Savings and Inflation

urbantus

What is the best way to protect savings against inflation
I currently have £100 k to invest

Zanderman

to invest? Or to save?
Invest implies risk and long-term.
Save implies safety and short-term.
Invest may well beat inflation medium/long term.
Save will rarely (and certainly not at present) beat inflation.

urbantus

I would prefer to lose a bit of money over time rather than risk losing more trying to beat inflation
What are the best options for saving accounts taking into account the safe limit on protection

Are there any safe investments for less than five years which are guaranteed not to lose money

steampowered

There are different types of risk.

"Investment risk" is the risk associated with investments fluctuating up and down.

"Inflation risk" is the risk of inflation eating away at value.

Over the long term, inflation risk is a much more substantial risk than investment risk.

If you are holding for the long term, the ups and downs of the stock markets even themselves out. If you are saving for the long term you will be much better off with a balanced portfolio of stocks & shares - e.g. a Vanguard fund.

AnotherJoe

urbantus wrote: »

What is the best way to protect savings against inflation
I currently have £100 k to invest

Two different things.
Do you wish to save and see the value drop a little every year, or invest for the long term and see fluctuations in value. Long term up but short term could be down.


Start with, what are these savings for? Whats teh plan?

AnotherJoe

urbantus wrote: »

Are there any safe investments for less than five years which are guaranteed not to lose money

Not if you include inflation risk (or, it should perhaps be put, inflation certainty)

urbantus

I will be retiring quite soon
I was planing to withdraw approx £7.5 k pa from the £100 k
Hence my concern over investment risk as opposed to the effects of inflation on my savings

AnotherJoe

OK so thats still 13 years. In which time it could easily lose a quarter of its value to inflation.
Here's a suggestion for comments, put 1/3 in cash , 1/3 in low risk funds and 1/3 in medium risk. Every year move a years spend downwards, eg medium risk to low, low to cash so after a few yers you only have low risk.

After 13 years to keep even with inflation at just 3% you'd need to be withdrawing £10k a year so you'd run out much quicker then 13 years (11 according to my fag packet)


What determines low and medium risk is up for determination

short_butt_sweet

do you have a pension which will start paying out 13 years after retirement? or are you planning to stop going on world cruises after the first 13 years of your retirement (for example)? or do you estimate that's when you'll die? or ...?

xylophone

https://forums.moneysavingexpert.com/discussion/comment/17681763#Comment_17681763

The same £100,000?

It appears from your previous posts that you are now approaching state pension age?

Have you obtained a state pension forecast?

https://www.gov.uk/check-state-pension

In previous posts you mentioned that you have pension schemes - are you taking benefits from these as soon as you stop work?

Have you looked at the above provision in conjunction with your savings in order to work out whether you could take some investment risk with part of your savings?

Otherwise, savings rates here
https://www.thisismoney.co.uk/money/article-1583859/Best-savings-rates-General-savings-Internet-branch.html

george4064

All the info you need is here: http://www.moneysavingexpert.com/savings/savings-accounts-best-interest

Have a thorough read and if you have any questions just ask away!