to think savings will be worthless?

[HopelessLayout]

So governments are printing money hand over fist to cover all the Covid bailouts. Isn't this going to cause hyperinflation when it is all over?
I have modest savings put away for my retirement in a few years' time, but perhaps I should just blow the lot now.

Please tell me if I am misunderstanding the situation.

They are already worthless as you are penalised (you can't get benefits) if you have been responsible and saved. I would just spend it and let the state look after you.

But someone with no debt and a decent level of savings, I also worry about hyperinflation. I do sometimes wonder if I should liquidate my account and buy gold but that's what everyone does and the gold price goes up!

This is me. Apparently it's impossible to buy gold at the moment!

Buy some gold when you can. YABU

I think if things get that bad and you already have savings then you'll be doing better than a lot of people....most countries are printing so in my uneducated brain it means the rebalance won't be horrific!

Is there anything big you have put off purchasing?

Unfortunately not. I managed to buy my home when interest rates were high. Luckily paid off now though.

Savings for retirement should be in a pension fund.. Thanks for the tip but my pension fund appears to be a dud as well. I started a post about this a few months back.

We'd be incredibly lucky to have inflation running at 4% right now.

If you are worried about inflation, buy property or equities.

Thanks to everyone for the suggestions. I will look at the premium/fixed bonds and at talking to an IFA.
I do have a stocks and shares ISA so might look at transferring some cash into that.

I don't have enough to invest in property (unfortunately).

I also got a letter saying my savings was going down to 0.01%. Thankfully I already have a fixed savings and a fixed rate cash ISA for 2 years. I had a look at my shares a couple of weeks ago. Shouldn’t have bothered it was depressing!

I've got two accounts one at 2% and one 2.5% (but quite stringent limits, no good for people with big amounts) it's to go towards our upsize, if we were in our forever home I'd be tempted to use the savings to over pay the mortgage instead to make the most of low interest rates!

On the plus side though, everybody's mortgages will also be inflating away...

OP, if you are worried about inflation (not that I'm saying that's likely) then why would you pick premium bonds where inflation would erode your principal? I could understand if you were worried about institution/banking failure so chose premium bonds for the sovereign backed security.

Savings are already effectively worthless and you will also be penalised heavily if you have saved and the time ever arises that you might need to claim benefits or require care. If you are approaching retirement there are two scenarios - either the state will take care of you or your own private funds will. The huge borrowing levels being undertaken at the moment do carry the very significant risk of increasing inflation, the number one enemy of savers and investors. You are right to be concerned.

If you are worried about inflation buy a years worth of staples and items you know you will need at today's prices: loo roll, medicine etc.

Interest rates are going to stay extremely low for the foreseeable and it's why house prices were booming all over the world as nervous investors wanted to keep money in something holding value, literal brick and mortar and "safe as houses". Savings accounts are the worst place to have cash and savings at the moment unless you plan to do something with your cash within weeks or a few months. You should always have an emergency fund of cash (at least a years worth) in a money market account (which in the USA at least is insured and a safe place for cash) or a Certificate of Deposit (US term) where you are guaranteed a rate of return after a year or more. Other than emergency funds other money should be invested for the long term, otherwise your money will not grow and of course with hyper-inflation get wiped out. With investments such as shares you are buying part of an actual entity such as a business and unless it goes bust your investment should grow with the value of the company over time. We have been in the longest Bull market in history (or very close) since 2008 which was going to come to an end at some point. But you should be investing for decades not a few years. Also plan to not sell your investments but have them in a portfolio that gives you dividends and then live off the interest of those dividends. Women live a long time, we need guaranteed income into our 80s+ It's best to be as diversified as possible at all times and not have all your money eggs in one basket. No-one knows the future and many investors of big brokerages are staying very liquid while they wait to see how COVID pans out and what to do with their clients money. But that is in the short-term 2-3 yrs. Long term (decades) if you have wise investments, sit tight. If you can figure out any side hustles, to make extra income (making masks to sell online for example) throw all that money into your investments right now.

I would recommend Vanguard, and Index funds, which is investing in the entire market so you don't have to pick funds, but I am in the USA.

“This is dangerous advice.“
It’s a lot less dangerous than your advice that “everyone” keeps their money “in cash” for their pensions. Lol. If that were even remotely true there would be no stock market, no finance job for your husband. Fact is over £1.5 trillion in pension savings are currently invested for millions of people in the U.K. right now.

And if one is retiring soon (5yrs?), you should still invest because retirement can last 20-40yrs. Long term. Cash will just lose value and not last if you live to your 90s. Especially as a woman! In fact financial watchdogs are sounding the alarm about retired people putting their pension money into cash accounts because it’s a bad idea unless you are going to spend it quickly (less than 5yrs) and loses them money.

www.thisismoney.co.uk/money/pensions/article-5995883/Why-savers-sticking-pension-pots-cash-funds-not-investing.html

Good post womanlywiles.

I only have about £10k in savings and plan on keeping it in the bank as it’s there for if I need it due to reduced income.

If I knew I wasn’t going to touch it I could invest it but I can’t as who knows when il need it

No point having a safety net locked away earning 2% when you lose your job and have to borrow money to live because you can’t get at your own money

I don't think there's much risk of inflation, quite the opposite. Lots of people losing their jobs means a reduction in the amount of money chasing goods and services, the bail-outs aren't going to be big enough to fully offset that.

Actually, contrary to what some people have said, the Bank of England are "printing money" to cover COVID expenses, but the new money will be replaced by borrowing as soon as possible, within a year I think.

If I thought inflation was a certainty, I'd borrow lots of money and use it to buy property or shares. They should (roughly speaking) not be affected by inflation, but the debt that paid for them would be eroded by it.

I would recommend Vanguard, and Index funds, which is investing in the entire market so you don't have to pick funds, but I am in the USA

Vanguard have a UK subsidiary. Something they offer will be suitable for OP.

“I would just spend it and let the state look after you.”

Ugh. What’s next? Refuse to work and let the state look after you? Have a dozen children and let the state look after you?

Have you no sense of civic responsibility? If you can save to support your old age, you should do that. Just like if you can work to support yourself, you should do that. No one likes a freeloader.

Chiribaya, PMSL at 'savings are already effectively worthless' - Savings can be used by the holder. I realise there is a tension in the UK where there is a limited safety net and savings are taken into account for the purposes of social care (is it c£23k) but as most retirees die before they need social care, even this doesn't make savings worthless. When a retired householder outside social housing needs to pay for a repair, it's easier to do this from their (worthless) savings then from ....

@SonjaMorgan
It is worrying and yet again the government is rewarding people who live beyond their means. Savers always seem to get the shitty end of the stick.

Is there anything big you have put off purchasing?

Do you have any idea how lucky you are to be able to save anything at all? It's not fortunate to have to borrow to survive. I say this as someone that is financially somewhere in the middle...

Womanly, very sensible and as a later post says, Vanguard operate in the UK and the last time I checked, they offered investments with lower fees than almost everyone else.

And if one is retiring soon (5yrs?), you should still invest because retirement can last 20-40yrs. Long term. Cash will just lose value and not last if you live to your 90s. Especially as a woman! In fact financial watchdogs are sounding the alarm about retired people putting their pension money into cash accounts because it’s a bad idea unless you are going to spend it quickly (less than 5yrs) and loses them money

Some of the best advice on here. I never fail to be shocked at how little most people understand about investing and financial products.