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When to cash in NS&I Index-linked Savings Certificate?
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# 1
PParka
Old 14-08-2012, 10:08 AM
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Question When to cash in NS&I Index-linked Savings Certificate?

I'm about to cash in an NS&I Index-linked Savings Certificate but have totally confused myself trying to work out the best date to do this.

I purchased it on 25 August 2011 and was going to cash it in on 25 August 2012.
However, the RPI figure has just been released and it's gone up from 2.8% to 3.2%

So, what is the best date to cash it in ???
If I wait until the 1 September, will I get the higher rate?
Or do I need to wait until the 25 September??

I've looked through the NS&I T&Cs, but I'm still unsure.

Thanks
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# 2
bryanb
Old 14-08-2012, 10:10 AM
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Is It fixed term?
This is an open forum, anyone can post and I just did !
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# 3
PParka
Old 14-08-2012, 10:29 AM
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No, not fixed term.
It's a 5-year certificate, but can be cashed in at any time.
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# 4
xylophone
Old 14-08-2012, 12:06 PM
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http://www.nsandi.com/savings-index-...s-certificates
terms and conditions and calculator.
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# 5
PParka
Old 14-08-2012, 12:37 PM
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Ahhh... school boy error.
Just realised it isn't going to make any difference when I cash it in.
The first years interest is based on the RPI figure on the anniversary of the purchase. Waiting an extra month won't mean 3.2% will be used instead of 2.8%
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# 6
pqrdef
Old 14-08-2012, 2:00 PM
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Quote:
Originally Posted by PParka View Post
Ahhh... school boy error.
Waiting an extra month won't mean 3.2% will be used instead of 2.8%
In a way it does. If you were to hang on until the 13-month anniversary, you could reckon the RPI uplift as

Jun 2011-Jun 2012, 12 months, 2.806%, plus
Jun 2012-Jul 2012, 1 month, 0.124%

plus a smidgeon of bonus and a smaller smidgeon for compounding.

Or you could reckon it as

Jun-Jul 2011, 1 month, -0.223%
Jul 2011-Jul 2012, 12 months, 3.153% (the new headline figure, before rounding)

Same end result.

If the last month had been a bad month in absolute terms, it would pay to hang on. But actually it's only been a bad month in relative terms - prices have gone up a little bit at a time of year when they normally go down. But they've still gone up less than the annual average, so this isn't a good month to hang on.


In general, since odd months aren't seasonally adjusted, it tends to pay to hang on through a high season and sell before a low season. And this is the low season in spite of the headlines.

Actually this is the first Jun-Jul RPI increase since 1990 and the biggest since 1983.
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# 7
RobStaffs
Old 14-08-2012, 2:35 PM
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Can someone confirm something for me. If you have deposited 15000 in year 1 and on the anniversary date you it is worth 15675. Will the interest at the end of year 2 be calculated on the 15675 figure? ie 15670* the RPI ?

thanks
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# 8
pqrdef
Old 14-08-2012, 3:29 PM
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Quote:
Originally Posted by RobStaffs View Post
If you have deposited 15000 in year 1 and on the anniversary date you it is worth 15675. Will the interest at the end of year 2 be calculated on the 15675 figure? ie 15670* the RPI ?
Yes it will.
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# 9
kar999
Old 14-08-2012, 6:55 PM
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With no more ILSC's being issued this year, I'm happy to keep the benefit of the extra 15000k tax free element over and above my ISA allowance at a stilll decent rate and with easy access .. at least until my next annual anniverary of May 2013,
If the ball had gone in the net it would have been a goal.
If my Auntie had been a man she'd have been my Uncle.

Last edited by kar999; 14-08-2012 at 7:06 PM.
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# 10
bigfreddiel
Old 14-08-2012, 8:06 PM
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Quote:
Originally Posted by kar999 View Post
With no more ILSC's being issued this year, I'm happy to keep the benefit of the extra 15000k tax free element over and above my ISA allowance at a stilll decent rate and with easy access .. at least until my next annual anniverary of May 2013,
and then you can let it rollover for more tax free interest....

fj
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# 11
ffacoffipawb
Old 14-08-2012, 9:09 PM
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Quote:
Originally Posted by bigfreddiel View Post
and then you can let it rollover for more tax free interest....

fj
The bad news is you can only do this once if there aren't any on general sale.
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# 12
kar999
Old 14-08-2012, 9:11 PM
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Quote:
Originally Posted by bigfreddiel View Post
and then you can let it rollover for more tax free interest....

fj
That's almost certainly a deciding factor as like ISA's once you withdraw your money thw tax free status is gone forever.
If the ball had gone in the net it would have been a goal.
If my Auntie had been a man she'd have been my Uncle.
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# 13
zerog
Old 15-08-2012, 1:18 PM
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Quote:
Originally Posted by bigfreddiel View Post
and then you can let it rollover for more tax free interest....

fj
If you let it roll over, you won't be able to cash it in early any more. See the T&C changes from today.
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# 14
StevieJ
Old 16-08-2012, 12:21 PM
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Quote:
Originally Posted by zerog View Post
If you let it roll over, you won't be able to cash it in early any more. See the T&C changes from today.
See what you mean, good things don't last, it looks like they are trying to reduce the numbers with these certs. It seems that the govt think they can get their funding elsewhere at cheaper rates, but as I said, good things don't last You will have to be careful if you cash these in during term, if you do it just before an anniversary it could cost 15 months interest, more sneaky tricks from the Treasury?
Quote:
Index-linked Savings Certificates will start changing on 20 September 2012. What’s new?
Here is a summary of what’s changing.
Financial changes
  • penalty and loss of index-linking for cashing in early
    The penalty is equivalent to 90 days’ interest on the amount cashed in. And you’ll lose the index-linking on your whole Certificate for the investment year in which you cash in.
  • minimum balance of 100
    If you cash in part of your Certificate, you’ll need to keep at least 100 invested for the Certificate to remain open.
  • single annual rate of interest for each Issue
    We will pay a guaranteed rate of interest that stays the same for the length of the term (previously the annual rates started low and increased each year during the term).
Quote:
Man wants to be the king o' the rabbits he best wear a pair o' floppy ears.

Last edited by StevieJ; 16-08-2012 at 12:27 PM.
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# 15
Looter
Old 18-08-2012, 8:34 PM
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To throw another spanner into the works, with the changes to the terms and conditions of fixed rate investments from NS&I, am I right in thinking that there will be no penalty if I cash in my index linked bond before 20 Sept 2012, but there will be if I cash in after that date? Also, does anyone think they have brought this rule in to encourage people to cash in their bond early with the way inflation is going?
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# 16
brewerdave
Old 20-08-2012, 9:55 AM
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Quote:
Originally Posted by Looter View Post
To throw another spanner into the works, with the changes to the terms and conditions of fixed rate investments from NS&I, am I right in thinking that there will be no penalty if I cash in my index linked bond before 20 Sept 2012, but there will be if I cash in after that date? Also, does anyone think they have brought this rule in to encourage people to cash in their bond early with the way inflation is going?
MY understanding of the new rules is that the penalty will only apply if/when you roll over into a new issue AFTER the bond maturity date - the rules won't apply to early encashment of an existing bond whenever you cash in.
This taken from the Q and A page on the site:-
"What happens next?
If you have an existing Index-linked Savings Certificate, dont worry. The changes will only affect you if your Certificate matures on or after 20 September 2012, and you choose to renew it for a further term. So you dont need to do anything yet.
Well write to you around 30 days before your Certificate matures, to remind you that its time to decide what to do with your money. Well include full details of the changes to your investment, together with information explaining your choices for renewing or cashing in."
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# 17
oldvicar
Old 20-08-2012, 5:20 PM
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In answer to OP, if cashing in soon then the best time is at its one-year anniversary. But only if you really have to since these things are currently irreplaceable.

25 August falls on Saturday this year, Monday's a Bank Holiday, So Tuesday 28th August is the optimum time - put it in the post Friday/Saturday 24/25th, to arrive on the due date, or before with clear instructions to cash in on 28th.
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# 18
Fella
Old 28-08-2012, 11:19 AM
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Can anyone who has done this recently advise how long it took to receive their funds? (I know what the website says but am interested in how long it generally takes in practice).

thanks
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# 19
Sceptic001
Old 28-08-2012, 2:01 PM
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Quote:
Originally Posted by Fella View Post
Can anyone who has done this recently advise how long it took to receive their funds? (I know what the website says but am interested in how long it generally takes in practice).

thanks
I have always found NS&I admin very efficient. I haven't cashed in recently, but would assume that (subject to post etc. working OK) that they will meet or exceed their stated target (used to be eight working days - is it still the same?)
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