Hi

Newbie here.

I've been a bear since 2004, shows you what i know . I'm really surprised how far this bubble has grown. I did consider STR back in 2004 but decided against it because i did not want to uproot my family.

Anyway, now i'm getting divorced and my wife has agreed to buy me out at todays market value, he he, i'm quite pleased with that, i get top wack, my kids get to stay in there house and she gets burdened with debt (her penance ) She's a property bull so she's happy also.

I'm going to rent for a while, so where to protect my cash from inflation?


Too much money in circulation has led to HPI but because most goods are produced in the far east we have not seen Inflation in other everyday items (at that scale)

I think this is because China and other far east countries wanted to keep there currency vs USD rate as is, so ordinarily if money supply increases general inflation occurs but this time only HPI occurred.

Because of this the GBP and USD are artificially overvalued.

But now don't the US wants to devalue to USD and/or get China to inflate its currency?? Why should they want that?

I'm worried about the scenario that the US gets what it wants, lets say the Yuan doubles in value, then won't we have instant inflation? I might only be getting 5% on deposit. If we could foresee this happening should we buy goods now, buy gold oil etc before everything inflates? I've seen some posters saying 'cash is king', which i suppose if house prices are due to drop it is but if it's spending power for other items is about to drop also would another asset be safer.

Thanks

nsandi (National Savings) do a savings certificate which pays RPI + a little bit more. We all know that RPI is a better and more realistic measure of inflation than CPI.

There's a limit to how much you can put in. But it does form a nice little hedge against inflation.

RPI + 1.35% as it happens, and they are tax free. This equates to well over 6.5% for a normal tax payer and 9% for a higher rate tax payer. As the investment is guaranteed, it is one of the best on market and you do not have to use up your ISA allowance to take advantage of it.

Hmm...might have to look into that.

So if inflation was to go sky high that would protect me? Or would they find a way to lie about inflation and make the RPI really low.

What is the current RPI?

Ta for that Ah-so, is that calculated with this months RPI figure? (3.9% I believe)

Ah-so's post wasn't there when I was typing my reply, hence my stupid question

I'll have to look into that and find out what the maximum amount I can invest in it is...sounds like just what I'm after!

I agree about the pound being over-valued and all that, but I don't know enough about currency trading to risk money in that. This could be a simpler alternative.

Its on the National savings website and you cn buy online - I think 15k is the max in this issue.

http://www.nsandi.com/index.jsp

Thanks for the advice.

RPI (3.9) + 1.35 is good for me. 15k per issue and they have several issues per year.

Another part to my question would be 'Inflation Beating Investments' so i can hopefully have a bit of a gain above RPI as part of a balanced portfolio.

Thanks.

Some oil stocks have totally not reacted to the oil prices recent spike up. For more information go to www.fool.co.uk and go to the discussion boards. Go to best of and try and find best 99 posts over last 3 weeks. You will see Soco mentioned (my absolute favourite). Others would be Aminex,Tullow, Dana, Imperial Energy all of which I own some stock of. Next week may see a market decline in reaction to the problems in the US, which will represent a buying opportunity IMO. Owning real commodity stocks also gives you a hedge against any fall in the pound. My biggest mistake in STR was not investing the money in the stock market. I admit that we are in for difficult times ahead, but the Government will always be ready to reinflate if necessary, so as long as you own real assets you will be ok.

honestly, I would suggest you hedge your bets.... spread the money around, foreign, cash and some property (just in case we see further rises)

Another option to consider might be Index Linked Gilts

mate are you taking the pi55? soco is trading at 95 P/E. BP trading at 10.

Junior E & P's don't trade on P/E ratios. Its all about growth in the pipeline and Net Asset Value (NAV).

I'm thinking of putting 10% into gold and the other 90% into NS&I. What do you think?

Not diverse enough, unless you're 90 years old. This would be a very low risk portfolio that would shrink in value with time. What time scale are you thinking of investing over?

Oops! I've just noticed your nic is YoungFTB, so I assume you will need access to all this money at some point, in which case I wouldn't recommend shares. There may be other ways of diversifying your portfolio, but I know little about bonds. Keep some in an instant access account, otherwise it looks ok.

This sounds like an interesting thread..

Sounds like your better off without the broad.. so good luck with that pal..

What is the time frame you would like to invest. Lets say you have about 100k equity for your part of the house..

like others have suggested you could spread your portfolio out.. I would definately stay away from bonds if this is the case.

If you might be interested in real estate in the future after a correction in market then stick some cash in the bank for this purpose.

take a little bit and invest in commodities!

spread some into gold! Most definately.

and look for other real estate investments that even in a downturn would prove an exceptionally good purchase.

for instance Malaysia in KL a 5 star hotel in the right location will do well! Take the same project a few streets to the left and you might be pissing yourself in the pants for making such a bad decision.

So know your market before you invest. Invest in companies that do not depend on real estate and currency as much as possible. And don't be scared to look out for great bargains! You never know what you'll come up with at the right time and place.