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capital0ne

eskbanker wrote: »

There's no such thing as zero risk - there are obviously accounts with capital protection, such as all savings accounts and premium bonds, but as these usually won't keep pace with inflation, especially over the long term, then money held in such accounts risks losing value in real terms.

Everyone know inflation reduces your spending power so a savings account paying less than the rate of inflation is zero risk. You are not risking anything - you know your losing capital when you venture into the deal.
The only totally risk free investment I know of are NS&I Indexed Linked Savings Certificates - not currently on sale, but if you have any, hang onto them. :T:T:T

eskbanker

capital0ne wrote: »

Everyone know inflation reduces your spending power so a savings account paying less than the rate of inflation is zero risk. You are not risking anything - you know your losing capital when you venture into the deal.

That's a rather odd view of what risk means in this context - knowledge and/or acceptance of inflation risk doesn't magically make it go away, i.e. a risk that's 100% likely to happen doesn't suddenly become zero risk to your money, quite the opposite in fact!

AnotherJoe

eskbanker wrote: »

That's a rather odd view of what risk means in this context - knowledge and/or acceptance of inflation risk doesn't magically make it go away, i.e. a risk that's 100% likely to happen doesn't suddenly become zero risk to your money, quite the opposite in fact!

Agreed. Plus of course, you might know you are losing out to inflation, so a risk is the size of that inflation. Will you be losing 1,2, 5 or perhaps more % a year? Thats the risk.

polymaff

AnotherJoe wrote: »

Agreed. Plus of course, you might know you are losing out to inflation, so a risk is the size of that inflation. Will you be losing 1,2, 5 or perhaps more % a year? Thats the risk.

The percentage loss is relative to what you could otherwise achieve - not to inflation.

Alexland

IanManc wrote: »

Using that logic, if I jump off the new 38 storey block of student flats in Manchester city centre I know I'm going to be killed when I hit the pavement - so I'm "not risking anything", as I know I'm going to be killed when I "venture into the deal". Therefore jumping off a 38 storey building is zero risk.

In the world of IT and Construction project management it certainly wouldn't be a risk as the outcome is near certain but it would be an issue, maybe not for yourself, for the people who have to clean you up over whatever radius you spread.

Alex

dont_use_vistaprint

eskbanker wrote: »

That's a rather odd view of what risk means in this context - knowledge and/or acceptance of inflation risk doesn't magically make it go away, i.e. a risk that's 100% likely to happen doesn't suddenly become zero risk to your money, quite the opposite in fact!

That's not the definition of risk though. A risk is something that "might" happen, below inflation growth in a savings account is not a risk, its a known level of performance

eskbanker

dont_use_vistaprint wrote: »

That's not the definition of risk though. A risk is something that "might" happen, below inflation growth in a savings account is not a risk, its a known level of performance

Hence my reference to "what risk means in this context" - there are obviously many ways of defining risk, but the one you're choosing (as with Alexland before you) doesn't relate directly to the matter of risk to your money.

However, if you choose to subscribe to capital0ne's skewed perspective that knowing you'll lose money means zero risk, then go ahead!

polymaff

Some risks are that you'll not select the best product - or that capital protection fails - or you die before receiving pro-rata income.

Inflation's only input is if your product list includes inflation-linked products.

dont_use_vistaprint

IanManc wrote: »

The risk isn't that there will be inflation - the risk is that you don't know in advance how high inflation might be, and it might be very high. The risk is the known unknown.

Here's a thought. If you are not renting, reducing energy and transport costs, generally consuming less, how relevant is CPI in this context?

Were told everything is getting more expensive, but for a large number of people that's just not true. New properties and water meters can cut utility bills in half, and the government will invest 20% to make them affordable. Food, clothes and other household items can be much, much cheaper if you cook and buy good quality clothes and use charity shops.

Data and Telcoms is now very cheap compared to 3 or 5 years ago

There are much cheaper ways to travel now with modern diesel and hybrid engines, Uber, Ryan Air, Liftshare sites, Cycle to Work.

£10 - £20 a month Gym is pretty standard is most cities. 5 years ago it was double.

So many books are 1pence (plus postage) on Amazon. I used to pay on average £10-30 per book.

Unlimited music for the whole family, £9.99. Netflix £7 per month, Blockbuster used to charge £4 per movie and CD's were £14 each at their peak

I guess its the people in high rented accom commuting into London and heavy consumers of brands that feel inflation, myself and many people I talk to feel like many things are becoming cheaper, although gas does feel like its just gone up a little :-)

eskbanker

^ I think most would heartily disagree with much of that - although in some isolated cases there may be savings to be achieved either by alternative sourcing or even like-for-like, there is plenty of data supporting published inflation figures.

MSE's own slant on household bill costs is quite helpful: https://www.moneysavingexpert.com/news/2018/08/the-rise-in-household-bills-has-grown-faster-than-inflation-over-the-last-year-mse-bills-tracker-shows/

And for many, food is a major constituent of cost, and there is little doubt that the trend here is upward too, as per https://tradingeconomics.com/united-kingdom/food-inflation