Index Linking For Dummies...

sabretoothtigger

Actually ignore my comment, I was thinking it was the difference in rpi that paid out. Now Im just confused :laugh:
RPi is the difference in various prices, thats it



Martin makes a good point, this is going to affect a few people probably. I think pensions are set by RPI also, not sure which month

Student loan rates hiked to 4.4% for 100,000s from September
Currently interest free, it'll be a shock for many - details on who's hit & what to do
Every Sept the Student Loan interest rate changes based on March's RPI inflation figure - yesterday that was revealed as a big 4.4%, meaning many face a big cost jump. Pre-1998 Loans: Those students who started before 1998, who currently have shrinking, -0.4%, loans, will almost certainly see theirs jump to 4.4%. Post-1998: For more recent students currently paying 0%, the rules are a bit more complex. They state it should be the lower of March's RPI (4.4%) or the base rate of a range of banks + 1% (currently 1.5% but of course it could change) - yet the govt won't confirm this until August. What you should do: Until Sept. it's 0% at worst, so if you've spare cash save it at high interest (e.g 3.2% cash ISA) as you'll earn more than the loan costs. Then re-evaluate in Sept (we'll update you), if by then you can't earn more than the interest cost, use the savings to overpay the loan. There is one exception - student loans are still the cheapest long-term debt you'll ever get, so repaying only to then reborrow at a higher rate for a mortgage or other loan doesn't make sense.

http://www.moneysavingexpert.com/latesttip/

Presumably he doesn't see base rate changing anytime soon.

No I do really. Either inflation, rpi goes up and/or the rates go up. The world is growing and uk must pay for its debt and as far as I can tell we are in competition for that money hence rates must rise to attract funding





Just thinking about it for a minute, this thread should be 100 replies long from all the people who put money in normal savings accounts and got like 2 or 3%.

Effectively these people lost money over the last year but dont yet realise it, as rpi reflects rising costs it will become evident at some point unfortunately.

RPI is also linked to rail fares apparently

ManAtHome

June 09 was the RPI low-point (-1,6%) - has been going up since then even though it was still negative year-on-year until November 09 (+0.3%). Potential for the best "bang for your buck" maybe from certs bought last June/July.

[edit] STT - I'm pretty sure that any base rate rise pushes RPI up, so if BoE increases rates to choke CPI inflation it widens the gap between CPI and RPI (possibly back to 'normal'?).

JamesU

ManAtHome wrote: »

June 09 was the RPI low-point (-1,6%) - has been going up since then even though it was still negative year-on-year until November 09 (+0.3%). Potential for the best "bang for your buck" maybe from certs bought last June/July.

ManAtHome, Be careful, EVERYTHING you have said here is misleading, incorrect and may confuse.

Without going into the specific details, suffice to say that you are referring to the % RPI which has no relevance whatsoever in defining the potential returns this year.

You need to look at RPI, and the RPI low point was actually in Jan 09 at RPI = 210.1. And the RPI in Jun 09 and Jul 09 were the same, it was not a "low point" in Jun 09.

And the best "bangs for your buck" will not be determined by the previous 12 months RPI values alone anyway. It is the differential between those start level RPI values and the end RPI values this year that will determine the "bang for your buck."

JamesU

ManAtHome

So Jan 09 to Jan 10 (1.037) paid more than Mar 09 to Mar 10 (1.044)..? Low-point and rate of change don't always line up.

Certainly the Jan-Jan numbers you have stated are demonstrably misleading, incorrect, and definitely confuse - my numbers "maybe" wrong depending on tba RPI numbers...

sabretoothtigger

June 09 was the RPI low-point (-1,6%)

That would have been -1.6% on june 08 to june 09 which would make sense as 08 had the high petrol prices

Of course we got those back now hence the reverse from 09

Lokolo

sabretoothtigger wrote: »

Just thinking about it for a minute, this thread should be 100 replies long from all the people who put money in normal savings accounts and got like 2 or 3%.

Effectively these people lost money over the last year but dont yet realise it, as rpi reflects rising costs it will become evident at some point unfortunately.

RPI is also linked to rail fares apparently

Give it time and there will be plenty of threads from all the older generations complaining about their savings.

Currently I am not that bothered about my savings rate, not until I finish uni anyway. I think at that point, if RPI is up around 6% and I am still getting 3% I will be pretty p*ssed.

And don't get me started on my student loan....

artha

Lokolo wrote: »

Give it time and there will be plenty of threads from all the older generations complaining about their savings.

Currently I am not that bothered about my savings rate, not until I finish uni anyway. I think at that point, if RPI is up around 6% and I am still getting 3% I will be pretty p*ssed.

And don't get me started on my student loan....

As one of the "older generation" I'm not one to complain about my savings rate when there are so many opportunities for wealth increase if you choose to take the risk. As for your student loan you clearly don't need it if you are saving(and able to) for a car that I wouldn't even consider as a need to have

Lokolo

artha wrote: »

As one of the "older generation" I'm not one to complain about my savings rate when there are so many opportunities for wealth increase if you choose to take the risk. As for your student loan you clearly don't need it if you are saving(and able to) for a car that I wouldn't even consider as a need to have

The savings are my student loan. If I had no student loan, I would have no savings (well, not as much anyway).

I never said I need the car anyway? Most of the car savings is from inheritance also.

artha

Lokolo wrote: »

The savings are my student loan. If I had no student loan, I would have no savings (well, not as much anyway).

I never said I need the car anyway? Most of the car savings is from inheritance also.

Perhaps I was just feeling a bit grumpy this morning being an "old person" and I don't know your personal circumstances so apologies if you thought it was a personal comment. I just have a thing about student loans being given to those who clearly don't need them or misuse them.

Lokolo

artha wrote: »

Perhaps I was just feeling a bit grumpy this morning being an "old person" and I don't know your personal circumstances so apologies if you thought it was a personal comment. I just have a thing about student loans being given to those who clearly don't need them or misuse them.

Hehe no worries. I didn't mean all older people we have had some people complaining on mass threads about it before.

And to be fair I have the same view about grants and bursaries, a number of my friends have uni paid for them, and still get loans and grants! This was the same when we were back in school and they got EMA even though they quite clearly didn't need it.