There are several ways to protecting your savings from inflation
- Invest in real assets – assets that will increase in value with inflation, such as gold, or higher risk ‘alternative assets’ such as property or art.
- Invest in equities that pay reliable dividends – conditional on companies passing on higher costs and prices to consumers, but this may be challenging and could cause a reduction in consumer spending, in turn reducing profits, and dividends. Commodity resource companies can combat this, as they can increase prices with inflation. Commodity prices are very volatile, however, so they may be vulnerable.
- Reduce exposure to bonds – if gilts/corporate bonds pay a fixed income, inflation will reduce the real value of this income. There are inflation linked bonds that can combat this but are less lucrative.
- Protect pensions – choose an inflation-indexed annuity, rather than a level annuity, which will prevent inflation affecting your pension. Although, these have a lower level of income due to the lower risk.
- Use your full ISA allowance to prevent paying income tax on savings, or a lifetime ISA, which has a higher tax free allowance. The rates for the ISAs are low however so will not provide the greatest return on your investment.
With gold being one of the best ways to protect savings from inflation, the new accessibility of gold using Glint allows you to prevent inflation from reducing the real value of your savings. The ease of investing in gold with Glint makes this a viable solution to the problem of inflation.