I'm at the start of a long career and trying to save sacrificially. I know if i over-save i still have it if i need it, but so far every dollar i have put into savings has been on a one-way trip!
I wonder and worry about how to save up for later in life, and who knows what the political landscape will look like then. In my country inflation has been 2.16% on average during the years I've been alive.
Where can I store my money in a way that I know it will be there later whn I need it?
(I'm a little nervous about the bank, one time I had a court order against my bank account so it was drained, and I was beingpaid by cheque, but even when I took my paycheque to the bank to deposit it, until that debt was paid off i couldnt even take out enough for groceries. I want something that cant be taken away at a whim without recourse. I negotiated a deal with the collection agency for a repayment schedule, but they still drained my account 2-3 times after our agreement just because. Oops!)
I live in Australia. Here the interest rate on cash deposits is around 2.75%, or 3.6% for a 180 day term deposit minimum $10,000. Inflation the past few years has been between 2.2 - 2.9%. No point holding money in a bank account or term deposit as an 'investment' - I only hold cash because it's handy to have.
All the books I read on the topic of investment were intended for Australians, so my advice is to read two or three books each on investing in the stock market and real estate, and understanding your countries tax rules as they apply to investors. It has been said that if you read three good books on any subject you should be able to converse with the professions and understand what they're saying.
There probably isn't a place you can put money where a court order won't be able to touch it. Payment agreement before that happens is a good idea, but of course that isn't always possible.
Having time and mind for saving is an excellent place to be. There are no guarantees with these things. As you say the only sure thing is that inflation will destroy significant portion of your savings in only few decades. If you think things in timespans of several years you really should look into investing. This way you don't sit on your money but buy something that generates value and thus will be valuable also in future.
Spread your investment over long time and wide range of different assets and you are as safe as you are going to get.
Usually people suggest passive index funds with low fees to do this in practice. Don't take their word for it but study yourself.
What little advice I can offer. From what I've gathered, there is no sure-fire way to protect your capital from constant things such as inflation and wild things such as economic "incidents", for lack of a better term.
I've lately been thinking that some more reliable means would be to own a "wealth-generating" business. Or a few of them in varied industries, to mitigate risk.
Another method that I've also thought about is antique art and possibly high-quality furniture as well. But that would apply in case of a major war-situation, assuming you could even get those physical items to safety.
TIPS open up a can of worms that most people probably don't want to deal with, unless the bonds are held in a tax-advantaged account (such as an IRA). Here's the skinny straight from the horse's mouth:[1]
Form 1099-OID shows the amount by which
the principal of your TIPS increased due
to inflation or decreased due to deflation.
Increases in principal are taxable for the
year in which they occur, even if your
TIPS hasn't matured, so you haven't yet
received a payment of principal.
I.e., you must pay annual taxes on an increase in principal for your TIPS bonds, even though you don't get your cash back from the govt until the bond matures.
No thanks! Count me out of that one!
As a possible alternative (which has its own problems) there are Series I savings bonds (which also attempt to compensate for inflation). Those have the advantage of:[2]
Tax reporting of interest can be deferred
until redemption, final maturity, or other
taxable disposition, whichever occurs first.
My previous reply was critical of TIPS. But I didn't offer an alternative. This is a very complicated issue to deal with; there are so many pluses and minuses to all investments.
But here's an alternative to TIPS: Roth IRA or Roth 401(k). You put your after-tax money in there and then you NEVER have to pay taxes on interest or capital gains. No taxes ever again. Of course that's at the whim of Congress. They can always bend you over 20 years from now by changing the law. TANSTAAFL.
I wonder and worry about how to save up for later in life, and who knows what the political landscape will look like then. In my country inflation has been 2.16% on average during the years I've been alive.
Where can I store my money in a way that I know it will be there later whn I need it?
(I'm a little nervous about the bank, one time I had a court order against my bank account so it was drained, and I was beingpaid by cheque, but even when I took my paycheque to the bank to deposit it, until that debt was paid off i couldnt even take out enough for groceries. I want something that cant be taken away at a whim without recourse. I negotiated a deal with the collection agency for a repayment schedule, but they still drained my account 2-3 times after our agreement just because. Oops!)