How to deal with Inflation

General
1

Apparently inflation is going to reach 10% in the UK later this year. The stock market is said to be stable or in a bear market for the coming months. Base rate interest is only 1%. I am new to the investing world and want some advise. What is the best way to try and keep your savings in touch with inflation for the forseeable future?

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2

Not sure it’s the best way - inflation linked gilts?

3

Just spotted this
iShares USD TIPS 0-5 Year (Dist)
ISIN: IE00BDQYWQ65

What’s difference between gilts, tips and bonds. I’m new to all this and finding it a minefield. If everyone knew high inflation was coming would the above ETF been ideal to buy as it is linked to inflation.
Looking on the morningstar chart it says it is up 7.5% in 2022.

There is also this:
iShares USD TIPS 0-5 Year (Dist, £ hedged)

ISIN: IE00BDZVHB89

What does £ hedged mean. This is slightly down this year. Same ETF but because it is in £ it’s down because £ is down against the $?

Can someone recommend online courses or websites where I can learn about all the different investment products or is it a case of searching google and reading as much as you can.

4

https://www.investopedia.com is quite good for getting explanations on terminology.

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5

Thanks I’ll give it a read.

6

Hello AS111,

I thought I could add a few pointers:

  • Gilts are UK Government bonds,
  • TIPS are US inflation-linked bonds and
  • bonds are just the generic term for fixed income.
  • £ hedged means the currency fluctuations when investing in overseas markets is non-existent.
  • £ is down versus the US Dollar year-to-date meaning investors invested on an unhedged share class would have got extra gains this year from the currency move.

I hope this helps. Let me know if you have any other questions.

Elise

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7

Have a look at PensionCraft channel on YouTube, good explanation of Bonds vs TIPS (and why TIPS might not do what you think) https://www.youtube.com/watch?v=NJrtspvT_FU

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