MSE News: Maximise your savings as inflation bites

Reaper

Dan,

That's my reading of it too. There is effectively a small interest penalty for withdrawing it early.

barak

Jonbvn wrote: »

Deleted as didn't see last few messages.

This has been addressed before in http://forums.moneysavingexpert.com/showthread.html?t=2236755&highlight=

ManAtHome

Dan - that's the way it works, will average out to RPI +1% over the full term. Slightly different %+ for the 3 and 5 year products - current issue 5 year % are: 0.75, 0.85, 0.90, 1.15, 1.36 (first 2 in your 3 year % should be 0.85 and 0.95 by the way).

Jonbvn

MSE_Dan wrote: »

Hi folks,

We are checking this with NS&I, but my reading of this page:

http://www.nsandi.com/products/ilsc/rates

is that if you withdraw during years 2 and 3, you'll end up with slightly less than RPI+1%, due to the way it structures the interest (i.e. Indexing+0.085% in year 1, +0.095% in year 2, and +1.21% in year 3).

Has anyone seen info on their site contrary to this? If you have, please let me know in this thread and i'll put it to NS&I.

Cheers

Dan

You are correct. The aggregate interest rate is RPI+1% if you hold the certificates to maturity. Clearly, their interest rates have been structured to encourage people to hold to maturity.

Given that MSE has justifiably panned Premium Bonds, perhaps a separate article singing the praises of Index Linked Certificates may be of equal value to a lot of people.

IMHO, it is difficult to argue against the idea that everyone should hold some of these certs in their portfolio. What's not to like?

1. 100% gov't guarantee.
2. Index linked
3. Only hold for 1 year to get a return.
4. Easy to roll-over.
5. Very large limit on holdings.

Reaper

Jonbvn wrote: »

Very large limit on holdings.

Not the way I read it. The maximum is £15,000 per issue.

john_s_2

Reaper wrote: »

Not the way I read it. The maximum is £15,000 per issue.

And there are usually two issues on the go at any time (3 and 5 years). Which is a total of 30K. (Not sure how often the issues come out.)

But 30K is very large in most people's books. YMMV. Much bigger than the annual cash ISA for instance.

ed123_2

....another point is they appear to create new issues of 3/5 year accounts each year next due approx may/june 2010.......they are instant access after one year(without loss of interest) and they do not count re earnings re reduction of age allowance....

david78

Index linked certs are a good product. The only downside is that it is difficult to keep track of the current value of the certificate as the calculators provided on the site are "pants" (to use a Martinism). Its would be good if NS&I provided on online account to keep these certificates in with automatic calculation of index linking and interest.

Zebra

Just received the weekly MSE email, which implies that investing now would earn 4.7% tax-free.

"Lock cash in for 3 years with NS&I's index linked savings & get inflation plus 1% = 4.7% TAX-FREE"

Very misleading in my opinion.

john_s_2

Zebra wrote: »

Just received the weekly MSE email, which implies that investing now would earn 4.7% tax-free.

"Lock cash in for 3 years with NS&I's index linked savings & get inflation plus 1% = 4.7% TAX-FREE"

Very misleading in my opinion.

I'm not on the email but if that's what it says, and all it says, I agree.