NS & I Index linked certificates

EalingSaver

nrsql wrote: »

Think the current issue is at 1.1% above RPI for the first year.

So if RPI on your anniversary was 0% then you would get 1.1% interest on the certificate locked in.
If RPI was -1% or -2% or -20% you would still get that 1.1%.

so for a -5% followed by +5% you would get
1.1% + 6.3% which works out at 7.47%
Much better than the average RPI over the period (remember that -5% followed by 5% is -0.25% not 0%).

Of course the question would then be "how well does RPI reflect inflation?".

Interesting point that I hadn't thought off. Though not as good as if one had kept ones eye on the RPI (NOT the rate, the index itself) and cashed in certs which were past their first aniversery, when the index first started dropping (Sept if I recall), and put the money somewhere else. Which is what I'm kicking myself for not doing.

Other posters point about spreading the point of investment out rather than do lump sums. Hadn't thought of that one, but then who was expecting such a huge drop in RPI.

nrsql

Yep - October was the first drop but there have been a couple of single month drops previously.
You would have to take the rate that was on offer when you got back in though and wait another year to get any interest.
Who know's what's going to happen? I think there's pressure on it to increase but have no idea of how much or the timescales.

200701 201.6
200702 203.1
200703 204.4
200704 205.4
200705 206.2
200706 207.3
200707 206.1
200708 207.3
200709 208
200710 208.9
200711 209.7
200712 210.9
200801 209.8
200802 211.4
200803 212.1
200804 214
200805 215.1
200806 216.8
200807 216.5
200808 217.2
200809 218.4
200810 217.7
200811 216
200812 212.9
200901 210.1

trenchwars

I have some that I bought last November. RPI has since decreased by about 3%, in part due to the VAT cut and the reduction in mortgage interest from cutting the base rate.

I'm thinking of cashing them in and then re-buying immediately, as this will reset the starting index so I won't have to wait for the RPI to rise 3% before I see some gains.