Index Linking For Dummies...

learner101

A a total new investor the idea of 4.7%+ seems the best idea, so I picked up the leaflet from the Post office. the example for their calculations is different so it doesn't give what you think you should get. The leaflet indicates you get the CHANGE in RPI over the year from investment and not the actual RPI.
So £1000 invested gets the following
1000 x (RPI at year end / RPI at year start )-1000 ( example states £5.17 )
Plus AER - Compound 1% , for year 1 0.85%
1000x 0.85 ( example states £8.50 )

The leaflet shows total return for year 1 of £13.67 and after 3 years of £54.84 per £1000.
Am I missing something ? I'D rather be shown my error now than lose at lot of money

JamesU

learner101 wrote: »

A a total new investor the idea of 4.7%+ seems the best idea, so I picked up the leaflet from the Post office.

Am I missing something ? I'D rather be shown my error now than lose at lot of money

The current rate as of today is %RPI = 4.4% but this refers to previous 12months and is not the rate of return you will get in the next 12 months.

It can be confusing. Read through the latest similar link here, including worked example. Other links to Q+As in this link also.


http://forums.moneysavingexpert.com/showthread.html?t=2416673

JamesU

learner101

JamesU - thanks for the information. More research required. Can I set up phased Certificates up to the 15K per issue ? or just a single per issue investment per issue ?
Thanks Again
Learner101

Consumerist

You can purchase as many certificates as you like up to the total of £15,000 in any one issue.

sabretoothtigger

120 to 220 in 20 years is not very impressive Thats only 83% + the 1% per year not shown on that graph of course but still not great


The point would be these might be better now then normal, it depends if you think rpi will outstrip interest offered by bank accounts. Also its tax free, anyone on higher tax and already using isa should love these

Consumerist

sabretoothtigger wrote: »

120 to 220 in 20 years is not very impressive Thats only 83% + the 1% per year not shown on that graph of course but still not great

I make that about 3% per year average inflation plus around 1% interest, to give about 4% pa tax-free return overall. Although the fixed interest does vary, I think that gives a fair representation of the past 20 years.

The big question now, of course, is what level of inflation we can expect in the short term while we climb out of the economic mess we're in.

Place your bets, ladies and gentlemen.

hallmark

Consumerist wrote: »

You can purchase as many certificates as you like up to the total of £15,000 in any one issue.

Is that true, I thought there was also an overall cap on the amount you could have in these?

Consumerist

hallmark wrote: »

Is that true, I thought there was also an overall cap on the amount you could have in these?

The cap is the £15,000 total investment in any one issue. You can hold an unlimited total in different issues.

hallmark

I was going by this: http://www.nsandi.com/savingneeds/taxfreeinvestments

"You can invest up to £95,100 tax-free with NS&I"

On reflection maybe they mean you can invest £95,100 right now & they just haven't worded it very well (their current wording is misleading, or at least it misled me!)

Consumerist

hallmark wrote: »

"You can invest up to £95,100 tax-free with NS&I"

That refers to their tax-free investments, as a whole. It includes an ISA, premium bonds, both issues of Index-linked certificates, fixed-interest certificates, etc.

If you look further down under Index-linked Savings Certificates, it quotes "£100 to £15,000 in each issue. . . ".