Does the ‘forward guidance’ policy of new Bank of England governor Mark Carney mean that we need to consider inflation proof investing?
Yesterday’s (7 August) announcement by Mark Carney, governor of the Bank of England, that interest rates will be kept on hold until unemployment falls below 7 per cent was welcomed by many across the financial services industry.
Mr Carney’s announcement has given a much greater degree of certainty over future rate movements, which will give confidence to the likes of mortgage lenders and fund managers.
The improved pricing consumers may enjoy on, for example, mortgage products will be a real positive and there will surely be further optimism over our economic prospects amid a more settled rates environment with things starting to pick up anyway.
It’s bad news for savers however.
The bank is likely to tolerate above-target inflation over the next few years meaning real interest rates will remain negative, while savings rates will remain non-existent.
Anyone reliant on savings – many pensioners for example – will likely suffer, as will the many whose wages are moving horizontally year on year.
Dr. Ros Altman sees this as an undemocratic redistribution of wealth in favour of the wealthiest members of society: www.rosaltmann.com
Inflation Proof Investing
And in addition, many investors have parked their money in cash because of the instability and uncertainty of investment markets. But holding too much for too long is not a wise move when looking to save, given the erosive effects of long-term inflation.
Pension Plowman Henry Tapper sees this as an opportunity to invest rather than save: www.pensionplaypen.com
Are there alternatives?
How about an investment that is linked to RPI, delivers market level returns, pays income annually, supports the UK economy and helps save the planet to boot?
Sounds to good to be true? I don’t think so: https://www.abundancegeneration.com/how/animation
Any advisers who are interested in finding out more about adding Abundance Generation to their portfolio can contact me on daniel@intelligent-partnership.com
Perhaps we all need to start thinking about inflation proof investing…
Thanks
Dan