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Time to chuck my RPI linked savings.

6022tivo
Posts: 805 Forumite


I have some large chunks of National Saving index linked certs.
1 x RPI + 1.35%
1 x RPI + 0.7%
1 x RPI + 0.35%
1 x RPI + 0.25%
As the RPI is now 0%, these are pretty crap aren't they??
Does anyone know how the RPI linking works, does it change on the value of the certs on a month by month basis, or year by year???
Should I just cash them in now and look for something better???? (If there is something better??)
1 x RPI + 1.35%
1 x RPI + 0.7%
1 x RPI + 0.35%
1 x RPI + 0.25%
As the RPI is now 0%, these are pretty crap aren't they??
Does anyone know how the RPI linking works, does it change on the value of the certs on a month by month basis, or year by year???
Should I just cash them in now and look for something better???? (If there is something better??)
0
Comments
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Depends on how you think of it.
You can cash them in at any time after the first year and get the index linking (+ increment) at the previous month anniversay.
At each annual anniversary the increase is locked in to the certificate and compounded for the following year. Remember that the increment increases year by year so you won't get the published AER if you cash in early.
So it's the index value at each yearly anniversay that counts if you keep them to term.
Depends what you think might happen but you could consider selling the lower ones and taking out the current rate which are currently an average of 1% over the term.0 -
Depends on how you think of it.
You can cash them in at any time after the first year and get the index linking (+ increment) at the previous month anniversay.
At each annual anniversary the increase is locked in to the certificate and compounded for the following year. Remember that the increment increases year by year so you won't get the published AER if you cash in early.
So it's the index value at each yearly anniversay that counts if you keep them to term.
Depends what you think might happen but you could consider selling the lower ones and taking out the current rate which are currently an average of 1% over the term.
I have put them away, but from memory two of them are early April 08, so based on that it is 0% RPI for next year, and maybe Feb 08 also, can't remember the rate then...
Cheers anyway, I think I will cash in the April ones in April on the first anniversary.0 -
As the RPI is now 0%, these are pretty crap aren't they??
You buy them for 3 or 5 years. Not just a few months in 2009 when RPI is temporarily low. RPI actually increased in the short term. It was just the annual rate that hit zero.
I'm still doing them by the bucketload as they act as a very good hedge against low interest rates which are typically lower than inflation.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
You buy them for 3 or 5 years. Not just a few months in 2009 when RPI is temporarily low. RPI actually increased in the short term. It was just the annual rate that hit zero.
I'm still doing them by the bucketload as they act as a very good hedge against low interest rates which are typically lower than inflation.
Maybe I am thick and don't understand them...
So if the interest rate is set annually on the annual anervesary today the interest rate is set for the next 12 months at 0% RPI + 0.25% (One of the ones I have) for the next 12 months??.0 -
No. The inflation rate on the anniversary date is paid for the last 12 months, not the coming 12.0
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You're looking at the annual rate when you should be looking at the percentage change in the index between the date when you bought the bonds and the date when you decide to sell the bonds.
http://www.statistics.gov.uk/downloads/theme_economy/RP02.pdf
For example, if you bought them in May 2007 (when the RPI was 206.2) and sold them in May 2008 (when the RPI was 215.1), you would earn a rate of interest equivalent to:
(215.1 / 206.2) - 1 = 4.3% + (1% bonus ish)
So if you bought £1000 worth of bonds you would get back around £1053 (assuming a 1% bonus, which might be a bit lower if you cash in after only one year).
Personally, I would hang onto them as the retail price index has started to rise again.0 -
trenchwars wrote: »Personally, I would hang onto them as the retail price index has started to rise again.0
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CPI is rising, but RPI dropping as this 'includes' the hacking of interest rates. I'm hanging onto the RPI+1.35% certs (didn't buy any of the sub 1% ones) which isn't really a blinding deal unless you're on higher-rate tax,
RPI is rising. In January RPI was 210.1 and in February RPI was 211.4.
http://www.statistics.gov.uk/downloads/theme_economy/RP02.pdf0 -
But wasn't the Feb 2008 index 211.4..?0
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