National Savings, Index Linked Savings Certificates

~Chameleon~

I am seriously thinking of diverting my ISA money into ILSC's. Can anyone think of a good reason why I shouldn't do this? Am I taking a huge risk with my money?

I don't really know much about them - yet! - but with the way interest rates are dropping and decent ISA accounts disappearing I'm wondering if I might fare better doing something like this

northernstar5

~Chameleon~ wrote: »

I am seriously thinking of diverting my ISA money into ILSC's. Can anyone think of a good reason why I shouldn't do this? Am I taking a huge risk with my money?

I don't really know much about them - yet! - but with the way interest rates are dropping and decent ISA accounts disappearing I'm wondering if I might fare better doing something like this

I guess it depends how long you want to tie your money up for. If you need access to it within the year it's not worth doing.

Count_Dante

~Chameleon~ wrote: »

I am seriously thinking of diverting my ISA money into ILSC's. Can anyone think of a good reason why I shouldn't do this? Am I taking a huge risk with my money?

I don't really know much about them - yet! - but with the way interest rates are dropping and decent ISA accounts disappearing I'm wondering if I might fare better doing something like this

Don't. Because:
- The best Cash ISAs just beat these certificates;
- They predict inflation will drop like a stone soon (though interest rates on savings will indeed get worse);
- Money out of an ISA can't go back in when times are more favourable.

These certificates are still good for spare cash, but it is a bit drastic to cash in your ISAs.

ed123_2

... by dropping the boe base rate they risk a rise of inflation in the future (the reason why King kept the rate high was to ward off inflation). He is now saying that inflation will drop very sharply next year and others say we could get deflation as per Japan. The question is do we believe him? I don't, inflation may drop v sharply for a few months but following the massive drop in base rate I feel it will rapidly increase. This all depend on the time span as they say any move in base rates has the effect 18 months ahead.

~Chameleon~

northernstar5 wrote: »

I guess it depends how long you want to tie your money up for. If you need access to it within the year it's not worth doing.

These are long term savings so no immediate access needed. Actually having my money in an ISA isn't as important to me at the moment as the return I might hope to gain from any investment I make as I'm not currently a tax-payer, and not likely to be in the near future. My only reason for having an ISA is to safeguard against paying tax on interest in the future

trenchwars

~Chameleon~ wrote: »

I am seriously thinking of diverting my ISA money into ILSC's. Can anyone think of a good reason why I shouldn't do this? Am I taking a huge risk with my money?

I don't really know much about them - yet! - but with the way interest rates are dropping and decent ISA accounts disappearing I'm wondering if I might fare better doing something like this

There are index-linked ISAs such as this one that work similarly to ILSCs, which you could transfer your ISA into:

http://www.leedsbuildingsociety.co.uk/savings/inflation_buster_isa.html

This account actually pays a better rate than NS&I certificates. One potential problem is that the term of the account only lasts one year whereas you can get 5 year NS&I savings certificates.

KDH_2

ed123 wrote: »

... by dropping the boe base rate they risk a rise of inflation in the future (the reason why King kept the rate high was to ward off inflation). He is now saying that inflation will drop very sharply next year and others say we could get deflation as per Japan. The question is do we believe him? I don't, inflation may drop v sharply for a few months but following the massive drop in base rate I feel it will rapidly increase. This all depend on the time span as they say any move in base rates has the effect 18 months ahead.

This article appeared about 3 weeks ago on this subject

http://www.thisismoney.co.uk/news/article.html?in_article_id=455814

itsnever2lateisit?

ed123 wrote: »

... by dropping the boe base rate they risk a rise of inflation in the future (the reason why King kept the rate high was to ward off inflation). He is now saying that inflation will drop very sharply next year and others say we could get deflation as per Japan. The question is do we believe him? I don't, inflation may drop v sharply for a few months but following the massive drop in base rate I feel it will rapidly increase. This all depend on the time span as they say any move in base rates has the effect 18 months ahead.

I am sure inflation will fall back sharpely during recession, and might undershoot the target of 2%.........except the Govt has it in its power to artificially increase inflation by increase in duty and, dare I say it upping VAT to 20%

Swipe

Does anyone know how long it takes to cash these in prematurely? Days or weeks?

Lansdowne

If you need to cash in N Savings Certificates, you just send the relevant form off with the certificate and it takes no more than a week in my experience. You can request payment by cheque or provide a sort-code etc to be paid by BACS. I imagine you can still get the form from a Post Office or maybe online.
You get interest for each complete month invested, so if the certificate was issued on the 20th, you can specify repayment on the 20th of this month to gain those few pennies extra.
You get no interest at all if you cash in within a year of making your investment, you just get your money back.