Cash ISA/Savings/Inflation - Query

coyrls

ssm90 said:

Is there no way of buying 'new' gilts? Or are these no longer being issued?
I do find it strange that the only option to keep up with/beat inflation is S&S, especially when it is so volatile. I imagine most risk averse people just accept that they will lose some value due to inflation rather than risk it on S&S.

Nobody can buy new gilts at the issue price; they are auctioned and in currrent conditions are selling above the issue price.

ssm90

perfect, thanks all for your responses, that has answered my query

Notepad_Phil

In case you are still looking in on this, you could perhaps think of moving at least some of your money so it was held outside of an ISA.

ISA interest rates for cash savings are poor and you could get better interest rates in taxable accounts - assuming you're a basic rate tax payer then you are allowed a minimum of £1000 of interest before tax would start to be a problem.

You're talking about a one year fix, so for instance there are multiple regular monthly savers offering guaranteed rates of 2% or more from the likes of HSBC, Lloyds, Halifax, TSB, Bank of Scotland, etc, etc that last for a year (see the opening posts of https://forums.moneysavingexpert.com/discussion/6106986/regular-savings-accounts-the-best-currently-available-list/p1 for more details)  - unfortunately these accounts do require a bit of work to operate and they usually have fairly minimal maximum amounts that can be deposited each month (say £200 to £250) but if you operate them with a decent earning savings account (e.g. something like marcus) then you have a chance of at least some of your money beating the 1.3% that you were talking of.

Nothing in life is guaranteed, but by making use of non-ISA accounts I have been able to keep mine and Mrs Phil's cash (ISA + non-ISA) matching at least the CPI inflation rate since I took early retirement a few years ago.

Albermarle

I do find it strange that the only option to keep up with/beat inflation is S&S, especially when it is so volatile.

Regarding volatility , then some points maybe to think about:

The drops tend to be more dramatic than the usual steady rise, and of course better headline material. Also the  large majority of investments are not 100% linked to share prices. Typically 50 or 60% so the volatility is lessened.

A typical medium risk fund has dropped between 7 and 12 % this year and will be around the same value as it was 12 months ago, and a lot higher than it was 5 years ago.

I imagine most risk averse people just accept that they will lose some value due to inflation rather than risk it on S&S. 

Many millions of people are invested in S&S in their pensions, most probably without fully realising it and over the lifetime of the pension they will benefit greatly from this .