Help a novice?

you are going to lose money in real terms whatever you do. Continued money printing by governments is inevitable, so your bonds (or money you have in bank accounts) will become worth less and less in real terms over time. Then there is the risk of default on some of them. Almost certain for a few eurozone countries, less likely for UK or US, but could still happen. Gold is probably the best option, as it retains its value no matter what governments do, but even then, it could well follow everything else down if everything else is collapsing. 10-20% of your savings in gold, the rest, I don't know, stick it under the bed or something.

Cheers Whippet,

So investing in Uk government bonds is not a good move then? From what I heard, (its very little on this subject) it was a better option than just leaving all savings in the band.

Gold is something I was thinking about but like you say, it could come down with a bang if a collapse did happen.

So there is really no totally stable asset in invest into?

nothing is truly and completely safe in this current environment. The thing is though, I would think that in the event the UK government did default on it's debts, the money you had under the bed would be completely worthless anyway, so you are screwed whatever you do in that scenario.

The best bet for the truly risk adverse is index linked bonds. They will track inflation so you will retain your spending power, provided you hold them till maturity (the price is likely to fluctuate in between so you could lose out if you need to sell up early). You have missed out on the NS&I ones unfortunately, there are a few other providers, but they aren't tax free (although some of them can be put in ISAs).

The problem you have with other types of bonds is when interest rates start going up, you will lose out. It is pretty much inevitable that interest rates are going to increase sometime in the near future, that's for sure. Best to avoid longer term bonds because of this. Some shorter dated ones might be worth going for, not just government, but retail. You will get better returns and even if interests rates do start rising, you shouldn't fare too badly.

I think though, whatever you decide to do with bonds, that you should make sure that you definitely won't need the money you are investing for something else, before the bond matures. There is without doubt going to be volatility in the bond markets in the short-medium term, and if you need to sell out early for some reason, you could well lose out (you could also gain as well, but I think that scenario is less likely)

Whippet, I must say a big thankyou for such a detailed answers, which you clearly went out of your way to write. I spend most of my time on the footy forum and this type of answer is not the norm!

Once again, cheers

Gold is something I was thinking about but like you say, it could come down with a bang if a collapse did happen.


Au contraire.

Gold (the physical kind, NOT PAPER) will not "come down with a bang if a collapse did happen", it will immediately become priceless as those who hold it will refuse to accept any amount of worthless fiat money to part with it.

Unless of course the government confiscates it, taxes it, or even worse, makes it a capital offense to own it, caught in possession of it, or trade with it.


(Just for the record, technically speaking, both the US and UK and all other sovereigns that have done QE (printed money) have de facto defaulted on their obligations.)

Ok Menelaus, so a good investment iyo then?

WWCD, there's a very easy way to look at this.

Anyone who follows these markets (and the world of finance - notice I didn't say the economy) and hasn't realized yet that bankers/politicians will continue to try to print their way out of this mess, hasn't really clued in yet. The problem is that there is NO way out of this. The monetary system build on growth to pay the coupon has reached its end, just like it was designed to from the outset. All ponzi schemes eventually come to an end, so has this one. The explosion in derivatives trading was the straw that broke this camel's back.

Which basically means all paper denominated investments will be worth about as much when the system collapses, and all (or at least most) hard assets will transfer some value to a post collapse system. 6000 years of history suggests there is no better asset than gold to perform that transfer successfully.

Buy only physical gold, not paper, without leverage. Then put it under the floorboards and....wait. You'll sleep a lot easier.

ok cheers, again for a detailed and helpful answer Menelaus

Take a look at retail bonds. The recently issued ICG7 is paying seven percent. You should not put all your wealth in one asset type. Spread it around a little.

put it under the floorboards and wait

I hope your a young man WWWCD because its gonna be a long wait.

Gold is not for you benny. Don't get me wrong, it's not that you don't have any patience, it's that you don't have any brains to understand what purpose it serves, nor money to buy it with.