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Index Linking For Dummies...
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So Jan 09 to Jan 10 (1.037) paid more than Mar 09 to Mar 10 (1.044)..? Low-point and rate of change don't always line up.
Certainly the Jan-Jan numbers you have stated are demonstrably misleading, incorrect, and definitely confuse - my numbers "maybe" wrong depending on tba RPI numbers...
ManAtHome, I did not say the lowest RPI figure of 210.1 in Jan 09 would lead to the best returns this year. However I did say it is the differential between start level RPI values and the end RPI values this year that will determine the best "bang for your buck." And that is the maths you have now shown here. All to do with the RPI differentials you correctly now mention in this post, and nothing to do with the % RPI figures you mentioned in your previous post.
As previously, your reference to the low % RPIs has no relevance whatsoever in defining the potential returns this year. % RPI of -1.6% in June 09 is just telling you what happened between Jun 08 and Jun 09 and is irrelevant. However the difference between RPI in June 09 and June 10 will indeed determine the % return in June 10.
A lot of people get confused with the difference between RPI and % RPI and what the figures mean regarding their returns on ILCs. No need to add to this confusion.
JamesU0 -
Oh Joey - all those replies and you still haven't found/can't be bothered to use the thanks button?I was born too late, into a world that doesn't care
Oh I wish I was a punk rocker with flowers in my hair0 -
So. Would it be foolish to buy these now or will there be a better time?0
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June 09 was the RPI low-point (-1,6%) - has been going up since then even though it was still negative year-on-year until November 09 (+0.3%). Potential for the best "bang for your buck" maybe from certs bought last June/July.
[edit] STT - I'm pretty sure that any base rate rise pushes RPI up, so if BoE increases rates to choke CPI inflation it widens the gap between CPI and RPI (possibly back to 'normal'?).
Not true, if base rates go up Sterling tends to strengthen so imports and oil are cheaper.'Just think for a moment what a prospect that is. A single market without barriers visible or invisible giving you direct and unhindered access to the purchasing power of over 300 million of the worlds wealthiest and most prosperous people' Margaret Thatcher0 -
. . . A lot of people get confused with the difference between RPI and % RPI and what the figures mean regarding their returns on ILCs. No need to add to this confusion.
Oh how true.
I find it easier to concentrate on the changes in the actual RPI index over time. The annual percentages can be a bit misleading.
I have plotted a graph of the RPI index values (not percentages) over the last 20 years and got this :-
I hope this is more helpful for people to see how RPI has varied (in much the same way as share prices can be plotted as a time series).
Data source: ONS RP02 and CPI & CPI12
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Warning: In the kingdom of the blind, the one-eyed man is king.
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>the differential between start level RPI values and the end RPI values this year that will determine the best "bang for your buck."<
Nope, the index-linking will only maintain the purchasing power of £1 over the life of the bond. The 'bang for the buck' is the interest rate offered on top of index-linking, currently 1%.
>No need to add to this confusion.<:rotfl:0 -
Consumerist wrote: »I have plotted a graph of the RPI index values (not percentages) over the last 20 years and got this :-
Consumerist, What is even more interesting is expanding and looking at the data more carefully in the range Jan 2007 to present. Gives a much better insight. In any case you can see quite clearly in the graph just how far the RPI dropped.
The Sept 08 high was RPI = 218.4 and this fell sharply to Jan 09 RPI = 210.1 and then gradually recovered to this level at RPI = 218 in December 10. The mth/mth RPI increase was effectively 0% in Jan 10 at RPI = 217.9 which I found counter-intuitive and got a little excited about, but it was a one-off event and not the start of a double-dip. The mth/mth change in RPI has now gathered a little pace, but at 0.6 - 0.7% mth/mth these are within the range of Jan 2007- Sept 2009 RPI changes prior to deflation. So nothing dramatic to infer in either direction at present.
Will be interesting to see what happens in the months post-election.
JamesU0 -
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I checked the oncsensus of forecasts for 2010 and 2011 (I think it was treasury stuff, you can google for it).
The consensus was RPI of about 3% for 2010 and 2011.0
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