MSE News: Maximise your savings as inflation bites

dougz_2

Zebra wrote: »

Why even mention 4.7%?

Maybe MSE is predicting that, by bizarre coincidences, the average of inflation of the next 3 years, and also the next 5 years, will exactly equal what it did over the last 1 year?

ed123_2

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keet83

ed123 wrote: »

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think theres a few spammers in here

Jonbvn

Reaper wrote: »

Yes but not relevant to the average saver

So in effect, you are saying the current holding limits are more than adequate for your average saver?

Proves my point don't you think?

Jonbvn

Zebra wrote: »

Why even mention 4.7%? It's a meaningless figure to those thinking of investing now.

Everybody is responsible for their own savings and investments - caveat emptor. MSE Martin is not our mother, and does not owe us a duty of care.:money:

In short read the T&C's.

StevieJ

keet83 wrote: »

steveJ its not quite that simple, NS&I wouldn't win that way. it works this way

12 months = 0.85% + RPI
24 months = 0.95% + RPI
36 months = 1.21% + RPI

so only on average it equals out at the stated 1% + RPI a year. hopefully keeping costumers for the full 3 years to get the benefit.

That is fairly obvious, what isn't obvious is what happens if you cash in after 18 months.

StevieJ

twizzel wrote: »

The 3.5% RPI that Guy Anker talks about as being needed for your savings to keep pace, was for the last 12 months and you can't do anything about that now.
The forecast is that inflation will be lower by the end of this year, if for no other reason than the VAT increase having passed through the calculation mechanism.

That forecast is probably for CPI, RPI is additionally affected by housing costs e.g. interest rates which probably will be on the rise.
Does anyone know what is included for housing costs in RPI e.g. do they include the average price of a house or rental values?

ses6jwg

This is being presented all wrong by MSE, IMVHO.

I don't think it is sensible to see index linked savings as a home for the majority of ones savings, but they are a good home as a risk-free (in the traditional sense of not losing your original investment) "hedge" against inflation in very uncertain economic times.

I think the use of the 4.7% figure as a headline is slightly misleading, as you only need to read some posts here and on the ISA board to see how confusing some people find savings and investments. Many people may take this certificate up assuming they will get that 4.7% return, when in reality it could be 10%, or it could be 1%... depending on how the economy develops.

I would however add, that these IL bonds do seem to carry less "risk" (in the other sense of risking greater return), than 3-5 year bonds. Just my 2p.

chardir

StevieJ wrote: »

That is fairly obvious, what isn't obvious is what happens if you cash in after 18 months.

EDIT: ignore this - see below

StevieJ

chardir wrote: »

cash-in value at 12 months is the same as at 23 months:

0-11 months = original investment
12-23 months = 0.85% + RPI year 1
24-35 months = 12 month value + 0.95% + RPI year 2
36 months = 24 month value + 1.21% + RPI year 3

Why does the online calculator change month by month say between 12 -23 months if the actual figure is not changing? I assumed that the RPI + extra % was incremental once the initial 12 months was up.
So what you are saying (if I understand correctly) you only receive interest payments on the anniversary dates and you can lose up to 12 months interest in the 1st 2nd or 3rd years if you cash in at the wrong time:eek:

Just checked the T&C and found the folowing

9. The amount due when cashing in a Certificate which has been held for at least one complete month from an anniversary date will be the anniversary value on that anniversary date plus:

(a) index-linking for each complete month from that anniversary date to the date of repayment; and
(b) 1/12th of the annual interest for each complete month held from that anniversary date.
This paragraph does not apply to any month not completed before the maturity date.

Does this not suggest it is monthly incremental after the first anniversary date?