NS&I Savings Certificates

isofa

I see your point regards "real inflation" it's much higher than the published figures. The ILSC are based on RPI, which is published monthly.

But no other accounts take that into consideration either.

Say an account pays 6% gross interest, that's 4.8% to a standard rate tax payer, or 3.6% to a high rate tax payer.

Compare with an example of a 1% + RPI ILSC - just for example say the RPI rate is 5%:
That's 6% tax free, which is equivalent to 7.5% for a basic rate tax payer or 10% for a high rate tax payer.

Admittedly this is a crude example and assumes RPI if 5% all the time, rather than the fluctuations we see, but still shows the potential for tax and high rate tax payers.

Count_Dante

Molotov wrote: »

Sorry maybe I was unclear, I trust the government that they will pay an interest rate calculated on the basis of their published rates, I'm just not convinced that those published rates are based on the reality of inflation found in the shops.

As Isofar rightly points out, that doesn't stop it being a good (or bad) investment.

That is not really the point. The issue is what you are getting compared to other savings of a similar nature. If we suppose real inflation is 10%, whilst these certificates pay 5% and other savings pay 4% after tax, then these still work out better overall.

Molotov

gozomark wrote: »

then why buy something linked to a fiddled figure, and issued by the bodydoing the fiddling

Because nobody else is selling a similar product, and certainly not one linked to the "real" figures.
The only other products to compare it to are based solely on quoted interest rates.

Count_Dante wrote: »

That is not really the point. The issue is what you are getting compared to other savings of a similar nature. If we suppose real inflation is 10%, whilst these certificates pay 5% and other savings pay 4% after tax, then these still work out better overall.

That's what I meant.

alanq

Molotov wrote: »

Because nobody else is selling a similar product, and certainly not one linked to the "real" figures.
The only other products to compare it to are based solely on quoted interest rates.

Britannia and Leeds building societies offer 2-year bonds linked to RPI growth+x%. However, unlike NS&I ILSC they are taxable and do not allow early withdrawal.

trenchwars

Leeds BS also offer an index-linked ISA that pays RPI + 1.8%.

It's interesting that the bonus has gone down as a few months ago they were offering RPI + 2.5%.