Cover of MoneyWeek magazine issue no 509

Take shelter

22 October 2010 / Issue 509

Protect your wealth as currencies fall

PLUS:

  • The best ways to beat inflation
  • Profit from the war on cyber-crime
  • How Chile went from basketcase to dynamo

Excerpt

Buy Japan while it’s cheap

I hate taking risks with my money. If it were all down to me, in today’s still frightening environment, I’d have all my money stashed in a high-paying savings account. But it isn’t down to me. With inflation at nearly 5% on the Retail Price Index (the number we really cared about until only a few years ago) and the UK base rate at 0.5%, it simply isn’t possible for anyone – even someone who pays no income tax at all – to make a real net return on cash.

The Bank of England has effectively introduced a tax on safety. To avoid that tax whittling away the real value of our savings, we’re being forced to take some risk. We often suggest you take that risk in a relatively safe way by going for solid international defensive stocks, paying good dividends. But there is no pretending that their dividends are entirely safe.

So where else might one take risk right now? The latest Merrill Lynch Global Fund Manager Survey offers a suggestion for the contrarian, although it is one I suspect many of you have taken already – Japan.

• Read the full editor’s letter here:
Buy Japan while it’s cheap