NS&I Saving Certificates

lisyloo

I agree with you.
What some people seem to be NOT taking into account is that inflation is expected to FALL.
Now if you have done detailed analysis and think you know better than the Bank of England etc. then fair enough. I'm not against people taking considered risks.
But if people are buying on the back of a band wagon without doing some analysis of what might happen in the FUTURE then that's a bad thing.
I know we don't have a crystal ball, but there are forecasts e.g. Bank of England and other "experts" that you can look at, in order to take your own "view".

Personally I think the forecasts underestimate inflation, but I've made sure I will be ok if I'm wrong i.e.my worst case scenario is a loss of 0.99%.

I do agree with you about Martin's arcticles HOWEVER people do need to also take personal responsibility in understanding what they are buying if they do not use a financial advisor to "hold their hand".

StevieJ

lisyloo wrote: »

I do agree with you about Martin's arcticles HOWEVER people do need to also take personal responsibility in understanding what they are buying if they do not use a financial advisor to "hold their hand".

Those certificates are designed to beat inflation after tax, so it doesn't really matter what the inflation rate is, in fact they perform even better in a deflationary environment where the 1% bonus really comes into its own.

grumpycrab

schiff wrote: »

...But there has been sufficient criticism of his bald statements about these on MSE and in the newsletter...

Made me laugh this morning.

Jonbvn

StevieJ wrote: »

Those certificates are designed to beat inflation after tax, so it doesn't really matter what the inflation rate is, in fact they perform even better in a deflationary environment where the 1% bonus really comes into its own.

Well it does, because in the case where we get deflation, it is better to open a bog-standard savings account paying more than 1% after tax.

StevieJ

Jonbvn wrote: »

Well it does, because in the case where we get deflation, it is better to open a bog-standard savings account paying more than 1% after tax.

Who says bog-standard saving accounts will be paying 1% plus (tax free) in a permanent deflationary environment? if they are it is likely to be only marginally better.

http://www.boj.or.jp/en/type/stat/dlong/fin_stat/rate/prime.htm

lisyloo

so it doesn't really matter what the inflation rate is

It does if you are borrowing to buy or could pay off debt instead.
I have drawdown on my mortgae at BOE+0.49 to buy these.
Others have chosen to take them in preference to paying off student loans.
So we are comparing BOE with inflation.

There are ALWAYS other options so you have to compare with your other options.

Those certificates are designed to beat inflation after tax

Agreed but that's not what everyone is using them for.
I'm using them to get a better return than paying my mortgage.
Others are using them to get a better deal than paying off their student loan.
So in this case there are comparisons to be made.

Not everyone uses products in the way they were designed.

JamesU

?

StevieJ wrote: »

Who says bog-standard saving accounts will be paying 1% plus (tax free) in a permanent deflationary environment? if they are it is likely to be only marginally better.

http://www.boj.or.jp/en/type/stat/dlong/fin_stat/rate/prime.htm

Interesting stats. Guess this is a good point, if the short and high term lending rates are in a roughly 1.5-2% range, would not fancy my chances of receiving much interest at all. Perhaps the Japanese have their savings in New Zealand instead?;)

JamesU