Advice Please For A Young Couple (renting) With A Deposit In The Bank, But Worried About An Inflationary Future

[mrs the-sign-jacker]

My advice

Emigrate to Australia

Good luck

Been there done that. I AM Australian. I'll probably retire out there mid 50's, but its not really a viable option at the moment. But thanks for the advice anyway.

[arthurwasright]

Been there done that. I AM Australian. I'll probably retire out there mid 50's, but its not really a viable option at the moment. But thanks for the advice anyway.

That's great

But I was talking to the O.P.

[mrs the-sign-jacker]

That's great

But I was talking to the O.P.

Oops! Im thread hyjacking again......

Sorry OP!

[Sybil13]

30% off - that is what everyone says Savills / Rightmove's Director / Money Week even in January before talk of regulation and the UK being bankrupt

Sellers Need to Reduce Prices

We know that "40% is now the assumption" even in the article about the BOE official this week who warned Darling not to stop the market from falling, spoke of 21% falls to date and said still the market was overvalued by 40%.

We know lenders are valueing property 40% from peak for re mortgages, yet has anyone had a 30% from peak offer accepted?

£300000 property £210000?

Yet NOBODY should buy for anything more than 30% off peak, and even with 30% off needs to expect to lose another 20%+ within a year. If the government are now speaking of 35% falls I am beginning to think 60% is more likely, even though that to me currently seems hard to believe.

Edited April 23, 2009 by Sybil13

[R K]

You may wish to weigh up your timeframe and risk.

You have £, you earn £ and you wish to buy a house in £. So you have only a couple of variables to keep your eye on. The price of the sort of house you want and mortgages/interest rates (unless you can buy without a mortgage).

As soon as you start moving into currencies, precious metals etc you are introducing new risks which may work to your benefit or may work against you over your timeframe. So you need to ask yourself if you have the knowledge of these alternatives and if you want to take on these extra risks, when what you want is a good value house in £. If you do, then how are you going to manage those risks, what % of your £ will you commit to them. What if you find the house you like at a price you like and you have cash in Euros and Gold, and they've just dipped 20%? 12 months ago there was no shortage of people telling me $ was dead at .72 - next stop .52, well it went up 25%. Ditto gold was going to the moon - errr...it fell 30%, then went up 50% and in the last month fell 17% in £. Does that volatility work for you and your timeframe? Does committing 10% of your savings to, say, gold make any difference whatsoever unless there is a total economic collapse? Let's say it doubled - ok, you'll be £9k better off. Life changing? Worth the risk? Only you can decide.

If you're really concerned about hyper inflation before you buy your house, then just buy one sooner.

[richc]

There's no harm going out and looking at places that are within your price range. I would advise you to first to get a mortgage agreed in principle so you know how much you could spend. It's quite difficult to get a good mortgage deal compared to a year ago.

You do have a good deposit, so that's in your favour. You cannot rely on the current low interest rates when doing your budget - if going for variable rates make sure you could still afford payments for interest rates at 8%+.

How many people do you think are going to be forced to put their house on the market if interest rates hit 8%? What's that going to do the price of the house? And, how big was that gov't deficit announced yesterday?

It makes no sense to buy a house right now, even if you're paying in cash. If the Great Inflation comes along (which your house purchase is supposed to hedge against), interest rates are going to up enough that all of these people who stretched themselves to buy houses when interest rates were at 5% will be forced to sell. Prices will collapse further and you will find that what you thought was a hedge was actually the exact opposite. If the Great Inflation doesn't happen, then you need not worry that your savings are only making 2% in the bank.

You get so much more for renting than by buying at the moment, that it just doesn't make sense to buy. Rent and keep your money in a couple of banks or the simpler saving schemes.

[General Congreve]

There's a lot of different advice on here, so you're probably suitably confused already, however I will try to muddy the water further

It would appear your main concern is the safety of your savings, rather than feeling you'll miss the boat on house prices. You're quite right in this assumption, without question house prices will fall further, if the economy contracts 4.1% as the IMF predicts, there is no other way than down for house prices.

Of course, right now you will undoubtedly be able to get a more favourable mortgage rate now than in 12/18/24 months time. However, you don't want to find yourself trapped in negative equity or suddenly finding your repayments jump to an unmanagable level when you try to refinance a fixed rate mortgage in a few years time. In fact if you end up in negative equity you may not be able to refinance in that situation and would lose your house. So, sit tight on purchasing a house until the market hits bottom. You will not miss the boat as once the market hits bottom it is likely to drift along there for at least a year or two.

So, what to do with your money? Firstly, ensure it's split between a few accounts, interest is so low that it hardly matters, so split it into separate savings accounts with the safest banks, I'd recommend:

NS&I - 100% Govt.

Northern Rock - 100% Govt.

Nationwide - They have recently been downgraded from AAA status, but aside from that no bad news has come out about them that I have heard of during this crisis.

Try to split between as many banks as you can, while the govt. guarantee 50k per bank, you don't need the hassle or inconvenience of waiting for such a large sum to be paid back if the bank it's in goes down. So split in up in smaller amounts. And keep an eye on the news, be ready to withdraw your cash asap, if you feel a bank looks shaky. I did that with my savings on the Friday before Icesave went bust I also rescued my mum and dad's, sister's and gran's savings by telling them to do the same, although they seem to have forgotten about my brilliant advice already ! Think they're memory would be a bit better if Crash Gordon hadn't stepped in to save everyone else

Once you've done that you need to look at diversifying your cash, which you obviously already are.

My advice is steer well clear of stocks, the stock market is going down big before this is all over, it's a gamblers paradise at the moment.

Commodities like oil, grain, copper might be a good punt (again a bit of a gamble though) and the ordinary investor can invest in these easily through Exchange Traded Fund (ETFs) over the internet. Only problem is these are funds that keep your money invested in a bank somewhere. Whereas depositers are covered by the govt., in case of a bank collapse I doubt any govt. will cover investor losses. In the current shaky financial environment ETF's suddenly don't look like such a good punt do they?

So, what does that leave?

Foreign currency might be a good idea, if you go down this route I'd probably recommend putting a few thousand in:

Euro

Norwegian Krone

Only problem with this is you will lose money on exchange, both ways, and if sterling surprises everyone and recovers for some reason, you could end up shooting yourself in the foot. I'm not invested in foreign currency myself so can't recommend how to go about it, but I think all you need to do is look up some Euro banks or Norwegian banks (in the case of my recommendations) and find out how it works.

Finally we get to gold/silver, something I know a bit about. Someone recommended bullionvault.com on here as a way to invest in gold. This is essentially digital gold. Bullionvault do store the gold for you, but if the SHTF I don't know how good their promise will be. It also means the govt. can easily tax or confiscate your gold should they see fit to cover the billions they need to claw back in tax. The advantage to bullionvault over physical gold is I believe the margin for buying and selling gold via bullionvault is only 1% or 2%.

Personally I have physical gold and silver in my possession as a hedge against inflation, bank collapse or financial armageddon. No one can take it away from me, if they outlaw personal possession in the UK I can stash it in my car, get a ferry abroad and sell it's where it's legal, no worries. I don't think sniffer dogs can sniff for gold or silver, so I should be ok, so screw you Gordon

An earlier poster mentioned that we'll see inflation coming, double digit before hyperinflation if it gets that bad, so no panic to buy gold. He's quite right in the first case. However, as soon as the UK/world gets a sniff of inflation from all this new money floating about, I believe the gold price will take off ahead of inflation, because everyone will be diving into it as a safehaven against the coming inflation. You may well find you'll miss the boat in this scenario. Gold is not as easily available now as it should be, imagine what it'll be like when inflation predictions come true.

So, what are the cons of gold/silver:

- the smallest buy/sell margin you will get on physical gold as a small investor is about 3.75% (coins and small bars - BTW buy bullion bars and coins, not collectibles), effectively this means the moment you buy, all things being equal you are 7.5% down, as this is the amount you lose if you sell back to the dealer immediately. This means you need a 7.5% upwards movement in the price just to break even.

- Silver margins are even worse. Dealers are factoring in the fact (on sale only of course) that the spot price is undervalued and valuing physical silver according to actual demand. The margin on silver is closer to 15% and that's on a kilo bar, it's 20% on coins.

- You need to store the stuff somewhere. A bank? Wouldn't trust them. A safety deposit box, perhaps, but does cost and many of them are in banks Or your own safe in your own home if it's secure enough. The choice is yours but remember your insurance company is unlikely to cover it on your home insurance.

- The price is prey to traders, including some big US bank players that wield big influence who have interests in keeping the price down. These banks often short the market, quite probably just to suppress the price as a soaring gold price will crush the dollar. The banks and US Govt. are now essentially the same entity, so neither want to see strong gold/weak dollar. Same goes for silver.

Bearing all this in mind, gold and silver pundits reckon there is huge upside potential in these metals, but because of the machinations of vested interests it may take a few years for this potential to be realised, with much fluctuation inbetween. This makes it a tough investment decision for you, seeing as you mainly want to safe guard your cash to buy a house sooner rather than later I imagine.

I own my own house, so my gold/silver investments are half a hedge against cash/sterling going to the wall and half an educated gamble that gold will rocket at some point in the future and make me some decent wedge. Your situation is a little more tricky, as essentially you want a house and to safeguard your money until you decide to buy.

Therefore, I'd recommend that perhaps you spread your money about a few safe/safer bank accounts and then put a perhaps 10k-20k into gold as a hedge. You may want to put some in bullionvault.com (to take advantage of the low margin) and the rest in physical for safety, perhaps a 25(bullionvault)/75 (physical) percent ratio. If you're feeling brave perhaps put a couple of grand into silver bullion too, the margins are larger but the upside potential is larger too, as historically and relatively to gold the spot price makes it very undervalued at the moment (although the price you will pay to the dealer already factors some of this in).

Where to get gold/silver:

If you want digital gold bullionvault.com seem like the most trustworthy place to go.

For physical the options for the ordinary investor seem to be quite limited, as not many dealers sell direct to the public. Firstly avoid ebay, you don't know what you'll get, fakes abound. In terms of what you want to buy I would recommend a mixture of Krugerrand Bullion coins (1 Troy oz - approx 31.1g ) and small bars, probably 50g and 100g. The margins are a little smaller on larger bars, you could get a kilo for around 20k, but the problem is you have to liquidise your gold all at once when you sell, which might not be convenient for you, so it's not really worth the small saving you'll make in margin.

The best place for buying gold bars is probably Baird & Co.:

http://www.goldline.co.uk/investmentBarsPage.page

Don't be put off by the old school web page, these guys have been in the business since 1967 and I think they were the first dealer to sell to the public in the UK. They've even been featured on TV recently on Martin Lewis' Money Saving Expert. They actually have a phone service similar to Bullionvault's web service where they hold gold for you and only charge 2% margin, you may prefer that to Bullionvault. They also sell Krugerrands (and other bullion coins) but charge a £50 quid premium per kruger over their cheapest competitor. Their bars are manufactured in house from scrap gold and are individually numbered and embossed with Baird's logo, so should be easily saleable and Baird guarantee to buy them back themselves. I have several myself.

The cheapest place for coins is Hatton Garden Metals:

http://www.hattongardenmetals.com/coin.aspx

This company has been running since 2006, seems to be a one man show run by a guy called Gary who sounds like he's straight out of EastEnders. Don't let that put you off, in all my dealings with him he's been a very honest straight talking guy who has been happy to give me advice, even as far as saying the bars he sells aren't as attractive as other dealers! The only drawback with Gary is he seems to spend a lot of time rushed off his feet, so he can be difficult to get hold of, he doesn't always have stock and despite his promises he doesn't always get back to you regarding stock enquiries because he's busy, so you will have to chase him. That said, if you have a little patience and persistence you'll eventually catch him when he has stock and get the best price. I have brought from him several times, as has my father, and we've been very happy with the service. By the way he fixes his prices daily at about 10am based on the spot price at that time, whereas other dealers tend to float the price throughout the day.

If all that sounds like too much hassle, give Gold Investments a shot:

http://www.goldinvestments.co.uk/shop/

I haven't used them, but a friend has and recommended them to me. You'll pay a bit more per coin, about 18 quid looking at prices today, but you can buy online which is quicker and less hassle than getting hold of Gary at Hatton Garden to see if has stock. You call, cash versus time really.

Other Dealers are:

http://www.guernseymint.com/ - Never used these guys so can't comment.

http://www.atsbullion.com/ - Used to buy a little silver, efficient service, but bigger than average margins

http://www.chards.co.uk/ - Archaic website, loads of info but impossible to navigate, best to phone them for prices. Have used them before for some Australian Gold coins (a little more on that below), good service, but not the best margins. Also used them to buy kilo bars of silver and some silver coins - I couldn't tell you which of these dealers offers the best price on silver bars and coins, as I bought on availability at the time rather than price. you'll have to ring round them to find out if you're interested in silver.

So what else? There are other coins, Canadian Maples, Australian Nuggets (I also have a couple of these), British Sovereigns, Chinese Pandas (my missus reckons they're cute - nuff said), Austrian Philamonics etc. All good coins, but Krugerrands are the most popular with investors and hence most saleable with slightly smaller buy/sell margins in general. That said, you won't go far wrong with the other coins IMO, but Kruger's are probably the best to go for. BTW, if you do buy Kruger's don't be alarmed if they look a bit orange, they are alloyed with copper and a little silver, hence the colour. You still get 1 troy Oz of gold in the coin, and the copper/silver makes it more hard wearing than pure gold, probably the reason they are so popular.

Bit of an essay, but hopefully it answers many of your questions. Obviously owning some gold myself, I have a vested interest in gold going up, so some may feel may advice isn't completely impartial. However, I would point out that I'd be an idiot to believe my meanderings on this site have any influence on the gold price whatsoever, so that's my seal of transparency right there. Just trying to help you out mate, would hate to see you lose money thanks to Crash Gordon's idiocy. :angry:

Essentially, what you do with your cash comes down to your own choices based on the information you can gather here and elsewhere, as none of us can predict the future unfortunately. Otherwise I'd know which bank to short next with everything I own and retire before the end of the month Hopefully all this helps you make the right decisions for your future. And as I often say here:

GORDON OR GOLD?

Edited April 23, 2009 by General Congreve

[Kazuya]

<useful info>

Great post! +5

[Bear Necessities]

Hi Everyone,

Would just like to say thank you very much to everyone who replied to this topic.

It's a little overwhelming to receive such a lot of varied feedback so quickly!

Certainly a lot to digest here! Will post something longer later on, replying to some of the posts individually.

This really is one of the most welcoming and helpful places I have visited on my many years on the net!

Cheers! (shows how helpful everyone has been, as my first post had a sad face!)

Edited April 23, 2009 by Bear Necessities

[Emlyn]

The main danger is a couple of the major banks going bust (and taking your savings with them).

Where is safer to keep your money? You pays your money and you takes your chance at this stage IMO...

I'll stick my neck out & say that will never happen.

What would happen instead is that HMG will underwrite it. You would get your pounds back but they would be worth less than they were before.

[Bear Necessities]

My POV:

As long as house prices are falling in nominal terms and inflation dosn't become so bad that your deposit won't buy you a decent bottle of red wine, cash

(sterling) is fine. Doesn't matter if RPI and CPI go up to 30%, as long as nominal house prices are falling your strategy is working.

Hooray!

Hyperinflation - Historically preceded by years of double digit inflation, so plenty of time to plan accordingly

Thanks for the explaination, this is fantastically reassuring.

I had visions of waking up one morning and having to put all my money in a wheelbarrow to go buy a loaf of bread, like something out of 1920s Germany!

Learning that hyperinflation doesn't just appear from nowhere will help me sleep more peacefully!

If the money is for a house, wait.

That's definitly the plan!

Stay saving and liquid and you should be in an excellent posotion to buy property in a few years time.

I really hope so! Definitly plan to keep on saving and certainly don't want to tie money up too much in case we need it in a hurry

Use some of your STR fund to stock up on beans and shotgun shells (+shotgun)

Hope thats not too mental

A wee bit mental!

Anyway if I eat my stockpile of beans I won't need the shotgun as I'll be able to gas any enemies!

On a gross annual income of £30k, the inheritances must've been better than small to save that kind of money.

your inheritances couldn't have been that small if your only 26, your household income is less than 30k, and you've got 89k in the bank.

Just what I was thinking, heres hoping a similarly 'small' amount of cash lands in my lap.

Certainly wasn't my intention to post on here, waving a wad of money in people's faces and saying "oooh look how much money we've got" !

So hope noone took it that way

A chunk of the money is from saving hard (Trying to stick to a reasonable budget, both walk to work, so no car, don't have contract phones, had a small

unflashy wedding, no massive holidays - apart from honeymoon! etc)

Perhaps was a mistake to call the inheritance amounts "small", we are certainly very grateful for the money, but sadly this wasn't money from the death of a distant great uncle or someone from another far flung part of the family tree.

It's money from the deaths of four very close family members (from both sides of the family) all within the last three years.

So it's very sad money to have in many ways

All the more reason to want to make sure it is used for helping us to set up home and start a family rather than being squandered or lost in some sort of nightmare future Gordonland rollercoaster ride!

[BudoBear]

.....

There will be people on here who will buy in 3 years time and buy a dog of an investmernt...

There are people on here that are buying a house as a home! Timing and bargaining hard are critical factors, especially if you have a monty deposit.

I'm sure your opinion is essential reading, but not necessarily any more than anyones else's!

[Bear Necessities]

Buy a house dummy.

Renting is for poor people and bums.

Current renting cost for the last 12 months - 6K

Current average drop in house prices in the last 12 months - something like £20K or more

So not entirely sure that renting is that stupid right now!

If you are planning on buying in 18 months, they I would say just keep it in cash/cash equivalents (bank account/ns&I etc).

Inflation is unlikely to make a material difference to your deposit in that period.

Very helpful advice, cheers

I don't think the time period you are looking at is sufficiently long to make (relatively) uninformed investments worthwhile.

This is my main fear, jumping in somewhere, into something I don't understand!

There's no harm going out and looking at places that are within your price range.

...You cannot rely on the current low interest rates when doing your budget

...Make a check-list of all the important things you want in a house and only consider buying a place if it meets 90-100% of your criteria. Also only buy if you would be completely happy to live there for at least 5 years.

...Also consider looking at auction places - you could get 20% (or more) off the current advertised prices.

...don't jump in and buy the first house you see.

Thank you, some very good points

This focus on when to buy is blinding you.

Get out there and do research.

Make sure you buy a "desirable" house.

Have at least a 40% deposit - which gives you a budget of about 200K.

£100K mortgage is about 3 x your joint income - do not go above that.

Get a 10 year fixed (5%) repayment and plan to pay it down in 10 years. Make sure it allows overpayments

There is tsunami of inflation about to arrive in the West.

Thank you for your reply, it was partly number 11 in your sig that made me post the topic in the first place!

My advice would be to sit tight, keep your money in sterling, in British High Street banks but chase the highest interest rates you can.

Use your cash ISAs to the limit - that will be a joint £10K pa by next year

Don't start a pension; that's just throwing money down the drain at the moment.

Ignore all advice to buy guns or beans - there are bears and then there are HPC bears, which are like grizzlies with bi-polar disorder.

We are always checking around for good rates, and definitly use our ISAs to the full, although the rates on those have gotten quite bad.

People last year were chastising me for not starting a pension, but I agree with you it's not worth it right now

Regarding the beans/guns, yes I had noticed that there is a pretty hardcore faction within HPC.co.uk!

I try to steer around the Bi-Polar Bears!

[Bear Necessities]

my advice would be to diversify as much as possible but don't tie up capital for too long just in case you find a place you really want to buy.

Sounds like good advice and your stash breakdown made interesting reading too

My advice

Emigrate to Australia

Good luck

Hehe, sounds like another good idea mate, better pop another shrimp on the barbie

Oops! Im thread hyjacking again.....

Sorry OP!

No problem! Sounds like you are in a similar position moneywise

even with 30% off needs to expect to lose another 20%+ within a year. If the government are now speaking of 35% falls I am beginning to think 60% is more likely, even though that to me currently seems hard to believe.

This is why we want to hold on for a while before buying. Don't want our savings to disappear into a falling houseprice!

You may wish to weigh up your timeframe and risk.

You have £, you earn £ and you wish to buy a house in £. So you have only a couple of variables to keep your eye on. The price of the sort of house you want and mortgages/interest rates (unless you can buy without a mortgage).

As soon as you start moving into currencies, precious metals etc you are introducing new risks which may work to your benefit or may work against you over your timeframe. ...Worth the risk? Only you can decide.

If you're really concerned about hyper inflation before you buy your house, then just buy one sooner.

Another great reply, and food for thought. I'm a very cautious person, not a big risk fan and what you say makes a lot of sense. The "have £, earn £ and wish to buy a house in £" thing is a very good way to look at it, and one that I had lost sight of.

It makes no sense to buy a house right now, even if you're paying in cash.

If the Great Inflation comes along (which your house purchase is supposed to hedge against),

interest rates are going to up enough that all of these people who stretched themselves to buy houses when interest rates were at 5% will be forced to sell.

Prices will collapse further and you will find that what you thought was a hedge was actually the exact opposite. If the Great Inflation doesn't happen,

then you need not worry that your savings are only making 2% in the bank.

You get so much more for renting than by buying at the moment, that it just doesn't make sense to buy.

Another excellent point. I hadn't considered the effect higher interest rates would have on people getting into trouble and having to sell causing falling prices.

Totally agree about renting, we are currently looking at "upgrading" to a better rental place to take advantage of the falling rent prices - the place we are in currently is tiny and I barely have room to cook properly, and loads of places have come onto right move recently which are only a few quid more than we pay now

*Everything you said*

Your post is above and beyond the call of duty, amazed that a stranger would make the time to offer so many good and well reasoned suggestions. Thanks very much.

Will have to spend a bit of time digesting it all!

That goes for everyone! Cheers again!

[BudoBear]

.......................................................

Crikey! Thought I was on a Gold Bug thread for a minute there! Great post.

[Steamerpoint]

Hi everyone,

Sorry this post is a bit long winded but would really appreciate some advice and there seem to be a lot of smart people on here.

I've been reading this forum for a while now and find myself in agreement with a lot of the people on here regarding the continuted fall in house prices. (Can't wait!) But there are some other threads that I'm not sure I understand such the ones telling everyone to get out of the pound and buy lots of gold, that sort of thing.

Background:

I'm 26 and got married last summer.

I get a pretty average wage (£23K) and my wife works part time (6K)

As a couple we have never been in debt, having grown up learning the value of saving.

We've managed to save up £89K towards a house over the last three years through a combination of saving up and a couple of small inheritances.

We have some money in a 10% regular saver account (runs out in June) some more in an account offering 4% (runs out in May) and the rest is earning terrible rates of between 1.5 and 2.5% which is pathetic.

Don't worry, we have no intention of throwing money away on a house that keep going down in value for the next few years! (Will be waiting at least 18 months before we even think about looking for somewhere)

Question:

All this talk of super inflation, the crappy £ and buying gold has gotten me worried that this money we have saved hard for is going to be totally wiped out.

Have never gotten into shares, or currency or gold, or anything other than a standard savings account and a cash ISA

So don't really understand how it all works.

What should we do to protect our savings from becoming worthless?!

Seriously..... Fact, two days ago I went online and ordered myself a fire resistant safe! Once it's bolted firmly to the house, I'll be putting my savings in it. The 4-major banks in the UK are on borrowed time anyway. Interest rates on savings are below inflation and should they go down, the government is so far in the red, they couldn't afford to repay the lost trillions. Everyone will be broke accept those with money put to one side ready for a rainy day. Unfortunately for me, I don't have anything like the sums you have to worry about, but I did have some money in Kaupthing Edge that I managed to get out 2-days before they went under. I'm not about to make the same mistake again.

[EndToBoomandBust]

Bargins are out there. I heard my first real good buy story this week.

A young lad in the building trade looking on rightmove saw a repo up for a 100k a few streets from me.

Houses on the same street had gone for 141k in the past.

He was told some inside info to go in 20% under the 100k.

After a few offers he has bought at 80K so there are sighs that banks are willing to take big drops on repo's.

[General Congreve]

Great post! +5

Your post is above and beyond the call of duty, amazed that a stranger would make the time to offer so many good and well reasoned suggestions. Thanks very much.

Crikey! Thought I was on a Gold Bug thread for a minute there! Great post.

Glad my efforts were appreciated. Made myself laugh just now though. Remembered that I was on another thread the other day arguing that humans were generally not altruistic, although I did say that very occasionally we are capable of it. Looks like I must have been having one of those rare altruistic moments when I made my post on here yesterday. Think that might be all my altruism used up for the next couple of years though, it was pretty exhausting writing that lot.

Edited April 24, 2009 by General Congreve

[Godley]

Seriously..... Fact, two days ago I went online and ordered myself a fire resistant safe! Once it's bolted firmly to the house, I'll be putting my savings in it. The 4-major banks in the UK are on borrowed time anyway. Interest rates on savings are below inflation and should they go down, the government is so far in the red, they couldn't afford to repay the lost trillions. Everyone will be broke accept those with money put to one side ready for a rainy day. Unfortunately for me, I don't have anything like the sums you have to worry about, but I did have some money in Kaupthing Edge that I managed to get out 2-days before they went under. I'm not about to make the same mistake again.

Ignore this guy he is a first class twonk. He knows about as much about economics as my Great Aunt Nellie who has dementia.

If he comes on here spouting again I will dredge one of his old posts up where he gives us his expert opinion on the economy and economics in general. It was cringingly embarrassing............

Steamerpoint: You are an estate agent, stick to photocopying, uploading pictures and bs to rightmove, answering the telephone and fixing cars.

[batthink]

I am in a similar position as the topic starter. Started to look at buying a house again, but its not a purely financial decision. We are looking at those coming up for auction, however in london they still seem overpriced to us.

Makes me laugh how many properties have been for sale for over a year, with no significant reduction in asking price (firefox, right-move, property-bee are you friend if you haven't already seen them).

One of the best indiciators I have seen, was an inflation adjusted graph of house prices - so simple and so effective. The bottom will be in 2012.

Edited April 24, 2009 by batthink

[General Congreve]

Ignore this guy he is a first class twonk. He knows about as much about economics as my Great Aunt Nellie who has dementia.

If he comes on here spouting again I will dredge one of his old posts up where he gives us his expert opinion on the economy and economics in general. It was cringingly embarrassing............

Steamerpoint: You are an estate agent, stick to photocopying, uploading pictures and bs to rightmove, answering the telephone and fixing cars.

From this indivdual post I would assume it is you who is the twonk/troll Godley. I can't say I know anything of steamerpoint's previous posts, so maybe I'm not the best qualified to comment, but his comment doesn't sound like that of an estate agent. Otherwise he'd be recommending buying a house or such like, wouldn't he? Whereas his financial armageddon post is suggesting doing anything but.

In fact his point may not be too far off the truth. Brown's govt. is in the red up to it's eyeballs, there's every chance we'll be off to the IMF for a bailout in the not too distant future. I wouldn't rely on the UK govt. to repay deposits as a result of bank default with anything put printed money, where else are they going to get it? However, an IMF bailout may stipulate they can't print more money, in order that we get our house in order as part of the loan conditions.

So perhaps a fireproof safe isn't such a crazy alarmist option as it sounds. I have a fireproof cash box myself (available online and from ebay for around £25-£35), not that I am using it at the moment. But it's there and ready, just in case I feel I need to put some cash in it instead of the bank in the near future, should I become overly concerned with how things are playing out.

Edited April 24, 2009 by General Congreve

[live in hope]

This focus on when to buy is blinding you.

It's not a question of when - but how much?

There will be people on here who will buy in 3 years time and buy a dog of an investmernt.

Others are buying now at 30-40% off and more - so it is the right time to buy for them.

My advice is HEDGE and buy a house at least 30% off peak.

Get out there and do research.

Make sure you buy a "desirable" house.

Have at least a 40% deposit - which gives you a budget of about 200K.

£100K mortgage is about 3 x your joint income - do not go above that.

Get a 10 year fixed (5%) repayment and plan to pay it down in 10 years. Make sure it allows overpayments

There is tsunami of inflation about to arrive in the West.

Interest Rates are going to rocket

My opinions are essential reading - but DYOR !!

http://www.housepricecrash.co.uk/forum/ind...112212&st=0

All the best

In your oppinion when this happens will the general increase in intrest rates on savings be enough to offset the inflation

[General Congreve]

In your oppinion when this happens will the general increase in intrest rates on savings be enough to offset the inflation

Interests rates will certainly lag inflation, making savings deposits the loser in an inflationary environment, hence my lengthy recommendation of timely purchase of some gold as a hedge against when this happens. Techincally we're already in that environment with CPI running at around 3% but most savings accounts paying less than this.

It is savers who are already suffering and will continue to suffer over the coming years as the government does everything in it's power to tax the frugal to bail out the indebted vote-wielding masses. Anyone seen that Ricky Gervais sketch about the lazy mouse and hard working mouse? Well that sums up the situation nicely.

[General Congreve]

Here we go, Ricky Gervais with the Lazy Mouse sketch. Very topical and funny, too unfortunately a reflection of the situation unfolding in the UK right now. Watch from about 1 minute 25 seconds:

http://www.youtube.com/watch?v=F06mxL31K_E

[miko]

On a gross annual income of £30k, the inheritances must've been better than small to save that kind of money.

lol, exactly what I though!! wonder what he thinks a big inheritance would be ?