7th September 2011
If it's the eroding effects of inflation you are seeking haven from, then – bad news – NS&I has just withdrawn its latest issue of fixed Interest and index-linked savings certificates.
The cerfiticates went on sale in May and have, not surprisingly, been very popular.
However there's only so much money the government-backed savings provider can offer to investors at such extremely preferential rates of interest.
Jane Platt, chief executive of NS&I, said there had been nearly 500,000 sales of the certificates.
"The volume of sales over the past few months is such that our forecasts show we were at risk of exceeding the top end of the Net Financing range, so we needed to take action to reduce sales."
NS&I's website and call centres stopped taking new sales of savings certificates at the close of business on 6 September 2011. Postal applications received by 7 September 2011 will be honoured, but all postal applications received after midnight tonight will be returned to the customer.
Dr Ros Altmann, director-general of over 50s group Saga, pointed out that although the fixed rate bonds were not market leaders, the RPI inflation -linked bonds were unbeatable.
She said: "They were the only way that savers could protect their money against the ravages of inflation.
With RPI running at 5% and expected to rise higher than this in coming months, there will be many savers who will suffer significant falls in their purchasing power – especially those who are nearing or already in retirement and relying on their savings.
So what should investors do. There's not a lot you can do to hedge yourself against inflation, instead look at other ways of offsetting savings, such as using your tax-free savings allowance via an ISA.
When it comes to equity investing, and you are not approaching retirement you might want to consider inflation-proofing your portfolio by by taking a risk.
Inflation and market turmoil are not mutually exclusive, i.e you can have one without the other. When stock markets everywhere are falling commodities are a traditional route for investors looking for less esoteric investments. Gold is one as are diamonds and even platinum.
When it comes to equities – if you are brave enough – adopting a defensive strategy could now involve investing in emerging markets. Forget traditional defensive stocks such as Shell, Glaxo emerging market bonds as reported in the Independent
According to the Indy, "the once highly indebted emerging markets have less than 40 per cent of government debt as a percentage of gross domestic product, according to the International Monetary Fund.
"In contrast, this figure is above 90 per cent for developed G20 countries. Nevertheless, the returns for investors in emerging market government debt are surprisingly high.
"Investors can get yields towards the 6.5 to 7.5 per cent a year range on emerging market debt funds," says Patrick Connolly, a financial planner at AWD Chase de Vere. "Emerging market governments are in a financially stronger position than Western governments and they do not have the same levels of debt as developed markets."
Another haven remains property. Although be careful which division of the asset class you go for, as trade magazine Investment Adviser reported.
According to IA "multi-asset managers are cautiously re-entering the UK property market, focussing principally on investing in prime areas such as London and the South East.
Max King, head of global asset allocation at Investec Asset Management, said commercial property has seen a rise in returns in the past six months, while demand for residential property continues to exceed supply in London and the surrounding area.
Mr King said: "Investing in property does look positive. Commercial prices have come back a bit in the last month so it is a good opportunity to add to UK property holdings, but the hotspot is London."
The manager tipped retail parks, and said London offices were currently attractively priced.
"Looking for good deals in London is not a bad idea at the moment," he said.
If that has inspired you you could still buy into the success of the world's safest currency the Swiss Franc.
Although as reported in The Guardian and by Mindful Money's economist blogger Shaun Richards the Siwss National Bank's decision to peg the SF to the Euro could have removed yet one more safe haven for investors.
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