Anybody concerned about future high inflation?

[raisinbran]

Coming out of a divorce and will have lump sum of cash. Obviously want to wait for the market to settle before buying a house to live in. Just accepting saving aren't going to grow much in next year.

However spoke to a colleague at work and he is woried about future inflation and that it could rocket to 20%, wiping out large amounts of savings.

Would you buy some gold and or equities to help inflation proof your money?

I am responsible to two boys and I don't want to lose the safety cushion I have built up. Any advice welcome.

So why exactly does he think this? It seems to me that everyone has different bonkers ideas about what might or might not happen to the economy. FWIW the brief for the BOE is to keep it to 2% so 20% would be quite a drastic failure!

Gold is currently quite high and this can also drop in value. Equities are low, but who knows what will happen to these in the next year or so?

Some think that inflation may rise, but in a year or two due to the Bank of England increasing the money supply, see www.ft.com/cms/s/0/7562d4dc-fc95-11dd-aed8-000077b07658.html?nclick_check=1.

Gold is high in price at the moment as that is what people buy when things are bad, UK equities might not do well over the short term (a year or two).

DH and I have a chunk of savings to buy a house are so are also worried about this, I'm just keeping an eye on things for now.

There are bonds that are inflation linked but your money would be tied up for a bit, see www.postoffice.co.uk/portal/po/content1?catId=19300237&mediaId=72200721.

Thanks for input, I am just a bit ignorant really and I suppose a little knowledge can be more dangerous than the facts. I just think of the middle classes in Argentina who probably never for saw their problems years ago and I am just worried it could happen here. By playing it safe keeping things in cash it is possibly still risky.
Realise I relied on my ex too much with the finances.

I think that if the money is to buy a house then the only type of inflation that matters to you is house price inflation anyway. Why does it matter how much petrol or electrical goods you can buy with it?