Mike4 wrote:My concern is that inflation devalues savings in the bank at a higher rate than the interest the banks pay. A far higher rate in my experience, so cash in the bank seems a Bad Idea whatever the inflation environment.
It's an interesting topic for a discussion forum.
Everyone's experience can be different I'm sure, but for some perspective if you look at the return on 'cash' (savings deposits, not under the mattress) for the last 50 years for USA, you find a real (after inflation) return of 0.67% CAGR. Over the last 30 years cash has held its own. You can find similar UK data here https://portfoliocharts.com/2017/05/12/ ... -investor/. It can be a bit easy to write-off cash as an asset class.
Mike4 wrote:And yet governments respond to inflation by putting up interest rates which in turn, causes asset values to fall, so share portfolios also seem likely to me to fall in value, in the most general terms. Is this correct?
I have no idea but it sounds plausible. But there are a zillion other factors tossing share values around in their usual choppy manner. Surely, don't imagine picking out only one will give you any reliable guide as to the future while the scores or hundreds of other factors are ignored.
Mike4 wrote:So getting to the point, where might be good places to put one's capital to protect its value, still get some growth or at least minimise its devaluation, if one thinks there is persistent inflation coming? Some risk is acceptable. Shares? Bonds? (What are bonds anyway?) Cash in the bank? Something else? What? Maybe there is nothing.
There has been inflation every year without exception in UK back at least 30 years, indeed persistent, and we might expect that to continue. It's 'business as usual' on the 'persistent inflation' front I'd suggest. Your portfolio was constructed in the past around the likelihood of ongoing inflation as well as equity crashes, bond crises and whatever else might annoy you; there seems no need to change anything now because of speculation about one element of the financial landscape.
As interesting as it might be to discuss as a topic, it doesn't seem actionable to me which makes it a bit of a time waster.