Safety of savings in the context of the international financial markets

maximoo

I am presently on the continent. In some places here south of Channel, particularly in Germany, there is a lot of talk about the instability of the financial markets, increasing food prices on the global market, the recession in the US, escalating global inflation, skyrocketting gold prices etc. There are allusions (though very vague and indirectly) to the Great Depression, so much so, that I wonder whether it is still rational to keep savings in savings accounts. Would it be wiser to spend it? Or, if enough invest it in an apartment?
Could Martin perhaps comment on this?
Many thanks,
Max

anon12345_2

Or hide it in the attic? Under the floorboards? Behind the kitchen sink?

jo_b_2

maximoo wrote: »

I am presently on the continent. In some places here south of Channel, particularly in Germany, there is a lot of talk about the instability of the financial markets, increasing food prices on the global market, the recession in the US, escalating global inflation, skyrocketting gold prices etc. There are allusions (though very vague and indirectly) to the Great Depression, so much so, that I wonder whether it is still rational to keep savings in savings accounts. Would it be wiser to spend it? Or, if enough invest it in an apartment?
Could Martin perhaps comment on this?
Many thanks,
Max

Martin has written an article HERE discussing the safety of savings, in the current financial climate.

I don't know how relevant it will be to you in Germany (assuming you live there) but may be worth reading.

maximoo

Thanks for your comments. I have read Martin's points about safety. My question is not about banks going bust. It is about inflation and excessively fast rising prices.
What is the point of penny pinching and changing savings accounts if the interest I get (whether half a point more or less) is overtaken by the combination of inflation, rising prices and taxation?
Max

cheerfulcat

Hi, Max,

Inflation is always the big risk with cash. Over many years it is almost guaranteed to erode the value of your savings, even allowing for interest. You could look at inflation-linked government bonds - randomly chosen ( Googled ) but relevant article here. Alternatively, put some money into equities...

maximoo

Dear Cheerfulcat,
I didn't have time to check into the discussion here for some time. But
thanks very much for the useful comment and link! I don't quite understand why people are not more concerned about this issue...
Regards! Max

agent_orange_2

maximoo wrote: »

I am presently on the continent. In some places here south of Channel, particularly in Germany, there is a lot of talk about the instability of the financial markets, increasing food prices on the global market, the recession in the US, escalating global inflation, skyrocketting gold prices etc. There are allusions (though very vague and indirectly) to the Great Depression
Max

It's been mentioned here in the uk;)

cheerfulcat

Hello, Max,

The savings ratio in the UK is pitifully low, which suggests that most people here are taking a Micawberish position. I suspect that the Germans are better at saving and investing, possibly with the folk memory of hyperinflation still relatively fresh?

It's also possible that quite a lot of people don't actually understand what inflation does to the value of money! This may be about to change...