inflation

josef2311

what to do with  savings protection from inflation

RG2015

Sadly, savers are pretty much stuffed at the moment regarding protection from inflation. Inflation currently 5% likely to peak at 7% or more in the next month or two.

The best savings rates for easy access or one year locks are well below 2%. They may rise a bit as will 2 to 5 year fixes but even they are likely only to be half the inflation rate.

Hence savers will be losing out big time.

Albermarle

You can not protect savings from inflation at the moment .
Savings interest rates are way below inflation.
If you are prepared to invest the money , then history says that you should beat inflation , but you need to be prepared to lock your money up for quite a few years.
If you want more specific info/guidance you will have to post a lot more info about yourself and your current circumstances.

Zola.

The only way to protect against inflation (even in the "good times") is to invest cash into appreciating assets. 

Thats pretty much never money in the bank.

GeoffTF

Zola. said:

The only way to protect against inflation (even in the "good times") is to invest cash into appreciating assets. 

Thats pretty much never money in the bank.

Money in the bank has given an above inflation return for long periods of time during my lifetime, before tax at least. Not now though. Finding appreciating assets is likely to be a big problem starting from here.

dunstonh

what to do with  savings protection from inflation

Savings tend to either be at or just below inflation in most periods.   The gap is just bigger than normal at the moment.

So, the same old methods apply.  You invest instead.

Zola.

GeoffTF said:

Zola. said:

The only way to protect against inflation (even in the "good times") is to invest cash into appreciating assets. 

Thats pretty much never money in the bank.

Money in the bank has given an above inflation return for long periods of time during my lifetime, before tax at least. Not now though. Finding appreciating assets is likely to be a big problem starting from here.

The most I have ever seen in a saver/current account is something like 3.5%. Whilst it was certainly miles better than what we have now, I never once thought it was truly keeping up with inflation as it pertains to things I buy... I struggle to believe the reported inflation numbers each year. 

Why would finding appreciating assets be a big problem from here, especially when you could just do global indexing and not worry about finding individual companies or sectors. 

wmb194

dunstonh said:

what to do with  savings protection from inflation

Savings tend to either be at or just below inflation in most periods.   The gap is just bigger than normal at the moment.

So, the same old methods apply.  You invest instead.

No, historically it was possible to earn between a 1% and 2% real return but you needed to chase the rates.

wmb194

Zola. said:

GeoffTF said:

Zola. said:

The only way to protect against inflation (even in the "good times") is to invest cash into appreciating assets. 

Thats pretty much never money in the bank.

Money in the bank has given an above inflation return for long periods of time during my lifetime, before tax at least. Not now though. Finding appreciating assets is likely to be a big problem starting from here.

The most I have ever seen in a saver/current account is something like 3.5%. Whilst it was certainly miles better than what we have now, I never once thought it was truly keeping up with inflation as it pertains to things I buy... I struggle to believe the reported inflation numbers each year. 

Why would finding appreciating assets be a big problem from here, especially when you could just do global indexing and not worry about finding individual companies or sectors. 

Really? I still have a 4% fixed rate savings bond running to mid-2024, so until recently this was keeping up with and may have been a little ahead of official inflation.. At around the time of the '08 financial crisis I had fixed rate savings bonds paying 6.5%+ with Nationwide and elsewhere and RPI had turned marginally negative that year. After things calmed down it was still easy to find 5% five year savings bonds. It all changed when the Bank introduced the TLS(?) and then TFS(?) and crashed deposit rates. After that the game shifted to current accounts and regular savers but you could find 4% on £8k, IIRC later reduced to £5k, with e.g., Lloyds and BoS Vantage current accounts and FD had a regular saver at 8% for a while.

Pre-crisis, when inflation was running at c.3% for a long while it was pretty easy to find accounts paying 5%+. I remember even NS&I Income Bonds were paying 5%+ and 10yr gilts were 5.5%, USTs 5%.

Albermarle

Zola. said:

GeoffTF said:

Zola. said:

The only way to protect against inflation (even in the "good times") is to invest cash into appreciating assets. 

Thats pretty much never money in the bank.

Money in the bank has given an above inflation return for long periods of time during my lifetime, before tax at least. Not now though. Finding appreciating assets is likely to be a big problem starting from here.

The most I have ever seen in a saver/current account is something like 3.5%. Whilst it was certainly miles better than what we have now, I never once thought it was truly keeping up with inflation as it pertains to things I buy... I struggle to believe the reported inflation numbers each year. 

Why would finding appreciating assets be a big problem from here, especially when you could just do global indexing and not worry about finding individual companies or sectors. 

Just after the GFC and when Northern Rock was taken over by the government , I got a fixed rate saver with them for 7% if my memory serves me correctly . 

The last decade has been good for investors and there seems to be a consensus that the next ten will be more of a struggle . It could well be that a global index fund will not produce the returns that some are hoping for .

eskbanker

Thanks to the longevity of this forum, those with misty-eyed nostalgia for decent interest rates of old can review the rates available right back to 2007 on threads on this very board:

https://forums.moneysavingexpert.com/discussion/596724/the-top-easy-access-savings-discussion-area/p1

https://forums.moneysavingexpert.com/discussion/608697/regular-savings-accounts-the-best-currently-available-list/p1
https://forums.moneysavingexpert.com/discussion/5776240/regular-saver-thread-new-and-restarted/p1