We’d like to remind Forumites to please avoid political debate on the Forum.
This is to keep it a safe and useful space for MoneySaving discussions. Threads that are – or become – political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
Is now the time to buy index linked saving certificates
Comments
-
I wonder why they'd limit the purchase of them. Arent index linked gilts freely available and I suppose the difference is the tax status.
They arent very appealing at the moment but for life long savings I agree
I thought this last spring, this is when the effects really start to become real on whats happening for the real direction from here on.We are about 12 months on from the price falls which caused the RPI to drop - so those will fall out of the loop
It might be a crescendo upto the anniversary of us reaching 0.5% rates, hard to tell at first
The alternative to uk gilts would be something like Perth mint gold certificates backed by Australian government I think it is or just buy their gilts and benefit from their higher rate of interest and also likely greater currency strength (imo)0 -
Letting inflation rise quite a way is (secret) govt. policy to diminish the public sector debt
So "secret" in fact, that everybody knows about it !!!!'In nature, there are neither rewards nor punishments - there are Consequences.'0 -
We are 1/3 into Index Linked (IL) and have always recommended investing in them.
I think a caveat now needs to be put with that advice.
As we have negative RPI, it would be wiser to place funds that you want to put in IL in a bog standard A/C until RPI turns positive.
As a long term investment I still believe it is sound.
Best of fortune.0 -
No, no, no. It's presently 213.4, how is that negative? The RPI is an index, it can never be 'negative'. Inflation, as measured by changes in the RPI - as compared to 12 months ago - is presently showing as negative but if you buy an ILSC you are interested in the next 12 months, not the last 12 months.I think a caveat now needs to be put with that advice.
As we have negative RPI, it would be wiser to place funds that you want to put in IL in a bog standard A/C until RPI turns positive.
And, as I posted earlier, the RPI is already rising, and has been steadily since January, when it was 210.1; earlier this year is more and more looking like it might have been a very good time to buy. If you wait and watch it carry on rising, you will, effectively, be buying at an even higher price, potentially costing you money.0 -
No, no, no. It's presently 213.4, how is that negative? The RPI is an index, it can never be 'negative'.
I'm going by the way that the index linking is paid.
My understanding is that each year on the anniversary you receive a fixed interest payment + IL for the previous 12 months.
Anybody buying now will get no IL until RPI turns positive.
If anybody bought from Feb this year they would only be in line for the .85% on 3 year bonds, and .75% on 5 year bonds, at the first anniversary.
If I'm wrong, then it needs clarifying quickly.0 -
More recently than when they did it almost two years ago, widely reported on long after it had happened?Well, the Treasury recently moved a large holding of its own pension fund in index-linked certificates.
Time has passed since then and the only certainty is that we'll know where the money currently is long after the fact and long after it's too late to benefit from the knowledge.0 -
sabretoothtigger wrote: »I wonder why they'd limit the purchase of them. Arent index linked gilts freely available and I suppose the difference is the tax status.
They arent very appealing at the moment but for life long savings I agree
I thought this last spring, this is when the effects really start to become real on whats happening for the real direction from here on.
It might be a crescendo upto the anniversary of us reaching 0.5% rates, hard to tell at first
The alternative to uk gilts would be something like Perth mint gold certificates backed by Australian government I think it is or just buy their gilts and benefit from their higher rate of interest and also likely greater currency strength (imo)
how do you get access to aussie government gilts?0 -
how do you get access to aussie government gilts?
Only the U.K Government issues Gilts.
The Australians issue Treasury Bonds and their equivalent of the DMO is the AOFM
http://www.aofm.gov.au/default.asp?NavID=22'In nature, there are neither rewards nor punishments - there are Consequences.'0 -
I'm going by the way that the index linking is paid.
My understanding is that each year on the anniversary you receive a fixed interest payment + IL for the previous 12 months.
Anybody buying now will get no IL until RPI turns positive.
Exactly (except, again, that you mean 'inflation' not 'RPI'). So, if you bought today, you would be wanting the RPI to be higher in Sep 10 than now (and thus inflation to be 'positive'). And, as I said, it's already higher now than it was in Jan, so it's heading the right way. But no-one can see into the future. Let me put it another way: if inflation were a positive figure now, that wouldn't help anyone buying now; it would just mean that people who bought a year ago will be getting IL on top of their interest.
Anyone who bought in Feb will be in much the same position as me - I bought in Mar and Apr 09 and am looking good to get 3, 4 or more % (plus the 0.85% and 0.75%) in Mar and Apr 10, all tax-free.If anybody bought from Feb this year they would only be in line for the .85% on 3 year bonds, and .75% on 5 year bonds, at the first anniversary.
I think a search will find it covered a few times over the past few years; it is one of those things that gets raised at intervals. To be fair to NS&I, it is all covered in the T&Cs, but there is a lot to read in there!If I'm wrong, then it needs clarifying quickly.0 -
So - I have 3yr IL bought in Feb 07 ( 1.15% +RPI)- if I look at the stats the % change in RPI Feb07 to Feb08 is 4.1% 08 to 09 is zilch so for
07-08 I get 1.15 + 4.1
08-09 I get 1.15 + 0
09-10 -??
Doesn't seem like one of my better decisions...
Have I got it or do I need more caffein?
Thanks for all the comments, I guess the general consensus is go for it as part of a varied savings strategy.
So if the best 2 year fixed are currently around 4.5%, 1 year fixed 3.75ish - would you go now, for 30k in a fixed rate or 30k (for 2 of us) in more ILs0
This discussion has been closed.
Confirm your email address to Create Threads and Reply
Categories
- All Categories
- 351.7K Banking & Borrowing
- 253.4K Reduce Debt & Boost Income
- 454K Spending & Discounts
- 244.7K Work, Benefits & Business
- 600.1K Mortgages, Homes & Bills
- 177.3K Life & Family
- 258.4K Travel & Transport
- 1.5M Hobbies & Leisure
- 16.2K Discuss & Feedback
- 37.6K Read-Only Boards