NS&I Index-Linked Savings: Q&A

Biggles

ManAtHome wrote: »

My April 09 ones have gone up (unless I recorded the numbers wrongly last month..) - won't work if you're trying to compare March 09 to 'now' against April 09 to 'now' as there wasn't much change between March and April 09.

It was corrected a day or two after I posted (though it still says the latest RPI was issued 25 Mar, not 23 Mar).

Sceptic001

moana wrote: »

Can someone tell me the answer to this.
If I buy 1000 quid of NSI now at 1% above RPI.

Assuming RPI stays at 4% for next 3 years.
How much will I get back after the 3 year period.

I don't pay income tax.

Thanks.

The minutiae of the calculation is quite complicated but explained quite well in the first post on this thread. Cutting through the detail and to answer your question, if inflation (currently 3.7%) were to remain constant throughout the three-year term you would receive 3.7% index-linking plus 1% interest which I calculate to be approx £1148. NSC are tax-free but this is of no advantage to a non-taxpayer.

James_2nd

am going to invest in NS& I but would it be best to purchase now or after next months figures?

Ken68

Can someone help. I am a non taxpaying pensioner, hardly ever spend anything let alone such as supermarket food or transport. In fact most of what is made up in the RPI has been factored out. Am I missing something, got it all wrong.
Are NS&I certificates worth it.???? when I can get 4% for the same time frame elsewhere.

lisyloo

Hi Ken,

There's clearly no tax advanatage for you.
It's impossible for anyone to give you a definite answer because none of us know what RPI will be in the future.
If RPI is say 4% then you will get 5% from NS&I so you would be better off with NSI.
If RPI is 2% you will get 3% and be worse off.
So no-one can tell you.

The consensus forecasts I've seen have said 3% for RPI for 2010 and 2011.
Now I KNOW those are only forecasts but it's probably the best thing we have to work from, so that would give you a return of 4%.

So personally I would go with the other account (all other things being equial) becasue you know what you will get.

However if interest rates or inflation rise, then you need to recognise you willl be worse off.
Is the account you mention fixed?
Do you have access to your money?

ON balance I'd go with the account, but note you will lose out if infaltion rises or if it' fixed and interest rates rise.

Ken68

Thank you Lisyloo for quick reply. I pay no rent/mortgage/food bills(garden)/transport(free bus)/capital costs etc AND because of age and illness get help with Winter fuel allowance etc etc....so in effect the RPI (to me) is extra interest on top of the 1%. Does this make sense ????
If so it would make sense for anyone reasonably self sufficient or moneysavingexpert.

skevvybritt

Hi everyone,

I am new to this forum, although I have been following the site silently for a while now. I've read through the thread but unfortunately my maths is awful and I can't quite follow! I hope someone can help advise on my current situation, which is as follows...

I have around £8,000 to invest (my entire savings towards a deposit for my first house), and of that, £2,000 is tied up in a different product for another month. I am a basic rate taxpayer. I have been looking at the index linked savings for a while now, but I understand that RPI has jumped quite drastically over the past couple of months. If this is so, is now a bad time to invest, given that the account tracks the change in RPI and it's currently high?

Also, would I be able to put the £2,000 in once it's matured, or is the product fixed once open? If so, would the 3 years count from the date of the first or the second investment?

My other option is the Santander 5% first home saver, but I'm worried about it given the state of the Spanish economy at the moment.

I would really appreciate any feedback on this. Thanks in advance!

SethMould

The Banking/Savings tab contains an article about the National Savings Index-linked Certificates which is misleading, I think. You don't get the current RPI + 1%. You get the difference between the RPI at investment and on anniversary. See nondom's earlier post. So the quoted figure of 6.3% is nonsense.

moneylover

I am thinking of investing £15000 maybe taking out after a year depending on circumstances.
two questions:

1 If I take out my money after 14 months do I get one year interest or 14 months. Am presuming the latter but just checking!

2 I read this in the Daily Mail Money section on Wednesday:

"buy now and your starting level will be based on Marchs inflation rate - so you will automatically benefit from the rise of close to 1pc between March and April. Wait until June 1 and you will miss out on this rise. "
I don't understand this - it implies that I have now missed the boat in some way, as I havent invested yet. It this true and if so is it likely to make much of a difference - I do understand that we cannot know how much we will get until a certificate matures or is cashed in, but I dont quite understand the specific downside of not having got investment in before end of May. Is it likely to make much difference?
Many thanks.

Sceptic001

moneylover wrote: »

I am thinking of investing £15000 maybe taking out after a year depending on circumstances.
two questions:

1 If I take out my money after 14 months do I get one year interest or 14 months. Am presuming the latter but just checking!

Yes, after the first anniversary index-linking and interest are earned for each complete month held.

moneylover wrote: »

2 I read this in the Daily Mail Money section on Wednesday:

"buy now and your starting level will be based on Marchs inflation rate - so you will automatically benefit from the rise of close to 1pc between March and April. Wait until June 1 and you will miss out on this rise. "
I don't understand this - it implies that I have now missed the boat in some way, as I havent invested yet. It this true and if so is it likely to make much of a difference - I do understand that we cannot know how much we will get until a certificate matures or is cashed in, but I dont quite understand the specific downside of not having got investment in before end of May. Is it likely to make much difference?
Many thanks.

Your start RPI figure depends on month of purchase. May purchases got the March RPI figure (220.7). June purchases will get the April figure (222.8).

The Mail was right to point out that there was a 0.95% increase last month, but what matters is where you think inflation will go in the next 12 months (or until you cash in, if longer). The Bank of England is hoping that CPI (currently 3.7%) will fall back to its 2% target. Others are more pessimistic.