Inflation doesn’t just affect the weekly grocery shop or your energy bill. It also silently eats away at your savings.
You won’t see your bank balance going down. You’ll just be able to buy less as prices continue to rise.
With inflation at more than 12%, even if your bank were to match the BoE’s base rate of 3% (which sadly most don’t), your savings would still be losing over 9% of their future purchasing power, which can be especially frustrating if you’re saving up for something that keeps getting more and more expensive. The situation is so dire that even the Financial Conduct Authority has highlighted the risk inflation poses for consumers keeping their savings in a traditional bank account. So, what can you do to protect your wealth from losing value at an alarming speed?
One of the most tried, tested, and popular ways to beat inflation is to put your money in gold. In fact, most economists will tell you to keep at least 10% of your wealth in the shiny yellow stuff, given it’s historically proven to increase in value over time. Since 2009, gold’s price against sterling has jumped almost 150%. During the same period, the FTSE 100 has grown by less than half that. So, what are the options for getting into gold?
Bullion is the name given to solid gold bars and is a popular way of buying gold for several reasons. Firstly, it’s more cost-effective as you tend to get a better rate given the weightier form. Secondly, it costs less to pour a gold bar than to mint coins, so you benefit from economies of scale.
When buying gold bullion, it’s important to buy from a reputable dealer who is registered with a reputable industry organisation, such as the London Bullion Market Association (LBMA). You’ll also need to factor in costs such as manufacturing, handling, distribution, as well as storage, security and insurance.
Get a gold-backed savings account
In recent years, many investors have turned their attention to digital precious metals programmes, particularly those backed 100% by real physical bars. Owning a tangible asset is an attractive prospect because if the market crashes, there’s a sense of security knowing that it’s been safely tucked away and that’s likely to increase in value.
One such programme is TallyMoney, which gives you instant access to your gold via a personal account. When you deposit funds into your Tally Account, you’re purchasing London Bullion Market Association-approved physical gold. Your gold is then denominated in ‘tally’ in your online account, with every 1 tally representing 1 milligram of physical gold you own. You can save, spend or send your tally instantly worldwide using the app and Tally Debit Mastercard, giving you the security of gold with the liquidity of cash.
Wear your wealth
Accounting for two-thirds of global demand, jewellery is the third option for storing your wealth in gold. Easy to buy, store and insure, jewellery also offers investors the added bonus of being able to enjoy their wealth in a decorative format.
One of the biggest watchouts for jewellery collectors is the significant markup on the metal value of gold jewellery, which can be as much as 250%. Of course, design and manufacture will contribute to the cost but given jewellery valuation is subjective, it’s not surprising to learn that it’s still possible to make a loss on a piece of jewellery despite the value of the metal itself continuing to rise.