a mortgage so that I have full flexibility in finding work. Then once I am less desirable to employers, I will buy a small apartment wherever I can afford it within Europe. I also can see certain countries having lower property prices in the future which could be to my advantage.

But perhaps I am thinking about this the wrong way? I'm feeling slightly muddled about this one now...

@DiggerUK, thanks for the heads up on gold and the warning to stay away from silver. At the very least, gold does seem to have a trend of going up with inflation.

Again, thank you very much everyone and if anyone has any further comments, it would certainly be most welcome

fiesta04

As you seem very unsure of what you want, I suggest you go to your Bank and listen to what they offer. But do not agree to, or sign anything. If you like any of the products advised then go to an IFA and see what is really out there in the terms of growth and income.

Be aware of all the charges.

F4