The Current Situation As I See It.

[Guest The_Oldie]

Firstly, I have said for some months that I expect the housing market to correct by 30%-40% over the next few years and nothing that has happened over the last couple of weeks changes that opinion.

The following are my thoughts on where to invest my money in the short term, bearing in mind the FED rate cut and a probable copy cat cut move by the BOE.

Property? No. Although it is possible that rate cuts may prop up the market in the short term, property is a highly illiquid asset and in these uncertain times, I wish to be able to move quickly. Getting landed with a substantial sum tied up in property that is falling in value and can't be sold is not my idea of fun.

NS&I Index linked bonds? No. Although they are tempting with real inflation on the rise, they are based on government inflation figures which I don't trust.

Stock Market? No. I'm not an expert and in these uncertain times, I'm leaving SM based investments well alone.

High interest bonds? Tempting, but I don't want to tie up my money for even a year as the situation may change quickly.

Gold? Perhaps. I may buy a little as a hedge, perhaps up to 10% of my net worth, but I would only hold physical gold in a safety deposit box. I shall think about this one, although my gut feeling is that it will drop before continuing it's rise.

Foreign currency? Yes. I am holding a substantial amount of Euros which I bought a 1.49 and the current exchange rate is 1.43, so even though I'm only getting 3.75% interest on my Euros, taking into account the current strength of the Euro, I'm pretty happy there. Note, this is not pure currency speculation, as I will require Euros to spend in the next year or three.

High interest savings accounts? Yes. These are currently paying upwards of 6%, and although probably not keeping up with real inflation, at least my money is instantly accessible.

To sum up, the economy is controlled by the whims of Governments and central bankers and as such it is not predictable by applying fundamentals as it is heavily swayed by political aspirations. I shall therefore stay in cash and liquid assets until such time as the situation becomes clearer, this country is drowning in debt and no amount of government intervention will change that.

[sign_of_the_times]

oldie :

you can get 6.75% for 6 months only at standard life

I've just got myself a couple as 6 months is no time really and 0.5 better than most online savers

edit : if you rely on the interest, this can still be paid monthly with this deal

Edited September 19, 2007 by sign_of_the_times

[dstars]

I recommend a biscuit tin under the bed.

[Guest The_Oldie]

oldie :

you can get 6.75% for 6 months only at standard life

I've just got myself a couple as 6 months is no time really and 0.5 better than most online savers

edit : if you rely on the interest, this can still be paid monthly with this deal

Thanks, I'll look into that one

I recommend a biscuit tin under the bed.

Good idea, I like biscuits

[scarlets79]

How about Premium Bonds, they are more fun

[0q0]

...To sum up, the economy is controlled by the whims of Governments and central bankers and as such it is not predictable by applying fundamentals as it is heavily swayed by political aspirations...

Gawd, not 'alf, you can say that again.... and it's more so with each successive administration. I just wish I knew if they're going to pull it off this time.

[Smell the Fear]

Burning cash to heat your house will soon be the most cost-effective investment.

[red]

Hey Oldie,

Any ideas on best place to invest Euros? Nationwide International? HSBC?

Thanks in advance...

[Guest The_Oldie]

Hey Oldie,

Any ideas on best place to invest Euros? Nationwide International? HSBC?

Thanks in advance...

I don't know about best, but mine are with Barclays.

http://www.barclays.com/internationalperso...es_30_07_07.pdf

[Tonester]

NS&I makes more sense if you're a higher rate tax payer.

[Realistbear]

Firstly, I have said for some months that I expect the housing market to correct by 30%-40% over the next few years and nothing that has happened over the last couple of weeks changes that opinion.

The following are my thoughts on where to invest my money in the short term, bearing in mind the FED rate cut and a probable copy cat cut move by the BOE.

Property? No. Although it is possible that rate cuts may prop up the market in the short term, property is a highly illiquid asset and in these uncertain times, I wish to be able to move quickly. Getting landed with a substantial sum tied up in property that is falling in value and can't be sold is not my idea of fun.

NS&I Index linked bonds? No. Although they are tempting with real inflation on the rise, they are based on government inflation figures which I don't trust.

Stock Market? No. I'm not an expert and in these uncertain times, I'm leaving SM based investments well alone.

High interest bonds? Tempting, but I don't want to tie up my money for even a year as the situation may change quickly.

Gold? Perhaps. I may buy a little as a hedge, perhaps up to 10% of my net worth, but I would only hold physical gold in a safety deposit box. I shall think about this one, although my gut feeling is that it will drop before continuing it's rise.

Foreign currency? Yes. I am holding a substantial amount of Euros which I bought a 1.49 and the current exchange rate is 1.43, so even though I'm only getting 3.75% interest on my Euros, taking into account the current strength of the Euro, I'm pretty happy there. Note, this is not pure currency speculation, as I will require Euros to spend in the next year or three.

High interest savings accounts? Yes. These are currently paying upwards of 6%, and although probably not keeping up with real inflation, at least my money is instantly accessible.

To sum up, the economy is controlled by the whims of Governments and central bankers and as such it is not predictable by applying fundamentals as it is heavily swayed by political aspirations. I shall therefore stay in cash and liquid assets until such time as the situation becomes clearer, this country is drowning in debt and no amount of government intervention will change that.

I think I would agree with all of the above. Your sentiments on gold are right on IMO. The herd are jumping in which is when people Like Buffett do the opposite. Timing will be key--stay in too long and you get burned.

Yes on high interest savings accounts and out of sterling. I am in US $ because that is where I lived for many years and am in government backed CDs paying between 5.1 and 5.25% on 3 month notes. These are guaranteed up to $100k per account so no worries on the STM fund!

Stocks. Don't be tempted. The euphoria is, well, euphoria. The problems have been building for 10 years or more and they are not going to go away without some pain. The "froth" may last a few days but after that reality returns.

I also think the central bankers run things from now on. The "private" banking sector is insolvent and it could trigger a depression unless managed. They will lower IR but tighten the hell out of credit to make sure that borrowing does not add to the bubble which they know must deflate--they will just try to let the air out gently.

HPI. History. 50-60% down over the course of the next 3 years or so.

Jobs--definite recession.

[Kuma]

Hey Oldie,

Any ideas on best place to invest Euros? Nationwide International? HSBC?

Thanks in advance...

discussed here: http://www.housepricecrash.co.uk/forum/ind...=56075&st=0

[Guest Charlie The Tramp]

Myself and Mrs CTT each are in...

Premier Savings

Online Saver

Cash Isas

NSI Bonds

Premium Bonds ( Lots of fun and a good return for us )

Just one problem, the monthly returns are more than we need.

Gold, no way it makes you paranoid, and you suffer symptons similiar to mild dementia.

[Benedict]

NS&I makes more sense if you're a higher rate tax payer.

How so? Genuine question, I've no idea how it works.

[payback period]

High interest savings accounts? Yes. These are currently paying upwards of 6%, and although probably not keeping up with real inflation, at least my money is instantly accessible.

A few weeks ago I would have agreed and put a max of £35k in each account.

In today's circumstances, where the chancellor has torn up the rule book and the BoE is injecting money into the markets like it's going out of fashion, I'm not so confident!

[Willy Weasel]

I'm almost 100% cash which is starting to worry me. This morning's U-turn from the BoE makes it more likely IMHO that the Government has decided to inflate us out of this mess. That being the case, cash is the last place I want to be but everything else feels like too much of a gamble.

[DabHand]

How so? Genuine question, I've no idea how it works.

You dont pay tax on interest (have to leave it in for minimum term) so if you are a 40% tax bander its like having a normal current account paying about 10%. PLls its index linked to RPI so...well its a form of inflation hedge, at least its linked to the less fiddled one it would seem!

[Charlie Don't Surf]

I don't know about best, but mine are with Barclays.

http://www.barclays.com/internationalperso...es_30_07_07.pdf

3.75% your getting!!? That means you must have e300K in there you bugger!

Nationwide seem to have better deals:

http://www.nationwideinternational.com/int...trates/euro.htm

[Woody Finch]

I'm almost 100% cash which is starting to worry me. This morning's U-turn from the BoE makes it more likely IMHO that the Government has decided to inflate us out of this mess. That being the case, cash is the last place I want to be but everything else feels like too much of a gamble.

It's clear that the BoE would like to inflate us out of the problem, but whether it can do so depends on other factors. Unlike the Fed, the BoE has an unambiguous inflation targeting objective (it can't simply say it's giving growth the priority if CPI starts to rise).

So the key question is: What is the outlook for CPI? I'm no expert (who is?) but seems likely that it will rise at current IRs.

This is partly because of cost pressures that others have identified e.g. food and oil. But more importantly, it's because the GBP has been overvalued for some time and with softening growth, inflation will rise steadily. NB in this respect the BoE is in a worse position than the Fed because the dollar has arguably been undervalued for some time and may not have far to fall. (The US trade deficit figures have been improving markedly in recent years).

So, hold on bears, CPI is going to rise, and with it IRs, and down come house prices.

This is regardless of whether money markets remain gummed up.

Edited September 19, 2007 by Woody Finch

[Guest Charlie The Tramp]

I'm almost 100% cash which is starting to worry me. This morning's U-turn from the BoE makes it more likely IMHO that the Government has decided to inflate us out of this mess. That being the case, cash is the last place I want to be but everything else feels like too much of a gamble.

Don`t worry Tuffers old chap we are in a Global Economy and I can`t see all the musicians playing the same tune.

[Guest Bart of Darkness]

Firstly, I have said for some months that I expect the housing market to correct by 30%-40% over the next few years and nothing that has happened over the last couple of weeks changes that opinion.

The following are my thoughts on where to invest my money in the short term, bearing in mind the FED rate cut and a probable copy cat cut move by the BOE.

Property? No. Although it is possible that rate cuts may prop up the market in the short term, property is a highly illiquid asset and in these uncertain times, I wish to be able to move quickly. Getting landed with a substantial sum tied up in property that is falling in value and can't be sold is not my idea of fun.

NS&I Index linked bonds? No. Although they are tempting with real inflation on the rise, they are based on government inflation figures which I don't trust.

Stock Market? No. I'm not an expert and in these uncertain times, I'm leaving SM based investments well alone.

High interest bonds? Tempting, but I don't want to tie up my money for even a year as the situation may change quickly.

Gold? Perhaps. I may buy a little as a hedge, perhaps up to 10% of my net worth, but I would only hold physical gold in a safety deposit box. I shall think about this one, although my gut feeling is that it will drop before continuing it's rise.

Foreign currency? Yes. I am holding a substantial amount of Euros which I bought a 1.49 and the current exchange rate is 1.43, so even though I'm only getting 3.75% interest on my Euros, taking into account the current strength of the Euro, I'm pretty happy there. Note, this is not pure currency speculation, as I will require Euros to spend in the next year or three.

High interest savings accounts? Yes. These are currently paying upwards of 6%, and although probably not keeping up with real inflation, at least my money is instantly accessible.

To sum up, the economy is controlled by the whims of Governments and central bankers and as such it is not predictable by applying fundamentals as it is heavily swayed by political aspirations. I shall therefore stay in cash and liquid assets until such time as the situation becomes clearer, this country is drowning in debt and no amount of government intervention will change that.

I think a summing up like the above is useful in light of recent events. I look forward to reading other people's comments on the above and their stategies. Might add some comments myself when I get back in range of a computer.

'Till then, toodle pip!

[RichM]

I am going long in building up my social capital. So far we are doing well, and no tax to pay.

[jp1]

So the key question is: What is the outlook for CPI?

What is the outlook for CPI? - Whatever McStalin orders it to be

[Benedict]

You dont pay tax on interest (have to leave it in for minimum term) so if you are a 40% tax bander its like having a normal current account paying about 10%. PLls its index linked to RPI so...well its a form of inflation hedge, at least its linked to the less fiddled one it would seem!

I had no idea! Well worth knowing if I've ever got cash above and beyond any isa capacity that I'm not likely to need for a while.

Thank you

[ARIMA]

I had no idea! Well worth knowing if I've ever got cash above and beyond any isa capacity that I'm not likely to need for a while.

Thank you

In a similar vein you don't pay capital gains tax on UK governent bonds, so if you believe we are entering an easing cycle it might be worth punting the short end of the curve (i.e. 2-5yrs, I don't recommend the long end because of the inflation risk). Pretty much default free and pays a 5-6% coupon - and if you get it wrong you can hold to maturity. This could be a worthy play for those holding a large sum in a savings account...