Savings devalued by inflation - what are people doing?

[Jonny TVR]

In such a volatile world what are peoples views on the best ways to protect cash from devaluation over the next 5 years.

[Simpo Two]

See my thread from March: https://www.pistonheads.com/gassing/topic.asp?h=0&...

[Jonny TVR]

Thanks ST

[anonymous-user]

Arranging a remortgage for January next year has been a wake up call, thankfully I got confirmation this week as I suspect it would have got a lot more expensive after the BoE interest rate decision today.

I kept the cash in the bank as a safety blanket, but I am going to overpay my mortgage by 10% in the next couple of months, and then by another 10% as soon as the new mortgage starts in the new year.

I didn't mind the mortgage debt when the rate was 1.5%, but now that has almost doubled I want to get shot of it as soon as possible.

[Fusion777]

High yielding blue chip shares, overpaying mortgage, savings accounts as interest rate rises. None of these pay 9% (may get the odd company paying it short term, but long term it doesn't happen), but it's better than zero/close to zero.

[Jawls]

Cash savings aren’t there to beat inflation. They’re there as insulation against short term crises (major car maintenance, your boiler blows up, you lose your job etc). That inflation munches away at them is part of the cost of doing business. So I just whack it in the best easy access accounts I can find.

Long term stuff should be in return producing assets, whether that be property, shares etc. Its those that are supposed to beat inflation over the long term.

[Dave350]

S&S ISA - Vanguard - S&P500.

Easy to access/withdraw if necessary and the S&P has historically performed very strongly as an index fund compared to others.

[anonymous-user]

Dave350 said:

S&S ISA - Vanguard - S&P500.

Easy to access/withdraw if necessary and the S&P has historically performed very strongly as an index fund compared to others.

I have some in there as well as a Life Strategy 100. Let's be honest, not exactly done well in 2022.

[DaveA8]

When you have the Co CIO of Bridgewater ( $150B under management) saying cash has been the least bad asset of 2022, you know things are sticky.
Rates cannot go enough to cover even medium term inflation so for now it's death by a 1000 cuts

[Nitro182]

I personally believe that during high inflation the best thing to do is hold as much cash as possible while spending as little as possible. So basically save save save and spend as little as you can on fuel , food and gas/electric. Don't worry about beating inflation as you can't.

[bitchstewie]

The argument is that with inflation you lose with cash but you know roughly what you'll lose and peoples personal inflation rates can be very different.

Stocks and other investments can do much worse over short periods of time.

[UnclePat]

Whilst the ‘effective’ spending power of a £1 may be 10-15% less in a year’s time with high inflation, at least with a fixed rate mortgage and inflation bumping salary income (held in an account which near enough earns equivalent interest return to the mortgage interest) £1 in my pay still pays off £1 owed in my mortgage via over payment, so there’s a viewpoint that whilst the value of money is slipping with inflation, that same inflation is also helping to more quickly erode the debt.

[Thin White Duke]

Apparently we could be looking at 15% inflation and a major recession. Correct me if I'm wrong, but during the recession/credit crunch of 2008 inflation didn't seem to be a problem.

Why is it this time?

[Fusion777]

Thin White Duke said:

Apparently we could be looking at 15% inflation and a major recession. Correct me if I'm wrong, but during the recession/credit crunch of 2008 inflation didn't seem to be a problem.

Why is it this time?

Energy and food prices, post-Covid bounce and supply issues, shipping costs, and so on.

[Phooey]

Thin White Duke said:

Apparently we could be looking at 15% inflation and a major recession. Correct me if I'm wrong, but during the recession/credit crunch of 2008 inflation didn't seem to be a problem.

Why is it this time?

inflation is the blame of this recession

[PostHeads123]

Pumping spare cash into my pension as salary sacrifice.

[Simpo Two]

DaveA8 said:

When you have the Co CIO of Bridgewater ( $150B under management) saying cash has been the least bad asset of 2022, you know things are sticky.

I seem to recall trying to convince certain people here of that earlier this year! He has the numbers to back it up, I just go by smell...

[lizardbrain]

Thin White Duke said:

Apparently we could be looking at 15% inflation and a major recession. Correct me if I'm wrong, but during the recession/credit crunch of 2008 inflation didn't seem to be a problem.

Why is it this time?

The recession is 'neccessary' to deal with the inflation. If there wasn't one coming anyway, they would need to create one.

Maybe MMT isn't magic after all

[Piginapoke]

Vanguard FT100 tracker and Tesla shares (bought at 720)

[GR86]

Nitro182 said:

I personally believe that during high inflation the best thing to do is hold as much cash as possible while spending as little as possible. So basically save save save and spend as little as you can on fuel , food and gas/electric. Don't worry about beating inflation as you can't.

I agree with this. If I put my cash in a tracker right now I wouldn't be surprised if the value of the tracker went down whilst inflation went up, double whammy.