Inflation

RG2015

There is a rather dramatic thread started today titled inflation and economic crash. I do not subscribe to this somewhat irrational fear but do have some concerns. Inflation hits savings and an economic crash hits investments.

My question is what, if anything can be done to mitigate against the consequences of any large increase in inflation in the next year or two?

6022tivo

Spend your money and enjoy it.

masonic

Economic crashes are generally welcomed by knowledgeable investors as they enable investments to be bought for lower prices. They are a temporary revaluation of those investments driven largely by a change in sentiment, though it is true not all companies survive economic crashes.

Inflation tends to be a permanent devaluation of cash. Sometimes deflation follows inflation, but usually prices do not fall back to previous levels after a period of high inflation.

So it is really the inflation that is of greater concern. You can mitigate the effects of inflation by holding assets whose price will be subject to inflation, or which can generate income streams that can keep up with inflation, spending sooner rather than later, and avoiding holding more cash than you need in the short term.

Thrugelmir

RG2015 said:

My question is what, if anything can be done to mitigate against the consequences of any large increase in inflation in the next year or two?

Is inflation your only concern?  Many factors have a bearing on the the value of a stocks and shares portfolio. Hence why the asset class is volatile and not dissimilar to riding a roller coaster. 

HansOndabush

RG2015 said:

There is a rather dramatic thread started today titled inflation and economic crash. I do not subscribe to this somewhat irrational fear but do have some concerns. Inflation hits savings and an economic crash hits investments.

My question is what, if anything can be done to mitigate against the consequences of any large increase in inflation in the next year or two?

I don't see the thread you refer to; has it been pulled?

masonic

HansOndabush said:

RG2015 said:

There is a rather dramatic thread started today titled inflation and economic crash. I do not subscribe to this somewhat irrational fear but do have some concerns. Inflation hits savings and an economic crash hits investments.

My question is what, if anything can be done to mitigate against the consequences of any large increase in inflation in the next year or two?

I don't see the thread you refer to; has it been pulled?

I think this one is the one being referred to: https://forums.moneysavingexpert.com/discussion/6266708/inflation-and-economic-crash

RG2015

Thrugelmir said:

RG2015 said:

My question is what, if anything can be done to mitigate against the consequences of any large increase in inflation in the next year or two?

Is inflation your only concern?  Many factors have a bearing on the the value of a stocks and shares portfolio. Hence why the asset class is volatile and not dissimilar to riding a roller coaster. 

ATM yes as 70% of my current surplus is in cash including premium bonds. I have a relatively comfortable DB pension and will be eligible for state pension next year.

I remember only too well the double digit inflation of the 70s, but I was beating this with healthy annual salary increases and house value growth.

Larger S&S investments would mitigate against inflation, but I am reluctant to do this as a crash with a larger investment portfolio feels like a bigger risk than low single digit inflation.

GeordieGeorge

RG2015 said:

There is a rather dramatic thread started today titled inflation and economic crash. I do not subscribe to this somewhat irrational fear but do have some concerns. Inflation hits savings and an economic crash hits investments.

My question is what, if anything can be done to mitigate against the consequences of any large increase in inflation in the next year or two?

You can buy inflation-linked bonds, or place a spread-bet on inflation through a company such as City Index. 

RG2015

GeordieGeorge said:

RG2015 said:

There is a rather dramatic thread started today titled inflation and economic crash. I do not subscribe to this somewhat irrational fear but do have some concerns. Inflation hits savings and an economic crash hits investments.

My question is what, if anything can be done to mitigate against the consequences of any large increase in inflation in the next year or two?

You can buy inflation-linked bonds, or place a spread-bet on inflation through a company such as City Index. 

I was not aware that inflation linked bonds were currently available. As regards spread betting, that sounds link a bit of a gamble.

Steve182

RG2015 said:

GeordieGeorge said:

RG2015 said:

There is a rather dramatic thread started today titled inflation and economic crash. I do not subscribe to this somewhat irrational fear but do have some concerns. Inflation hits savings and an economic crash hits investments.

My question is what, if anything can be done to mitigate against the consequences of any large increase in inflation in the next year or two?

You can buy inflation-linked bonds, or place a spread-bet on inflation through a company such as City Index. 

I was not aware that inflation linked bonds were currently available. As regards spread betting, that sounds link a bit of a gamble.

A hedge is not a gamble, on the contrary, it's an insurance policy.

RG2015

Steve182 said:

RG2015 said:

GeordieGeorge said:

RG2015 said:

There is a rather dramatic thread started today titled inflation and economic crash. I do not subscribe to this somewhat irrational fear but do have some concerns. Inflation hits savings and an economic crash hits investments.

My question is what, if anything can be done to mitigate against the consequences of any large increase in inflation in the next year or two?

You can buy inflation-linked bonds, or place a spread-bet on inflation through a company such as City Index. 

I was not aware that inflation linked bonds were currently available. As regards spread betting, that sounds link a bit of a gamble.

A hedge is not a gamble, on the contrary, it's an insurance policy.

I said spread betting sounds like a gamble. It was a joke.