Rampant inflation, what do i do?

[Deleted User]

I have almost a similar amount of money, all in regular savers, an LISA and premium bonds. I aim to buy a house in the next three to four years so in savers the money will stay. 

Aretnap

If you have a fixed rate mortgage that is three times your savings then you should certainly cross your fingers and hope for rampant inflation. However I suspect that you'll be disappointed. Certainly 30 year bond yields of ~0.6% don't suggest that mainstream professional investors and economists are expecting inflation to return to the levels of the 1970s, or even the early the 1990s, any time in the foreseeable future. The people I see predicting imminent rampant inflation are mainly people trying to sell me gold, people trying to sell me Bitcoin, and people who have been predicting that quantitative easing will lead to imminent hyperinflation since at least 2008.

That said there is little point in keeping about two years of take home pay in cash unless you have a plan for spending it in the next few years; cash savings will usually be gradually eroded by inflation over the years, and you are missing out on the better expected long term returns that come from stocks and shares. So you should consider keeping enough cash as a buffer for emergencies (eg unemployment, major car repairs, new boiler), and putting the rest into a broad based stocks and shares fund for long term investment.

Unfortunately there is no way of protecting savings from inflation without taking some risk of loss, at least in the short to medium term.

WelshGlyndwr

Aretnap said:

If you have a fixed rate mortgage that is three times your savings then you should certainly cross your fingers and hope for rampant inflation. However I suspect that you'll be disappointed. Certainly 30 year bond yields of ~0.6% don't suggest that mainstream professional investors and economists are expecting inflation to return to the levels of the 1970s, or even the early the 1990s, any time in the foreseeable future. The people I see predicting imminent rampant inflation are mainly people trying to sell me gold, people trying to sell me Bitcoin, and people who have been predicting that quantitative easing will lead to imminent hyperinflation since at least 2008.

That said there is little point in keeping about two years of take home pay in cash unless you have a plan for spending it in the next few years; cash savings will usually be gradually eroded by inflation over the years, and you are missing out on the better expected long term returns that come from stocks and shares. So you should consider keeping enough cash as a buffer for emergencies (eg unemployment, major car repairs, new boiler), and putting the rest into a broad based stocks and shares fund for long term investment.

Unfortunately there is no way of protecting savings from inflation without taking some risk of loss, at least in the short to medium term.

thanks, but not many stocks shares isas make a return, most of them are a loss. Perhaps safer in a savings account

eskbanker

WelshGlyndwr said:
thanks, but not many stocks shares isas make a return, most of them are a loss

Eh?  What makes you think that?  Obviously much depends on which investments are being bought and how long they're held for, but as a generalisation that comment doesn't hold water.....

Alistair31

sevenhills said:

Alistair31 said:

Rampant inflation? 

With £56,000 in a savings account earning very little interest, the OP could be losing £400/£500 every year.

Inflation is hardly rampant. That is not to say it couldn’t become so. 

WelshGlyndwr

eskbanker said:

WelshGlyndwr said:
thanks, but not many stocks shares isas make a return, most of them are a loss

Eh?  What makes you think that?  Obviously much depends on which investments are being bought and how long they're held for, but as a generalisation that comment doesn't hold water.....

family members i know have never made much of a return

dunstonh

WelshGlyndwr said:

Aretnap said:

If you have a fixed rate mortgage that is three times your savings then you should certainly cross your fingers and hope for rampant inflation. However I suspect that you'll be disappointed. Certainly 30 year bond yields of ~0.6% don't suggest that mainstream professional investors and economists are expecting inflation to return to the levels of the 1970s, or even the early the 1990s, any time in the foreseeable future. The people I see predicting imminent rampant inflation are mainly people trying to sell me gold, people trying to sell me Bitcoin, and people who have been predicting that quantitative easing will lead to imminent hyperinflation since at least 2008.

That said there is little point in keeping about two years of take home pay in cash unless you have a plan for spending it in the next few years; cash savings will usually be gradually eroded by inflation over the years, and you are missing out on the better expected long term returns that come from stocks and shares. So you should consider keeping enough cash as a buffer for emergencies (eg unemployment, major car repairs, new boiler), and putting the rest into a broad based stocks and shares fund for long term investment.

Unfortunately there is no way of protecting savings from inflation without taking some risk of loss, at least in the short to medium term.

thanks, but not many stocks shares isas make a return, most of them are a loss. Perhaps safer in a savings account

S&S ISAs do not make or lose money. They are just a container for investments.     If you use UT/OEICs then you would be hard pushed to fine more than a handful that are in a loss position.
You are working on duff assumptions.

eskbanker

WelshGlyndwr said:

eskbanker said:

WelshGlyndwr said:
thanks, but not many stocks shares isas make a return, most of them are a loss

Eh?  What makes you think that?  Obviously much depends on which investments are being bought and how long they're held for, but as a generalisation that comment doesn't hold water.....

family members i know have never made much of a return

But surely by posting on here you were looking for guidance from those who know what they're talking about?

DiamondLil

eskbanker said:

WelshGlyndwr said:

eskbanker said:

WelshGlyndwr said:
thanks, but not many stocks shares isas make a return, most of them are a loss

Eh?  What makes you think that?  Obviously much depends on which investments are being bought and how long they're held for, but as a generalisation that comment doesn't hold water.....

family members i know have never made much of a return

But surely by posting on here you were looking for guidance from those who know what they're talking about?

My late father in law: "My car won't start"  Did you take it to the garage ?

"Nah, I'll ask the chap up the road"  Oh, I thought you asked him to fix it last week ?

"Yes I did, he fixed it but it's broken down again"

masonic

WelshGlyndwr said:

eskbanker said:

WelshGlyndwr said:
thanks, but not many stocks shares isas make a return, most of them are a loss

Eh?  What makes you think that?  Obviously much depends on which investments are being bought and how long they're held for, but as a generalisation that comment doesn't hold water.....

family members i know have never made much of a return

Being terrible at investing needn't run in the family, if that's your concern. This forum is a great place if you want help making good investment decisions and avoid your family members' mistakes.