NS&I Saving Certificates

JamesU

lisyloo wrote: »

If you know of any products where I can pay 40% tax and get a better return than the tax free version then please let me know.

I just cannot follow your mindset on this, nobody in their right mind would want to consider investments that are taxed when there is no need to pay the tax in the first place. Buy an asset, make a profit, CGT free. From memory on your financial makeover thread some time ago, benefits of CGT allowances and 18% CGT after this were not discussed sufficiently (VC may scupper this with increased CGT in June, but hopefully with a reintroduction of some form of indexation/taper relief/long term investment relief etc to compensate for those with planned investments). Anyway as previously, tangential discussion here on ILC thread.

So for sure, sounds reasonable to stick with cash/income tax issues/minimal risk option and as above ILCs short term until you have to start paying off your debt properly.

JamesU

lisyloo

nobody in their right mind would want to consider investments that are taxed when there is no need to pay the tax in the first place.

Yes they might (with savings).
Some people have savings account that currently pay 5% or 6%.
Why would you want to invest in say a 3% ISA if you get MORE after tax elsewhere (on equivalent products).
This was stevieJ's point.
If I mixed up the words savings/investments then I apologies. I mean both.

apt

da1178 wrote: »

Hi all,

I have a student loan, the interest of which may go up to 4.4% in September, but I have managed to save up over the years more money than I owe. As I don't want to pay it back if I can earn more through saving I was wondering if, come September and the interest rate for repayment does goes go up to 4.4%, I can't find any ISA's or savings accounts that can beat that rise would I be betetr putting my savings into an NS&I Index-linked Savings Certificate? This would mean that I will still be earning more interest than I will be paying out?!?!?!? Is this right? Ive read all the guides on the website but find this whole thing rather confusing.

Any help????

One of the proposals that the Tories have put forward is giving a discount for those who pay off student loans early. So I would not tie your money in before the budget in case they put this into practice and you could benefit from the discount.

lisyloo

From memory on your financial makeover thread some time ago, benefits of CGT allowances and 18% CGT after this were not discussed sufficiently

There is a reason for this in my particular case.
I am taking advantage of a very lucky/unusual situation where I can borrow to save/invest at 0.99%. However I expect interet rates to rise at some point and hence this is a temporary stooze.
Long term investments are not suitable for this and hence lack of discussionn on them/ I am using NSI because I know I can get at the money in 12 months (or even beforehand if nexessary).
It's a calculated gamble, but I'm maxed out on it.

atypical

da1178 wrote: »

Hi all,

I have a student loan, the interest of which may go up to 4.4% in September, but I have managed to save up over the years more money than I owe. As I don't want to pay it back if I can earn more through saving I was wondering if, come September and the interest rate for repayment does goes go up to 4.4%, I can't find any ISA's or savings accounts that can beat that rise would I be betetr putting my savings into an NS&I Index-linked Savings Certificate? This would mean that I will still be earning more interest than I will be paying out?!?!?!? Is this right? Ive read all the guides on the website but find this whole thing rather confusing.

Any help????

As I wrote elsewhere:

Our loans are at base rate + 1%, NS&I ILS are at RPI + 1%. I think we all expect the latter to rise before the former. Does that make them a no-brainer for those who save their student loan?

Our interest rate would be 1.5% if it applied today. Our loans would only be at 4.4% is the base rate was at 3.5%.

lisyloo

It's a very good bet IMO.
I'm on BOE+0.49% so similar situation and FWIW I've put about £10K in (talk is cheap so better when people put their money where their mouth is).

JamesU

lisyloo wrote: »

It's a very good bet IMO.
I'm on BOE+0.49% so similar situation and FWIW I've put about £10K in (talk is cheap so better when people put their money where their mouth is).

As long as you are happy to share this info with 500 million other internet users (Europe alone) this is fine I guess, some prefer not to;)

JamesU

JamesU

moneylover wrote: »

feel so grumpy I could cry. Over the years I have learnt so much from this site but the NS&I has beaten me and I still dont understand even after all the kind postings in this thread. I would like to save if this is a good product but obviously not unless I understand what I am doing.
I do not understand why the high RPI of 5.3% is being trumpeted as a reason for buying if the rate of inflation is likely to drop over the next year. If a year from now its lower than now then all I would get if I took my money out would be 1%.? For example if RPI was 6.3% then the interest would be 2% (minus the bit they reduce it by if you cash in early) but if it was 5.3% or lower I would just get 1% Is this right?

No need to be confused or understand the maths. All you really need to know is that index linked certificates will give approx 1% interest (the bonus) + any % inflation from the time you invest until the time you withdraw (provided they are held for at least a year). It is a personal choice regarding whether or not inflation will be higher or lower in the future, nobody can predict this, only guess at the moment.

And just remember that when you read that %RPI or returns on ILCs are XX% (5.3%, 6.3%, 7.9% or any other figure), they are all wrong and should be ignored. Why? they always refer to the last 12 months inflation, and are not the return you will receive in the next 12 months. Simple.

And if you want to understand how ILCs are calculated, just say so on this thread and we can try to explain it (post 6 on this thread is a good starting example to look at).

JamesU

lisyloo

As long as you are happy to share this info with 500 million other internet users (Europe alone) this is fine I guess, some prefer not to

I don't understand (really).
Please explain the issue to me.

Are you talking about id theft risks?
or that I shouldn't be asking advice on my portfolio or what?

I'm not understanding the issue.
I was merely pointing out that I'm not making the statement without any "stake" in it, if you know what I mean.
You seem to be trying to pick holes in everything I say recently.
Is there an issue here?

I really don't believe 500 million read this thread.
If there were it would probably be better quality :-)

schiff

Stumbled across this fascinating thread as I needed to research something for the woman who served me when I bought my ILC at the PO today! More of that later.

I bought into these pretty much on Martin's recommendation. I couldn't blame him if things went wrong, as it's my decision. But there has been sufficient criticism of his bald statements about these on MSE and in the newsletter, that I'm very surprised that nobody eg JamesU has seen fit to make an approach to him to say it's not quite as simple as he makes it appear. I think particularly the after-timing of a previous figure to consider now as being so attractive for the future. Or a board guide - there must be one or two around?

Martin understandably is considered as the fount of all knowledge and almost certainly trustworthy, so this does seem something of a dent in his reputation.

When I bought mine today, the lady serving me asked me about them. She said she had read something about them in the Guardian, something worrying about the month you cashed them in. I told her that as far as I knew, your investment increased by the inflation figure for each month and that new figure remained fixed, till the next month. That has turned out to be rubbish, and I'll be in there tomorrow to put matters right.

But, like many things 'official', the T&C's are not that clear. It definitely needs two or three examples of 'how we calculate' on page 6 of the booklet to make sure everything is crystal clear.