MSE News: NS&I inflation-beating savings: stick or twist?

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  • pqrdef
    pqrdef Posts: 4,552 Forumite
    kar999 wrote: »
    I dont know what calendar dates the future RPI figures are published on but I dont beleives its a fixed date of the 22nd.
    Makes no difference what day it comes out. It's not relevant to your holding until your monthly anniversary date in the following month.

    If you bought on May 18th and you cash in before June 18th, you get the 12-month anniversary interest, based on March RPI as published in April.

    From June 18th, you get an extra month, based on the April RPI published in May.
    "It will take, five, 10, 15 years to get back to where we need to be. But it's no longer the individual banks that are in the wrong, it's the banking industry as a whole." - Steven Cooper, head of personal and business banking at Barclays, talking to Martin Lewis
  • oldvicar
    oldvicar Posts: 1,088 Forumite
    Pincher wrote: »
    Surely it's a lot more work to have a human being processing the redemption than it is to send money to a verified account (registered for Premium Bond) automatically. Maybe the union objected, because hundreds of civil servants will lose their job.

    Not at all. NS&I (formerly the Department for National Savings) doesn't employ hundreds of civil servants. Well just one or two hundred at head office. The procesing is done by thousands of private sector people. Mind you they have on average nearly 20 years experience of the job and used to be employed by the civil service so you are in safe hands. They do have good computers to help them of course, but by having experienced human intervention avoids nearly all the problems which can be introduced when leaving it to inexperienced self-service operators. In this case it improves quality.
    I hope they don't send a cheque, when I eventually do redeem. It's a good thing I haven't got a 9 to 5 job, otherwise I would have to post the cheque to the bank.
    . Posting a cheque would be such a hardship for you? But don't worry, they can do a direct credit to your bank - just give the details on the redemption form you will post off to them. ;)
  • qtlc
    qtlc Posts: 28 Forumite
    I'm thinking I'll take mine out. Got isa locked away at 4.25% for next 3 years so I'll chuck the 5k in bonds in this years allowance.

    Surprised the article didn't mention isas?
  • Another point worth considering is that it would appear from the HMRC's documentation that the interest does not count as income for tax credits purposes, and for some that may be important.

    Item from HMRC list of things not counting as income: "income from tax-free savings such as Individual Savings Accounts (ISAs), Personal Equity Plans (PEPs), index-linked and fixed-interest National Savings Certificates, Children's Bonus Bonds war pensions"
  • peterfoster
    peterfoster Posts: 19 Forumite
    zerog wrote: »
    OK, so for someone who bought on (any day in) June 2011, the correct calculation would be to use April RPIs?

    April 2012: 242.5
    April 2011: 234.4
    Increase is 1.034556... + 0.0025 additional interest = 1.0370563...
    × 15000 = £15555.84.


    And for the 15687 figure mentioned above: £15572.98 locked in in May
    April 2012 RPI ÷ March 2012 RPI =
    1.0070598... + 0.0035/12 additional interest =
    1.00735... × 15572.98 = £15687.46.

    Right or wrong?

    I took my £15k out on 19.05.11 and have just received written confirmation from NS&I that if I cash in now I will receive £15,572.98. If I deduct this £15,572.98 from your figure for 13 months of £15,687.46 you get an interest figure for the 13th month of £114.48 which is 7.3511% which cannot be right, shirley. I'll request another valuation from NS&I after 19.06.12 which will incorporate the 13th month and then I'll know for sure!
  • Looter
    Looter Posts: 131 Forumite
    oldvicar wrote: »
    Some people bought them as a gamble on the inflation rate versus savings rates elsewhere. They will be agonising as to whether to keep this 'accumulator'-style bet going and will be asking themselves: Whither inflation?

    Other people bought them to safely guarantee the purchasing power of their wealth. They don't give a fig what happens to inflation as far as these are concerned, although they will pat themselves on the back when it turns out higher than BoE targets.

    ...I think you've hit the nail on the head here, and a lot of savers will belong to the first group with the interest rates being so low. I'd like to belong to the second group, if only I could stop using the NS&I calculator every time the RPI is announced!

    When the bond matures, do we get given the opportunity to re-invest for a further term even if no issues are on general sale?
  • oldvicar
    oldvicar Posts: 1,088 Forumite
    Looter wrote: »
    ...
    When the bond matures, do we get given the opportunity to re-invest for a further term even if no issues are on general sale?

    So far,yes, we can re-invest. In fact do nothing and they automatically roll-over for a new term.

    At the moment there are re-investment issues not on general sale but just for certificates which are maturing. They pay RPI plus 0.25% over the term. Interest and index linking is applied every month from the start (unlike a newly purchased certificate which had nothing added until the first anniversary)
  • pqrdef
    pqrdef Posts: 4,552 Forumite
    If I deduct this £15,572.98 from your figure for 13 months of £15,687.46 you get an interest figure for the 13th month of £114.48 which is 7.3511% which cannot be right, shirley.
    Yes that can be right, because the raw monthly RPI figures aren't seasonally adjusted. They fluctuate a lot around the underlying trend. Typically, the ONS's shopping basket actually gets cheaper around August and after Christmas.
    "It will take, five, 10, 15 years to get back to where we need to be. But it's no longer the individual banks that are in the wrong, it's the banking industry as a whole." - Steven Cooper, head of personal and business banking at Barclays, talking to Martin Lewis
  • oldvicar
    oldvicar Posts: 1,088 Forumite
    The Retail Pices Index for May actually fell a tiny amount to 242.4 from 242.5 for April.

    This means that if you bought a certificate 12 months ago, you will get back a few pence more by selling it today (i.e. in June) than selling it in July. Of course you will get most back by keeping it until maturity.
  • kidmugsy
    kidmugsy Posts: 12,709
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    oldvicar wrote: »
    So far,yes, we can re-invest. In fact do nothing and they automatically roll-over for a new term.

    At the moment there are re-investment issues not on general sale but just for certificates which are maturing.

    I notice that the rules say that you can reinvest a particular certificate only once. The next time it counts as a new investment and can happen only if there is an issue on sale. Have I understood that correctly? Has anyone here experienced that limitation?
    Free the dunston one next time too.
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