Where should we put our cash?

[G4Z]

Simple question, the economy is going tits up, the pound is falling against the dollar day after day and I predict inflation is going to go mental (really, I think its been going mental for a while its just been hidden by the dodgy shopping basket).

I have some savings for a rainy day, looks like we are in for a bit of a hurricane instead. I was thinking I could buy dollars or maybe euro's and hopeful make some cash later. Probably wouldn't be a bad idea to put it into gold at the moment. Or i suppose I could chance it, hope that Barclays doesn't go tits up and that my money will still buy the same amount of stuff in 5 years...

What do you guys think?

[Gerrard]

I'm in the same sort of position. I've got some savings (and no debt), but I am not sure what's the best way of using it now. I've already transferred my main savings from HSBC to Alliance and Leicester, since HSBC drop interest rates immediately after the BoE puts them down. Currently getting over twice the rate with A+L. Also have to move my ISA from HSBC as well for the same reasons.

[Saracen]

As ever, it's a trade-off between risk and return. All that's changed is the risks, and returns.

Right now, the pound is well down, so you'd be buying dollars using a poor value pound. So you'd be gambling that the pound goes down even further. Which it might.

The same with gold. A lot of people have been buying, and last time I looked (a few of weeks ago) gold was near a record high. If all the government interventions round the world work and things get better, or even if the downturn flattens out and risks are perceived as falling away, gold may well go down. My personal opinion is that you've missed that boat by several months, and that if you go into gold (or dollars) now, you might well lose a lot.

So, do you need liquidity? Can you lock it away for months, or several years?

What degree of risk are you prepared to take?

If you aren't prepared to risk losing a fair bit, and therefore if you aren't prepared to keep a very close on rates and act quickly, don't gamble on gold or forex.

If you have spare cash and are a relatively conservative investor, first, max out cash ISAs, for the tax benefits.

Then, consider term deposits, but you'll lock it away for a year or two, or more, where you either can't get it, or it'll cost you penalties if you do.

If you're a risk less risk-averse, I'd suggest thinking about the stock market, IF you're prepared to look at medium/long term, and if you accept that you need to spread it about, because any individual company could go down. But, the stock market is currently heavily depressed, for obvious reasons. If you're prepared to look at returns over several years, and to accept a degree of risk, a lot of things look seriously cheap.

And if you do that, look at the share ISA's too, again, for the tax benefits.

Personally, right now, I've got cash spread between several relatively high-interest bank accounts. It's spread to keep each within FSA protection limits, and because I want easy access when I decide exactly what to do with it. The price I pay for that security and versatility is that returns aren't what they might be.

[TheAnimus]

You could always buy government bonds.... There going to be a whole lot more of them soon

[Saracen]

You could always buy government bonds.... There going to be a whole lot more of them soon

A bit like buying shares in a company just before it declares insolvency, though, isn't it?

[TheAnimus]

the point is someone has to buy the bonds to fund browns borrowings.

[Stewart]

Put it under your bed. Safest place for it.

[menthel]

Invest in Chocolate tea pots and unicorn horn warmers.

Quite frankly the best thing to do is to put it somewhere safe and just resign yourself to it not earning you anything.

[Stringent]

If you don't mind Mr Saracen, which banks have you stuck your savings in?

[G4Z]

While bonds are historically the safest investment i would be inclined to go with that if I thought you could trust this utter shower of a government at all. I really have no idea what they might do next, they may just decide to join the euro and write it all off (or just pay it back at some really unfavourable exchange rate). Who the hell knows, i know it would be unprecedented to just write off national debt but I just would not put it past them.

I already use an ISA, however what concerns me is not the rate of return but the rate of inflation in the economy. If it goes mental, my money might become worthless.

[Webby]

Premium bonds!

You might win big you never know

[Saracen]

If you don't mind Mr Saracen, which banks have you stuck your savings in?

Almost all well-known high-street names. The exception is a dollar account in a Florida bank, but I have very specific reasons for picking that bank that aren't relevant to most. And it's a pretty small balance there, anyway.

[Saracen]

the point is someone has to buy the bonds to fund browns borrowings.

Yup. But it won't be me. Not directly, anyway.

[Barrichello]

The same with gold. A lot of people have been buying, and last time I looked (a few of weeks ago) gold was near a record high. If all the government interventions round the world work and things get better, or even if the downturn flattens out and risks are perceived as falling away, gold may well go down. My personal opinion is that you've missed that boat by several months, and that if you go into gold (or dollars) now, you might well lose a lot.

Until recently, i thought this as well. But having shared a cuppa with one of my colleagues from the metals desk on monday, have to say his bullish views on gold seems to be reflected in predictions posted a couple of days later in the general press...


http://www.telegraph.co.uk/finance/c...-unravels.html

http://www.marketoracle.co.uk/Article7517.html

[Saracen]

Until recently, i thought this as well. But having shared a cuppa with one of my colleagues from the metals desk on monday, have to say his bullish views on gold seems to be reflected in predictions posted a couple of days later in the general press...


http://www.telegraph.co.uk/finance/c...-unravels.html

http://www.marketoracle.co.uk/Article7517.html

Well, I'm not going to contradict the experts .... other than to say that it's a gamble. Either that Telegraph article is seriously out of date, or prices have changed a lot in a day.

It quotes (via the link, for instance, ....

Gold bars start at around pounds 39 for a 2.5g bar, rising to pounds 11,957 for a 1kg bar. Visit bullion dealers such as Baird & Co (www.goldline.co.uk).

That site currently lists 2.5g bars at £53.25 (36% higher), and 1kg bars at £17,845.75 (49% higher). Yet the date on the article is Nov 27th.

It also talks about political instability, either an inflation shock or recession leading to depression and resulting political unrest or wars, even citing Pakistan as a nuclear power.

Is it right? Don't know. Is it fairly alarmist? Seems like it to me, though it might be right to be so. And it predicts that gold might soar from $800/oz to $2000/oz, which is what I's say if I was a bank wanting to sell gold.

Seriously, though, could gold be a good investment? Yup. But it's a risky one, too. Bankers have been known to get their strategy a bit wrong before .... or we wouldn't be in the current economic manure-pile.


Would I stick a bit of spare cash in gold? Maybe, as a flyer. Would I risk my life savings? Hell, no .... though in a year or two, I might wish I had. It's just far too speculative for me. But if someone's prepared to gamble on making a stack at the risk of losing one, well, fair enough.

[Barrichello]

Would I stick a bit of spare cash in gold? Maybe, as a flyer. Would I risk my life savings? Hell, no .... though in a year or two, I might wish I had. It's just far too speculative for me.

Indeed, anyone wanting to place their life savings in just one sector/stock/commodity would need their head examined. The scary thing though that is it still happens. Remember seeing that guy the bbc interviewed the day his entire life savings all piled in Northern Rock (brought at the top of the boom) went pop. He wasn't the first and wont be the last

But i still think (as do many) that Gold does have its place as part of ones portfolio. When you look at how it has held up in the midst of the general commodity decline this is even more evident. Also while world economies are throwing never seen before amounts of Money at Failing economies, and we have war/terror attacks daily happening across the world, some safe haven gold is rather nice.......

unless of course you don't think there is a global recession or more world conflict around the corner....?