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.

And if one is retiring soon (5yrs?), you should still invest because retirement can last 20-40yrs.

Good point; thanks!

Hopeless, no problems. You'll see premium bonds are government-backed which for many people is a good thing. The bonds you buy are the principal. Instead of earning interest or a return on investment as with shares, the government takes the notional interest and bundles it up into the prizes. These are tax free which for a higher-rate taxpayer makes them relatively attractive compared with other investments. If you don't win enough prizes then your principal erodes by inflation without the recompense of the interest paid in a deposits/savings account.

so they are an option with costs and benefits but the reason I mentioned is that if you are worries about inflation then they are probably amongst the worst investment unless you are lucky enough to win a large prize.

if you are worried about banks failing then they (or other UK National Savings investments) are good as they are state backed.

As you and PPs have said, important things are to understand your circumstances so be worried if someone says everyone should do X. And understand what your investment involves.

Good luck.

I have had a premium bond since I was born and it has not won a prize in the 50+ years since... however I live in hope. You DO get your original money back with them however.

i agree with the advice above (and it also depends how much money you have what you do with it). Have some money for emergencies to cover a few months (if are able to do so). Consider if paying off mortgage debt gets you more month by month cash than having intereset on savings of 1% or less - it usually does but check penalties for paying back mortgage early. obviously make sure you have no credit card debt. Then the classic third in cash savings at bank, perhaps on instant access just in case, a third in property and a third in shares is not too bad if you have quite a lot of money.

I have spent most of my life giving my money away - ex husband got more than half and my life savings on divorce and since then I have been giving it to each child as they buy a property so at least they have somewhere to live as do I and I would rather they have it (and I also paid school fees for 5 and university fees and costs so they have no student loans) so I suppose those kind of things are a form of investment in the next generation.

I've been advised (not by a FA but someone v experienced in stock market investments) that property is not a good bet at the present time.

Companies have staff WFH widely successfully so why do they need an expensive office building? The new normal will be to buy clothes online so why would Next/M&S/John Lewis need an expensive high street store?

Look to invest in companies doing well in the present circumstances. Anyone with a big online presence or able to adapt: Amazon, Tesco, home delivery companies, home entertainment, technology etc or someone with a business idea how I can get a massage and a facial, or my kids feet measured for new shoes while in lockdown!

FelicityMarbles I will add that to my list of things to look at—thanks.

Xenia Continuing to work won't be an option for me either due to my health. However, I might not have to worry about financing a long retirement!

HandfulofDust Thank you. It seems it hard to say anything these days without offending someone.

Floatyboat Thanks—will check that out.

Sgtmajormummy That is a genuine concern. I believe that has happened in other countries also.

Womanlywiles All good points.

Modern modern is all relative to other currencies. If ALL countries are printing money to survive the Covid crisis, then there'll be little relative difference between currencies and the underlying "value" won't change.

Major fluctuations, deflation/inflation, etc usually occur when one currency (or a small group) collapses but others don't - that's unlikely to happen here as all major developed countries are being affected.

I had 1K in premium bonds for approx 5 years
I won £25
Then took my money out, to invest somewhere else

There is a chance to win a big prize & it's tax free

I do have some savings & investments that pay more than inflation & a pension

It's worth shopping around

If you can afford to take some risk then invest in stock through a company like Hargreaves Lansdown

0.01% interest now from Lloyds. 😂

RosesandIris I would recommend you read through the info on the link I posted, then maybe join some personal investment forums on the internet and discuss them with people who have the same investment goals as you. You NEVER need to pay for investment advice if you do your own research and homework. I am in the USA so not familiar with UK pensions and how they are structured. I would first do research understanding those in the UK and what is available to you and how much you are allowed to invest tax free. Does your employer match funds (give you a benefit where cash is paid into a pension pot?). If so there is every chance you could set up an account with Vanguard and they would pay those funds directly. Please do lots of research, question everything I have said, gets lots of opinions. I believe Vanguard do have advisors if you would prefer someone help you pick the funds for your pension pot. Remember the golden rule of investing is DIVERSIFY, have a range of funds i.e. one covering big companies, one covering IT companies, one with international funds. Then you spread your risk. Please also remember your investments can go DOWN in value as well as up so you need to be investing over the long haul (just as you would not want to sell a house in a down market). Always have a financial emergency fund so that if you had a crisis you have access to funds so you don't need to touch your investments. Don't start investing until

1. You have paid off all consumer or other unsecured debt, such as credit cards (excluding a mortgage).
2. You have saved an emergency cash fund of at least 12 months of expenses.(Imagine if you lost your job right now and had no emergency fund and had to sell your investments, you could easily lose money).

Don't ever invest money until you completely understand what you are doing. If you are with a large company or a union which has financial advisors get their opinion (remember you can always ignore their advice). They may also offer excellent pension plans, so do your research.

I am not qualified to give you specific advice to your situation and your goals. You are the expert on that. Don't ever hand over your financial decisions to someone else, you need to be financially literate and understand every decision you make.

Lanurk Wow!

Zilla1 Thanks for the explanation. Probably not for me then, as I would like to see my investment grow (even just a little)… plus I never win anything!

Xenia No mortgage or debts so I am lucky in that regard. I do agree that investing in the next generation is the right thing to do.

JamMaking Thanks for the explanation… I think the phrase "a little knowledge is dangerous" definitely applies to me!

I appreciate all the insight and suggestions so thank you all!

greathat I have stock investments with the company that is managing my pension, but it seems to be worth less every year!

There are lots of free resources on the web for learning about finance.
Podcasts and Youtube Channels. Free ebooks.
Some are targeted towards people resident in certain countries.
For the UK here are some podcasts to search for in your favourite podcast app:
Money To The Masses
Meaningful Money
Maven Money
In Her Financial Shoes
That Mint Podcast

If reading is more your thing, then ebooks are around.
One written by a UK financial planner is called Three Steps To Financial Freedom and is a PDF download available from meaningfulmoney.tv/resources/

Personally I'm far too heavy in cash (instant access savings) at the moment and I am planning on moving some of it to my SIPP and some to S&S ISA. Having an emergency fund though is important, though it will lose money due to inflation. So we have to find the right balance between having enough money accessible and enough for us growing for our future.

p.s.when saying not to give money to younger relatives of course its fine if you planned to help them and can afford too. However if helping them puts you in financial jeopardy that it is a bad financial decision. Don't ever rely on OPM (Other People's Money). You need to have your own. For example don't not invest because you are counting on an inheritance. Never assume money is coming to you, that is definitely a high risk strategy.

Buy investments then!!! You will never make anything with cash deposits- take a bit more risk, now is probably a good time to buy a tracker as the markets have already fallen by a lot!!

nannynick I agree about the emergency fund losing value, that's why it's important to put it somewhere where it is protected but earning some interest, such as a Money Market account or CD.

I guess you could buy 20,000 loo rolls instead

People would never let other people pick their home or their life partner but some will hand over their money without having a clue what it's invested in!

Sorry I have not read through the thread but this academic economist writes about this in one of his blog posts. I appreciate this is one view and am sure there will be a range of views but thought interesting.

1. “When the government starts financing its deficit by printing money rather than issuing debt, rampant inflation is just around the corner.

Many thought this after the GFC, when central banks started buying government debt through their Quantitative Easing programme, because they bought the debt by creating money. Subsequent events have shown that those who thought inflation was inevitable were completely wrong, as many of us said at the time. The reason they were wrong is because interest rates are at their lower bound, and at the lower bound it does not matter too much how the government deficit is financed. The reason is intuitive: when rates are zero, you are indifferent between cash and short term debt. So why would issuing money rather than debt cause inflation when rates are zero? No reason at all.”

mainlymacro.blogspot.com/2020/04/some-myths-about-government-debt-and.html

Pretty much. It’s pretty crappy that if you are trying to protect your family that you are shafted

Interesting you mention mortgage overpayments xenia, I've been utterly torn about what to do there.

We were making overpayments of about 20% each month (small mortgage so less impressive than it sounds). I can't decide whether to keep that up, as we can do it without penalty, or save furiously because large parts of the economy might be about to disappear and the usual buffer might not be enough, even knowing the money is essentially depreciating.

What are people doing wrt overpayments?

Many people's savings are in asset classes that will keep pace with inflation.

If you have a decent chunk talk to a proper IFA about your own circumstances and appetite for risk. A portfolio of 100% cash is appropriate for very few people.

If I absolutely had to take savings out of the usual homes for them, I’d buy gold and probably bury it in the garden. Though since I think the price has (unsurprisingly) shot up lately, it’s probably not the best time.
I wouldn’t touch cryptocurrencies with a barge pole.

RoseandIris if you look under the earlier link they have an "Investing Education" which explains everything and how investing with them works.

www.vanguardinvestor.co.uk/investing-explained/invest-with-us

Interesting thread. Marking my place as we're approaching our savings target of about 6 months living expenses in an emergency fund and wondering what to do with additional cash month to month - whether to overpay on mortgage or invest in home improvements (once we feel comfortable having tradespeople in the house again).

Thank you womanly. Are they based on Canada? I think I’ve heard of them before