Too much cash savings - how to protect against poss hyperinflation?

OK, long story short. The coronavirus is making me nervous. All this talk of markets crashing, US debts being exposed etc and economies being brought to their knees Venuzuela style?
Basic situ is I have about 600k cash savings spread across Euros/sterling/USdollars and located in each country.
260k interest-only mortgage outstanding on PPR @ interest rate of .05%.

Self-employed freelancer meaning my income is irregular is why I kept such a reserve as ‘patting money’ but aware I’m seriously overexposed in case of hyperinflation now. If I pay off the mortgage with some of that cash, doesn’t hyperinflation mean the debt is devalued too? So I’m not really solving anything.

Panicking here … which I know leads to irrational decisions so greatly appreciate sound advice from some calm heads!
Thank you.

I would suggest that you pay off your mortgage and look for a permanent role if you are that concerned about risk in your situation.

1 Like

Thanks, employment is stable - I really just want to cover my ass cash-wise. Something I should have done a long time ago but now worried about being really badly caught in a crisis situation.
Doesn’t debt amount also decrease in case of hyperpinflation tho? In which case paying off the mortgage would be a neutral move?

I’m more concerned on an economic crash in the next 18 months than hyperinflation

The main American index, the S&P 500, has crashed back to the value it was at last November. The global index has also gone back to where it was at about last November. We are now going through the single largest crash since Christmas 14 months ago. Four out of the last five years have seen greater crashes in the Markets.

I’d suggest you take some of your cash and get a nice glass of wine and relax a little. Markets crash every year or two for one reason or another.

2 Likes

I hear you but I’m trying to plan for worst case scenario and hope for best!

Why are you panicking about holding cash if markets tank? Hyperinflation isn’t a product of economic slowdowns. And in fact, if markets do really tank 40% or more, look on it as an opportunity. Wait a week or so until they are definitely recovering (plenty of dead cat bounces happen) and then put 50k of your cash into some liquid blue chip market index fund rather than individual stocks. You could see a good return over a year or two as stock markets inevitably return to their normal unbridled optimism.

Thanks, tbh I’ve never invested in stock markets before and figured that now would be worst time to start, especially when I don’t know what I’m doing. Just looking for a quick ‘safe place’ to put cash in the interim, so that it doesn’t fall victim to high inflation/hyperinflation or anything that might erode its value, especially as I’ve no other assets other than the PPR.
Wouldn’t even know where to start with the blue chip fund you mentioned.

I’d put 5% into physical gold - thats how hedging against hyperinflation is done I believe (though maybe not right now) and 50% into blue chip stocks once the current crash has bottomed.

2 Likes

If. And it’s a big if for me, there is a crash, then it’s bail ins I’d be worried about if I was holdin folding.

Theres a possibility we could get both.

‘Market’ prices are largely a fiction - jumping about on a daily basis with little relation to the Real underlying value of the company.
The ‘economy’ too is largely a confection - its doing well or tanking depending on what you measure.

Hyperinflation may occur - as it is well overdue with the amount of money printing thats occured over the last decade. But as we’ve learned from the QE debacle it can occur in specific sectors.
Property of course has rocketed as well as stock markets as govts sought to ‘restore confidence’ however the concomitant decline in currencies didnt occur (or didnt seem to occur) as wages were repressed and prices were selectively measured.

I suspect that whatever happens, the real nature of the Econo-mandering and crony-capitalism that has been going on for a decade is about to be revealed. You can be sure though that you wont be reading about it in the MSM…

1 Like

Yes. Bail-ins… but with ‘new’ money would be my punt.

Old Marks useless, NuMarks good kind of thing.

Govt vouchers for food, say?

Certainly level the playing field for the young with those asset rich boomers.

If youve got 600k in cash the only thing you might need is a wheelbarrow.

1 Like

I don’t see why hyperinflation should be a concern at this particular point in time. QE has not been inflationary – it’s an asset swap, not a printing press. And relatively little of it has made it into the real economy anyway. The real danger after the GFC was de-flation as people had an aversion to debt and spending. Personally I’ve got about 85-90% of my assets in cash at the moment.

1 Like

I would feel very nervous about holding a lot of cash right now. Even though, I have put well over 90% of my pension in cash funds a few months ago but that was because I was a heck of a lot more nervous about holding equities.

There are a lot of zombie corporations out there and the junk bond market that keeps them afloat is going to collapse soon. It might be harder to issue debt unless you are a gold standard organisation in the coming months. I think that there could be some bank failures and there will be guaranteed bank bail-ins. I put the majority of my cash into hard assets some time ago, real estate (that I rent out) and a small amount of physical precious metals (small amount of PM stocks also). No debt. I sold the last of my tech stocks a few weeks ago to what I can only consider delusional traders, 600% gain in euro terms. I’ll keep that money in dollars. It’s not much in any case.

I have to say though, I’ve been super wary for the last 2 years of some sort of crash and have been preparing accordingly. Everyone is different. Nobody knows what’s going to happen. Holding cash could be an amazing investment, because it looks as though many older people could die from the virus, and there will be more houses available to buy. I’d just rather not take the risk given all the other factors. A bird in the hand.

I definitely think Gold is a good investment and not having any debt is always a good idea. It could also be that not many houses are built in the next couple of years in Ireland. (Which is another factor to keep in mind).

2 Likes

A year since I posted this and not sure if much has changed. Though I sorta wish I’d got my head together enough to put a few quid in bitcoin at least. Ah well…

1 Like

Same. And wondering what to do with what other cash I have now. I’m seeing more speculation about hyperinflation and/or bail-ins online.

Looking to sell house soon (downsizing). a Major concern is what to do with the excess cash for retirement purposes. I am old enough to remember the 70’s and the inflation that was rampant then, but hyperinflation ??? Thats something nobody has had much experience with, apart from the history books.

I’m not just worried about cash lump sums, but pension buying power being eroded, food price inflation, fuel shortages, newly powerful trade unions calling strikes, increased taxes - all ahead of us I fear.

70’s part 2 coming soon to a life near you - at least the music will be better …

1 Like

I remember the 1970s’ too. In 1970 a half crown was good money but by 1980 a quid did not go far.

From what I remember the two currencies that rode out the post 1973 inflation, although it had been building since the late 1960’s, were the CHF and the DM. I expect it will the same this time around. With the NOK being a reasonable proxy for the DM until it returns in some form or other.

Have you seen the charts recently? I’ll take the 1970’s music any day. Now the fashions, that is a completely different subject.

I’ll be the guy in the corner playing air guitar to Bostons - More than a Feeling. Wearing the polyester leisure suit.

I have just realised that my “music” comment in my previous post is badly worded - I meant to say music was so much better in the 70’s As for fashion, low disposal income might be partially responsible :grinning: .

Boston - what ever happened to them?

I think Boston pretty much imploded after the Contractual Obligation second album. There was a third albums some time in the 1980’s but as it came out at the height of the Big Hair Bands and before the Stadium Rock revival that was pretty much it. Just Best Of albums after that. They were last seen departing in a very large spaceship for parts unknown…

2 Likes