NS&I Index-Linked Savings: Q&A

Mr_K

The email is very misleading. You don't know what you're going to get, its dependent on RPI in each year you invest. You are guaranteed to get your deposit + 1% + any positive change in RPI during the year. So could be 6.3%, could be 1 %, could be 10 %, depends on inflation.

Sceptic001

colinfrasp wrote: »

Hi New to the Forum and have read long threads on the Index linked Certs. Nowhere can I see how these could be shown as currently earning 6.3% as shown in Martin's email. The best I can see in the threads is about 3.7%. Has Martin got this right?

The 6.3% is what you would have earned last month if you had invested in May 2009. Misleading to say the least, as Mr K says. Many on this forum have pleaded with MSE to change this misleading headline, without success. This is all very odd, as MSE is usually a reliable source of unbiased and accurate information.

Annual Retail Price inflation fell to 5.1% this month, so the headline is now not only misleading but a month out of date.:mad:

DimSum

If I took out a 3 year ILSC and a 5 year one with the intention of ending it at the 3 year mark, would both certificates give the same amount of return?
I find these very confusing.

Alsso how often do new editions seem to come out historically?

Sceptic001

DimSum wrote: »

If I took out a 3 year ILSC and a 5 year one with the intention of ending it at the 3 year mark, would both certificates give the same amount of return?
I find these very confusing.

Alsso how often do new editions seem to come out historically?

The 1% fixed element is stepped to encourage you to hold for the full term so if you cashed in after three years you would get slightly less than 1% AER on a five-year certificate plus the index-linking.

There is no fixed time for each issue, but typically there is a new issue once or twice a year.

DimSum

Sceptic001 wrote: »

The 1% fixed element is to encourage you to hold for the full term so if you cashed in after three years you would get slightly less than 1% AER on a five-year certificate plus the index-linking.

There is no fixed time for each issue, but typically there is a new issue once or twice a year.

Ah, so the index return ( if any) on 15 000 would be identical but the interest on 15000 at the three year mark would be £423 rather than £455?

I did ....
1.0075x1.009x1.015-1 for the five year one at the three year mark.

Sceptic001

DimSum wrote: »

Ah, so the index return ( if any) on 15 000 would be identical but the interest on 15000 at the three year mark would be £423 rather than £455?

I did ....
1.0075x1.009x1.015-1 for the five year one at the three year mark.

The stepped rates on the five-year ILSC are 0.75%, 0.85%, 0.9%, 1.15% and 1.36%. So £15000 becomes £15378 after 3 years (excluding index-linking)

hallmark

Totally confused by these.

I knew the interest could vary down to almost nothing, but I hold 6 lots & I just checked the value of each lot & they're all worth LESS than they were a month ago. I didn't realise that was possible..?

The "worst" are the ones I bought on 21st May 2010. On 21st July they were valued at £15,265.50 & £15,259.50 respectively (£15K each of 3y & 5y). Today, just over a month later, they're valued at £15,021.00 & £15,018.00! Even allowing for the vagaries of however these things work, I'm struggling to understand (1) how they can go down in value & (2) how they can only be valued at £21 & £18 more than I paid for them, after 3 months of very high RPI.

Totally bemused....

Sceptic001

I don't understand the valuations you are quoting. If cashed in before the first anniversary, ILSCs are repaid without interest or index-linking.

musehead

It's quite meaningless to give your ILSCs monthly valuations, as the amount you will get paid depends only on what the yearly anniversary value of the RPI is compared to what it was when you took out the certificates. I'm not even sure how these monthly valuations are calculated.

The reason that your monthly valuations are less this month is that RPI has reduced slightly from last month.

Note that the RPI is a figure (about 220ish at the moment? can't seem to find the data). When quoted as a percentage, that is not the RPI but the percentage change in RPI compared to one year ago. So the high percentages recently are not relevant in considering the inflation over the last few months.

hallmark

musehead wrote: »

It's quite meaningless to give your ILSCs monthly valuations, as the amount you will get paid depends only on what the yearly anniversary value of the RPI is compared to what it was when you took out the certificates. I'm not even sure how these monthly valuations are calculated.

The reason that your monthly valuations are less this month is that RPI has reduced slightly from last month.

It can't be that simple: I've held various lots of these since March 2007 & although the monthly increase using the NSANDI calculator varies, it's always increased, never ever gone down (& there have obviously been months during those 3+ years when RPI decreased. I've checked the value each month for 40+ months & this has always been the case.