How to protect your savings and pension from UK inflation

theguardian.com:

Interest rates went up again this week, and many savers will see their rates boosted as a result, but rising inflation – currently 9.4% and set to go higher – is eating away at the value of people’s nest-egg cash.

As central banks around the world raise interest rates to defeat inflation, fears are growing of a full-blown recession. So what can you do now to protect yourself from a potential hammer blow to your finances?

Here we look at some of the options for protecting your nest-egg money and pension from inflation.

They say gold is the traditional haven against inflation – but that has not been the case this time round. Since March it has fallen from more than $2,000 (£1,655) an ounce to about $1,750, and is back to where it was about two years ago. It has done better in sterling terms because the dollar has risen so much against the pound.

If you do want to speculate in gold, you don’t have to buy krugerrands (South African gold coins). You can invest small sums via “exchange traded funds” – for example, Invesco Physical Gold, which holds the shiny stuff in the vaults of JP Morgan bank in London.

This is the daftest thing you can do with your money. First off, if your house burns down or the money is stolen, a home insurance policy typically covers only £500 or £1,000.

Second, inflation means cash is plummeting in value all the time.

That would only make sense if such a thing existed. On Thursday this week, the best rate on a one-year fixed-rate bond was 2.85% from OakNorth Bank. Even on a five-year bond, the best you could get was 3.4%. Meanwhile, many high street banks pay paltry sums on their cash Isa accounts.

That said, aim to keep a rainy day sum on deposit equal to three to four months of your spending. That’s not