It's not easy to know where to put your money right now.
Everything looks risky. The stock market is volatile, real estate prices are shaky, and inflation has outpaced all savings rates for almost two and a half years.
House prices fell by 3.8 percent on an annual basisAccording to Nationwide's latest index, this is the biggest drop in fourteen years.
The FTSE 100 index has fallen 3.5 percent over the past twelve months.
We spoke to six savings, investment and real estate experts and asked them where they would invest their money in the next five years
In any case, savers profit from a decent interest rate. Thethe best deals readily availablethey pay almost 5 percent, while the best savings offers with a fixed interest rate pay just over 6 percent.
But with inflation reaching 6.8 percent in the 12 months to July, the purchasing power of savings is still losing value in real terms.
Read our guide to the best savings rates to fight inflation here.
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HOW THIS MONEY CAN HELP
Investment ideaIn times like these, gold often comes to the fore– and its advocates claim that it is a safe haven, a long-term store of value and can help fight inflation.
However, there is no guarantee that the price of gold will rise. For example, between the 1980s and the early 2000s, gold prices remained fairly flat.
In fact, anyone buying and selling gold at that time had a good chance of seeing their investment decline in nominal and real terms.
Those who take a long-term view may at least be more confident that investing in the stock market or buying real estate will pay off in the end, but whether it's a good idea depends on how long their time horizon is.
We spoke to a number of experts in the savings, investment and real estate industries and asked them where they would invest their money over the next five years if they could only choose one thing.
The options were a fixed interest savings account paying between 5 and 6 percent, the stock market, gold or real estate.
Alternatively, they were told they could also take a wait-and-see approach and opt for a readily available savings account.
Where would you invest your money in the next five years?
David Henry, investment manager at Quilter Cheviot, says:This is simple. I would choose stocks.
Going back to 1985, over the current five-year period, stocks have outperformed cash 74 percent of the time—those are compelling numbers.
I think most people would be surprised that stocks have historically outperformed real estate, but they have.
David Henry, investment manager at Quilter Cheviot, says he would choose to invest in shares
In my opinion, many people find real estate a very successful investment for two reasons.
First, the mortgage debt taken on the property amplifies the returns people have seen on the property, and second, people often don't appraise the property, so it's likely that the value has gone up if they do.
Given that interest rates over the next five years are very likely to be higher than what we are used to in a post-financial crisis world, there are additional headwinds for real estate as an asset class.
Gold is an excellent asset for diversification within a portfolio. He tends to dance to his own drum, but in my opinion is not a serious asset for accumulating wealth.
Once again, global equities historically have destroyed gold in terms of performance. Gold also often thrives in times of fear and desperation, when people cry out for security.
I prefer to invest in the progress of humanity, and the long-term performance of global stocks is a testament to the human ability to solve problems – and create wealth in the process.
Rob Bence, co-founder of property advice website Property Hub and investment platform Portfolio, says:I would choose to invest in real estate and I have been actively investing in that this year.
While property prices have fallen slightly in the last 12 months, rents have risen and I could use a mortgage to improve my return.
Moreover, inflation is currently eroding that debt at a rapid rate.
Rob Bence, co-founder of Property Hub and Portfolio, says he is actively investing in real estate this year
James Blower, founder of savings website The Savings Guru, says:Fixed rate bondsin my opinion the best option right now – they are overpriced and 6% for a risk free rate of return is an excellent rate of return by historical standards.
People need to keep enough money in readily accessible savings to survive an emergency, but I expect that cash that can be put away will work best as fixed savings in the coming years, as these will be difficult years for many people.
James Blower says he believes fixed rate savings is the best option for the next five years
Andrew Hagger, personal finance expert and founder of MoneyComms says:If I had to choose where to invest my money for the next five years, I think I would choose a fixed rate bond that pays out between 5 and 6 percent.
It's a safe bet, and since inflation is expected to fall in the coming months, they could see real net returns next year.
Andrew Hagger, personal finance expert and founder of MoneyComms, says he would also opt for fixed-rate savings if he had a five-year time horizon
Sarah Coles, Head of Personal Finance at Hargreaves Lansdown says:Personally, I have a strong cash position to cover emergencies and planned expenses over the next five years, so I would invest in a diversified portfolio using funds.
If I didn't have an emergency fund, I would choose to save in an easily accessible account; if I need a certain amount in exactly five years and have no other funds, I might opt for a fixed interest savings account.
The only thing I wouldn't do is hold on to an asset that doesn't suit me, just in case something else improves in the meantime.
Sarah Coles, head of personal finance at Hargreaves Lansdown, says she would invest in a diversified portfolio using funds
Charlie Lamdin, founder of real estate website BestAgent, says:I would choose gold or silver to invest my money.
A savings rate of six percent will be canceled out by inflation. I expect a major correction in equity markets over the next three to five years as rising corporate debt spirals out of control.
The 'real estate investment fun' of the past 40 years is over. Unless you are in the remodeling business or are a professional landlord buying with cash, which is a business, not an investment, I no longer see attractive returns in the real estate market.
Charlie Lamdin, founder of BestAgent, would choose gold or silver
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