NS&I Index Linked

missile

I have £15,000 invested since March 2007. As a standard rate tax payer would I be better moving it to a.n.other savings account?

Many thanks for any advice you may have :beer:

nicko33

What Issue Number do you have (which interest rate) and what term (3 or 5 year) ?

edit:
for comparison the RPI index in March 2007,08,09 has been
204.4
212.1
211.3
and in July 09 was 213.4

despite the headlines about deflation, RPI deflation might be over for now.
Fuel duty gone up, VAT to increase again...

might be worth hanging on to them

nicko33

also, the interest rate you get on the ILSC is stepped, so if you cash them in early, you do not get the full interest rate.

e.g. the 3 year RPI+1.35% gave:
year 1: RPI+1.10%
year 2: RPI+1.30%
year 3: RPI+1.66%

missile

Hi nicko,

£15,000 in issue 14 on 27.03.07, offering index-linking to RPI plus 1.15% pa compound if held for 3 years. The current value is £16,306.50. That works out @ 3.4% p.a. compounded.

So you would suggest I hold until March 2010?

gazhawkins

You might be interested to know that the Bank of England pension fund recently made a number of investments in index linked securities (ie inflation proofed).

This suggests they think that inflation is likely to rise in the medium term. And they should know!

As Nicko33 stated, RPI is currently negative (about -1.8%) - here are a few things to add in:-

Petrol up 2.3p/litre = September.
VAT up from 15% to 17.5% = January.
Oil Price up from low of $35/barrel to $70/barrel and rising.
Sick pound vs. any currency you can think of; UK imports more than it exports

Index linked savings don't sound like a bad idea to me.

Lansdowne

RPI inflation has been +1.6% in the last six months, if it is another 1.6% that would make 3.2% + 1.46% on maturity giving you another £375 or so.

Of course prices may go up more or less in the time remaining.

ManAtHome

I'm hanging on to mine - not particularly for the RightNow!! but you can roll them into new issues without affecting the allowed limits (£15k per issue), and I'm more in line with Merv's pension fund projections than his MPC forecasts.... (see gaz's post 5)

dunstonh

When the media report RPI/CPI they are using the figure that looks backwards. You have to look at the potential going forwards.

VAT is going up soon. Petrol has just gone up again and that looks likely to continue. Mortgages are at an all time low and they only have one direction to go in.

Quantative easing could have gone too far and that could lead to significant inflation ahead. Also, its in the interests of the Govt and many debt laden consumers to have a short burst of above average inflation.

So, there are many reasons to think the certs are well worth having.

There are also some reasons to think that deflation could kick in for the longer term.

You use NS&I for tax reasons and for hedging against interest rates/inflation. I would keep them.

Jonbvn

Personally, I think NS&I Index Linked certs should form part of everyone's portfolio.

missile

Many thanks for all your comments.