How do I protect the value of £200k cash in 2022?

Foggy999

OK So after being very poor all my life I have managed to acquire about £200k cash. I earn about £40k a year and am 54 single. I want to move from London where I work to the south coast and buy a property (eventually). There is nothing in London I can afford to buy that I would actually want to live in. i.e single room studio flats where you are essentially living sleeping in your kitchen. So perhaps I could get a BTL on the south coast and when I am ready or find work there I could move in a few years. That is one option.
So the question is what would you do with £200k in my situation in 2022. The markets look bear, there is a massive looming recession and uncertain future. I do understand a bit about personal finance but things are changing at a rapid pace. I feel like I need to free up my mind by looking at some different options. For example I don't think I want to lock my cash away for too long. 

DannyCarey

The stock market (ideally global index funds) is literally your only (easy) option to fight against inflation and to preserve spending power. 

The best time to buy is when their is peak fear... rather than in happy times...

talexuser

In your situation you can't. The only way of keeping up with inflation for the next few years is the stock market and then you  would have to be lucky in your fund choices. If you are buying a property in a few years cash is the only safe option since a market crash could wipe out more than inflation relatively easily. Maybe the best cash fixes you can find for the next couple of years?

InvesterJones

The only way you can be sure that you'll be able to buy what you want with a given amount of money in the future.. is buy it now. If that's not possible, then maybe buy something that you're confident will track a similar value as the thing you want to buy.

Anything else is effectively a speculation that it will appreciate more (or at least, depreciate less) than what you want to use the cash on in the future, so look at your risk appetite.

sevenhills

You could gamble with a safe place for your money and lose up to 10% in value or you could gamble in the stock market and lose up to 30% or gain 20% depending on how it's invested.

Frequentlyhere

Do you have a SIPP or company pension? As you're close to the age when you can take it, it seems to me It'd be best to put some money in there. You can put up to a limit of £40k (providing you've earned that amount as you've said) and if its a SIPP of some sort  you could potentially put in £32k this tax year and next and benefit from a 25% uplift on all of it through tax relief.

Probably the most important factor of what you do with the money though is how long 'eventually' is. If you mean when you're 65, then I personally would consider putting most of the money to work in the markets, perhaps drip feeding it in (and feed it into your pension for the next few years as described above). If you mean in 3 years, then of course not so much. 

Any money you then don't want in the volatile markets you could just go with 1 year fixes perhaps.

And whilst you carefully think about all of that, easy access at circa 1.8% with one of the best buys..

Albermarle

DannyCarey said:

The stock market (ideally global index funds) is literally your only (easy) option to fight against inflation and to preserve spending power. This mainly holds true as long as you can buy and hold the investment for the long term ( ideally more than 10 years). For the short term the stock markets are best avoided. For the medium term ( 5 to 10 years) there is still risk of loss but less so .

The best time to buy is when their is peak fear... rather than in happy times...

The second part of your post has some truth in it . Another saying is invest when there is blood on the street ( presume it means Wall st ) even if some of the blood is yours. It is getting the timing right that is the hard bit.

Foggy999

Great answers! Thanks. I love the 'invest when there is blood on the street' quote. Now if only I had the personality of a venture capitalist instead of being an airy fairy creative type lol 

Notepad_Phil

I normally would always prefer global equities to property when considering how to keep up with inflation, but in your particular shoes and with the relatively short period of time I'd be looking to buy the property now and get it rented out. Any other option is going to leave you in the hands of the gods of finance as to whether you'll have enough money in a few years time to buy what you want.

Foggy999

Notepad_Phil said:

I normally would always prefer global equities to property when considering how to keep up with inflation, but in your particular shoes and with the relatively short period of time I'd be looking to buy the property now and get it rented out. Any other option is going to leave you in the hands of the gods of finance as to whether you'll have enough money in a few years time to buy what you want.

Thanks Notepad that is succinctly put, its one line of thinking I have been on for a while. This gives me better perspective for sure.

uk1

Foggy999 said:

OK So after being very poor all my life I have managed to acquire about £200k cash. I earn about £40k a year and am 54 single. I want to move from London where I work to the south coast and buy a property (eventually). There is nothing in London I can afford to buy that I would actually want to live in. i.e single room studio flats where you are essentially living sleeping in your kitchen. So perhaps I could get a BTL on the south coast and when I am ready or find work there I could move in a few years. That is one option.
So the question is what would you do with £200k in my situation in 2022. The markets look bear, there is a massive looming recession and uncertain future. I do understand a bit about personal finance but things are changing at a rapid pace. I feel like I need to free up my mind by looking at some different options. For example I don't think I want to lock my cash away for too long. 

I think you might have failed to ask  yourself a much more fundamental question.  As a person who has experienced hardship and a struggle to be where you currently financially  are, are you really happy with what may to many the acceptance of risking all your capital on what might be risky investments for a possibly higher return - or not - in a highly volatile and extremely uncertain  world or might you be happier with accepting what might be a loss of potential opportunity and growth `(and risk) by taking a much more cautious and less risky approach and sleeping a whole lot better every night.  Particularly as your horizon is quite short term. 

Once you’ve thought that through it might lead you to a completely different set of options and therefore possible decisions. 

Just a thought.