Best place to put your money in current climate?

VoxNonIncerta

With inflation at an est 11.7% and the best easy access savings account at 1.5% isn't that a real time depreciation of 10.2% so where can you put savings (15k) to offset this? I've paid the maximum I can as an overpayment into my mortgage this financial year so anymore incurres charges I believe. I could commit to a 3 year fixed scheme but they only seem marginally better rates. Any advice is greatly appreciated. 

steampowered

You could consider a stocks & shares ISA.

You can invest in a tracker fund which splits your money across the entire stock market, so that you get the average return rather than being exposed too much to any one individual company.

The average return generated by the stock markets for the past 10, 20, 30 years is about 7-8% per year. Of course that is an average so some years will be a significant loss, and other years will be a significant gain. So there is risk involved and you need to be able to stomach the ups and downs, but over the long term it evens out.

Realistically I don't think you are going to be able to beat inflation this year with any sensible investment.

george4064

Depends on what you mean by ‘best’.

Do you mean best as in highest return? Or best as in safest? Or best as in risk/reward?

Generally speaking the best place to put your money to work, provided you can leave it for the long-term (at least 5 years, preferably 10+ years) is to invest it. Most tax efficient is usually within a pension, followed by an Stocks & Shares (S&S) ISA.

Best places to read to learn about S&S ISAs are;

https://www.moneysavingexpert.com/savings/investment-beginners/

https://monevator.com/category/investing/passive-investing-investing/

Linton

You need to split your wealth between the short term which you will need to access in the next 5 years and the long term. You have little choice to put the short term money anywhere other than a savings account which will probably return less than inflation.

For the long term, say 10-15years or more, from historical evidence you can expect to beat inflation by investing in shares, or preferably funds of shares.

Medium term, say 5-10 years is rather more difficult and would probably require a mixture of cash and other investments

Albermarle

With inflation at an est 11.7% and the best easy access savings account at 1.5% isn't that a real time depreciation of 10.2% so where can you put savings (15k) to offset this?

 If such a product existed to cover inflation in the short term, there would be a mad stampede to buy it. ( but there isn't such a product) 

For the longer term increasing payments to a pension is the best choice for many. Also making sure the pension is invested appropriately.

Although if you have a good pension provision in place ( like with most public sector employees) then a S&S ISA maybe better.

RG2015

VoxNonIncerta said:

With inflation at an est 11.7% and the best easy access savings account at 1.5% isn't that a real time depreciation of 10.2% so where can you put savings (15k) to offset this? I've paid the maximum I can as an overpayment into my mortgage this financial year so anymore incurres charges I believe. I could commit to a 3 year fixed scheme but they only seem marginally better rates. Any advice is greatly appreciated. 

Based on your figures, you losing about £1,500 per annum for a long as inflation continues at this level.

You could invest the £15k but it could lose value in the short term. A prudent investment in an S&S fund is likely to keep pace with inflation after 5 to 10 years and beyond.

However, inflation also affects your day to day expenditure and your £15k savings may be needed to fund this.

Do you have any specific plans for your savings? You say you could commit to a 3 year fixed scheme which implies you may need the money in 3 years. If that is the case, your only "safe" options are to save in a savings account or spend it.

Albermarle

Based on your figures, you losing about £1,500 per annum for a long as inflation continues at this level

It is not actually just inflation but the main issue for savers is the gap between the savings rates and the inflation rate.

It is pretty likely ( but not certain) that the gap is going to be at its highest this year, but should hopefully narrow next year and after that. Savings rates should continue to creep up and hopefully inflation will peak later this year.

So probably this £1500 pa figure will reduce for the OP after this year, but will still be significant.

RG2015

Albermarle said:

Based on your figures, you losing about £1,500 per annum for a long as inflation continues at this level

It is not actually just inflation but the main issue for savers is the gap between the savings rates and the inflation rate.

It is pretty likely ( but not certain) that the gap is going to be at its highest this year, but should hopefully narrow next year and after that. Savings rates should continue to creep up and hopefully inflation will peak later this year.

So probably this £1500 pa figure will reduce for the OP after this year, but will still be significant.

I said based upon the OP’s figures. 

They chose to use RPI of 11.7% and easy access savings of 1.5% and stated they would be losing 10.2%. I also said for as long as inflation continues at this level.

However, I absolutely agree (hope and pray) that inflation will fall from this year’s expected peak of 11% CPI later this year.

diystarter7

Personally, I would not ATM fix any savings for more than a year as I see rates improving. We've not fixed any and getting 1-5% at the Coventry not fixed etc - its an old onlive account.

RG2015

diystarter7 said:

Personally, I would not ATM fix any savings for more than a year as I see rates improving. We've not fixed any and getting 1-5% at the Coventry not fixed etc - its an old onlive account.

I agree, although 2.7% for 14 months from Coventry is appealing. Even more so as I do not need to register for a new FI.

sevenhills

VoxNonIncerta said:

With inflation at an est 11.7% and the best easy access savings account at 1.5% isn't that a real time depreciation of 10.2% so where can you put savings (15k) to offset this?

Buy yourself that Range Rover now?