What to do spend spend or buy gold

STILTON

In view of the Government printing money due to a massive future debt crisis, thus the value of the pound tanking over the next few years.
Is it better for a retired person of 71 to spend what savings one has ( equity release too) or buy gold as a hedge, although one would be taxed on profit on that.  Maybe max out on Premium Bonds.
The interest rate on savings will not go up anytime soon and stocks are dodgy especially for a retired person.  
Thanks for your views.

AlanP_2

Value of the £ compared to what? Countries all over the world are using QE or similar to shore up their finances. We have an advantage in the UK, as do other currency issuing nations such as the US & Japan compared to those that don't e.g. those in the EU and the countries that use the $ as their de facto real currency - the issing countries have a lot more control and can't run out of money.

If the UK governmment "create" £150BN of new money and prices go up in the same ratio you are no worse off.

The problem that could occur is that prices rise faster / higher than the amount of money chasing the goods people want to buy. If you have £2 to spend on a loaf and your neighbour only has £1.50 and the baker has one loaf to sell then the price will be £2, if he has 2 to sell the price will be £1.50.

At the moment there is no shortage of stuff that people want to buy, limited opportunity to spend anyway and so people are saving more overall. Allied with this there is no pressure on wages as jobs are becoming scarcer hence inflation is low and looks likely to remain that way for the forseeable future.

As a 71 year old with who knows what amount of time left on thie earth I would be very, very reluctant to spend what I had accumulated over many years "just in case something bad happens" and then be left in poverty in 20 years time when the future is different to how you think it might unfold.

PBs for your cash savings, will with average wins, pay about the same or slightly more than most savings accounts at the moment so worth considering.

Gold could be a hedge, who knows. The price of gold seems entirely random to me with no fundamental reason why it rises and falls, and I thinjk that over say 20 years there has been very little real return but you would need to look at historic pricing v inflation to verify that.

Some people on here are 100% in gold and I'm sure will post at some stage to gival an alternative viewpoint. Some have a small allocation to gold as a diversifier against their equities and bonds.

Stocks aren't dodgy if you go for a mainstream provider and a sensible global asset allocation for your age and risk tolerance and have over the lifetime of virtually everyone alive today produced better returns than cash or gold. Think about that, it encompasses 2 world wars, the cold war, the fall of the Eastern Bloc, the Oil Crisis, 15%+ interest rates and inflation, Black Monday, the dotcom crash of 2000 and the GFC of 2008 as well as all the other things that have happened in the world.

If you are using income drawdown are you not invested within the pension you are withdrawing from?

Stenwold

It depends what you want from life.

Is it more important to ensure your money continues to grow (as much as it can, anyway), or will you get more enjoyment from spending it?

Providing you don't deprive yourself of the funds required to live comfortably, obviously...

Another_Saver

STILTON said:

In view of the Government printing money due to a massive future debt crisis, thus the value of the pound tanking over the next few years.
Is it better for a retired person of 71 to spend what savings one has ( and maybe include income drawdown) or buy gold as a hedge, although one would be taxed on profit on that.  Maybe max out on Premium Bonds.
The interest rate on savings will not go up anytime soon and stocks are dodgy especially for a retired person.  
Thanks for your views.

No.
You could buy a gold ETC within a S&S ISA or SIPP to avoid capital gains tax.
Stocks aren't dodgy, they're the best long-term investment and even at 71 it (arguably) can still make sense to hold some stocks.

STILTON

Sorry everyone, meant Equity Release not drawdown - edited.
Have FS pension.

Ectophile

The price of gold is very heavily dependent on the markets' confidence in other things.  That's why it bounces up and down so much.  If everything else goes horribly wrong, then an ounce of gold is still an ounce of gold.

I bought in the last recession, when the banks were tanking, share prices were falling globally, and QE was driving down interest rates.  With nothing else to invest in, there was a mad scrabble for gold.  I left it a bit late, but I still came out with a nice profit.

The down side of gold is that it pays no interest or dividends.  In the periods between recessions, it doesn't really do anything.

Linton

STILTON said:

In view of the Government printing money due to a massive future debt crisis, thus the value of the pound tanking over the next few years.
Is it better for a retired person of 71 to spend what savings one has ( equity release too) or buy gold as a hedge, although one would be taxed on profit on that.  Maybe max out on Premium Bonds.
The interest rate on savings will not go up anytime soon and stocks are dodgy especially for a retired person.  
Thanks for your views.

You asked for my views.  Here they are (from another retired 71 year old):
1) The government isnt printing money due to a future debt crisis.
2) If it were it may or may not cause the value of the £ to tank - it depends on what happens to the money
3) At 71 squandering what money you have now  would be foolish - would you be happy living solely on your current income for the next 20 or more years.?
4) Are you suggesting equity release?  Surely converting an asset into cash at a time you believe that cash will "tank" aganst assets seems an odd think to do.
5) How do you think buying premium bonds will help?  They are a form of cash.
6) I agree that interest rates are not likely to go up soon.
7) Stocks are not dodgy for a retired person if invested sensibly.   In fact, if the £ is going to tank global stocks are one of the few readily available and realisable investment options that are likely to provide some protection. 

Sailtheworld

If someone knows sterling is going to tank and when surely they be better off getting into forex trading. Cut out the middleman that's gold because the bet then becomes that sterling will tank at a certain time AND the sterling value of gold will increase.

It makes no sense to have this foresight and take cash out of a house. The house potentially is a loose hedge against sterling devaluation and what's the point of cash that's predicted to devalue. Likewise the idea of maxing out on premium bonds.

AnotherJoe

STILTON said:

In view of the Government printing money due to a massive future debt crisis, thus the value of the pound tanking over the next few years.
Is it better for a retired person of 71 to spend what savings one has ( equity release too) or buy gold as a hedge, although one would be taxed on profit on that.  Maybe max out on Premium Bonds.
The interest rate on savings will not go up anytime soon and stocks are dodgy especially for a retired person.  
Thanks for your views.

The Pound has tanked over your whole lifetime. Did you spend spend spend or buy gold to cope with that starting in teh 60's?  If not why start now?

And why are stocks dodgy especially for a retired person? I am in that category and think in contrast to you that they are the best place for my money to be,   that gold is dodgy but not as dodgy as just randomly spending what i have (and on what??)

Notepad_Phil

STILTON said:

The interest rate on savings will not go up anytime soon and stocks are dodgy especially for a retired person.  
Thanks for your views.

It seems that you have a DB pension so it may be that for you that stocks may be something that you have never needed to really understand, however I would suggest that for many people that stocks are in fact a necessity and definitely not dodgy (provided they are bought as part of a mainstream fund) and so don't just block them from your thoughts unless you really don't need them.

My MIL is 96 and only has her state pension + a few level term annuities and if she hadn't kept a large chunk of her portfolio in funds then she wouldn't be in the happy position where her money has more than kept up with inflation over the last 30 years and she is able to live comfortably and securely. However my own 91 year old mother is in the lucky position of having a good index linked final salary pension from the government and so that with her state pension is enough for her without having to branch out to investments.

coachman12

Hi Stilton, I'm most impressed by AlanP's post on this thread, it is the best by a very high margin. It gives a measured definitive overview and a whole lot of options and thoughts for you to consider-----
I recommend that you use AlanP's thoughts as the basis of what you decide to do.

For my own part, I would really need to know more personal details of your total worth and what sums we are talking about ( and please do not divulge on this site unless you really have a need to).
OPTION 1 : If you have relatively small amount (IMHO less than £100,000 ), then I would recommend  that you find the best regular online saver accounts and just hold on to your money.
 OPTION 2 : If you have a medium amount (IMHO  £100,000--£500,000), I would recommend a dabble with blue chip shares on the markets if you are prepared for some research and work and turn it into a hobby, whilst keeping £200,000 in reserve in the form recommended in Option 1 above).You also have leeway to spoil yourself with that world cruise you've always wanted, the snazzy car, etc etc.
Option 3 :If you are moderately wealthy (IMHO over £1m and preferably much more than that if "seriously" wealthy), I have no hesitation in recommending gold as a first choice ( in bars, wafers or coins----but remember coin values are not gold prices)-------------gold is the best way to keep a very wealthy person very wealthy; I  would also dabble in the markets with as much as you wish ( IMO up to £200,000 if you have at least £1m+ in total---); and, of course if you have such amounts or more, you deserve to think much more in terms of spending money on yourself after 71 years of work and saving I assume-----so the wonderful house or a second holiday home and other luxuries that appeal to you.

All the above options come with the assumption that you now own a house ( and the above Options do not include its value in the figures quoted ). All above Options also come with the caveat    (especially Options 1 and 2 ) that you MUST keep as much as possible ---say up to £300,000 for the day when you may need a residential home or care home, in which case you want the very best : and that is one of the most important to bear in mind IMO ( more than houses, cars, realty cruises),  so you can spend your final days, if occasion demands, on living in upmarket surroundings with top-class care----instead one of the grotty residential homes that we see littering so many towns.

Whatever you decide Stilton, I wish you a happy , healthy and long life with financial security into your old age.