NS&i Index Linked Certificates - Any Point?

tradetime

So, I put £10,000 in that = V yes?
RPI is 0.1 for the current month that = A yes?
The aniversary RPI is 12 that = B yes?
So how much money do they owe me?

tradetime

I am still deeply confused right now.

:rotfl: :rotfl: :rotfl: Don't worry mate, so am I, and I'm usually not bad at working these things out, makes no sense to me at the moment, would be nice if they included a couple of examples, been a long week.

JoeCrystal

@tradetime Nevertheless, I will attempt!

If you buy £10,000 five year term ILSC on 14th February 08 and the index-linked value of ILSC on first anniversary would be

10000 x (210.1/211.4) is... £9,938.50 which is still £10,000... add in interest of £75, £10,075.

The problem is that I have no idea what the index would be for 20% in few year time.

sabretoothtigger

£9,938.50 which is still £10,000

deflation? which means you keep the 10k and some tiny interest but no inflation bonus

JoeCrystal

@sabretoothtigger Indeed, that is what I meant. The value cannot fall below the value of purchase or anniversary value. It does have it risks but in the end, I think it will worth it.

sabretoothtigger

But are those the actual figures, there has been deflation since feb 08?

Is there a table of figures


If we compare it that thread Martin wrote about real savings returns then your interest is 1.4% over inflation

Lansdowne

tradetime wrote: »

It is my understanding from reading the terms and conditions of these, that the interest re RPI is calculated every month, based on the previous months RPI thus as RPI will be released next week you are currently for the month of March getting FEbs y/y rate which was 0.1% + whatever fixed rate was applied to that certificate.

Actually, I withdraw that comment, I have just re read it, and either the method of calculation has changed or I am confusing it with something else, still trying to figure out the implications of how they calculate this product.

That is what Britannia BS do with their index linked products (now withdrawn to new accounts), but not NS&I.

Don't forget that RPI is an index. Retail Prices Index, the latest value is 210.1 based on recent shop prices etc. In the same way that the FTSE index is 3753.6 based on recent share prices. So whereas Britannia treats the RPI rate as a rate of interest, NS&I uses the actual index, and gives you inflation over the same period for which you hold the certificate.

Lansdowne

It is difficult to provide a link to the official RPI tables but the last 13 months are
209.8 211.4 212.1 214.0 215.1 216.8 216.5 217.2 218.4 217.7 216.0 212.9 210.1
[Edit] Found a link provided by a poster on another thread.
http://www.incomesdata.co.uk/statistics/rpitable.htm

These are based on prices in Jan 08 to Jan 09 and will be used by NS&I for Mar 08 to Mar09.

Knowing the past RPI values can't help you decide whether to buy NSCs, as they are based on the rise (or not) in prices from when you buy them.

tradetime

Yes thanks, got all that, likely I was confusing this product with something like the Britania or Leeds which do something similar. I'd be more inclined I think to look at something like Index linked gilts, assuming they are priced resonably well at the moment? I don't know, I know the US TIPS (American equivalent) are resonably priced. The advantage here is that although inflation may not have picked up by the time you cash them their price will tend to improve over time as the fear of inflation returns. There are a number of ETF's that give exposure to these products.