NS&I Index linked certificates to be introduced next FY

JoeCrystal

This is very good news, my plan is naturally is to put considerable amount of savings into it as soon it is open!

Cheers

Joe

RobStaffs

Apologies is has been posted elsewhere but here is what Danny Cox of H_L wrote about the issue yesterday.

"Savers everywhere rejoice! National Savings Index Linked Certificates will be reintroduced during the 2011/12 tax year. They offer inflation-beating tax-free interest and are backed by the government.
There are usually two versions, a 3-year and a 5-year certificate, both need to be held until maturity in order to fully benefit from the index-linking. The maximum invested in each certificate was £15,000, therefore, a couple could invest £60,000 in total. At maturity certificates can be reinvested, so it’s possible to build significant holdings.
The returns vary from month to month depending on the Retail Prices Index (RPI). For example, if you had invested a year ago to February, your current rate of return would be the rate of RPI plus 1%, a total of 6.5% tax-free. This is the equivalent to 8.1% gross for a basic rate taxpayer and 10.8% gross for a higher rate taxpayer.
These are very attractive but must be put into context - the Office for Budget Responsibility predicts inflation to be in the region of 4%-5% for the remainder of 2011 then fall to 2.5% in 2012 and to 2% the year after.
Despite this, I am a big fan of Index Linked Certificates as part of a long-term cash holding: I believe they can be a great way to complement accounts with more immediate access"

StevieJ

lisyloo wrote: »

Personally I wouldn't say so.
But then I would be comparing with variable rates and looking for access, not comparing with inflation and looking to tie-in, so what is "good" depends on what you are looking for.
I'd exect rate to rise more than 1.4% ovr 4 years personally, but that's just an opinion.

What I am looking for is something that offers a premium over inflation, I don't need access. If the OBR are at all accurate with their forecasts the 4.4% could turn out to be generous. Just one point I am currently finishing previous Halifax cash Isa's that were in the 6-6.5% range, I was very happy with those

the Office for Budget Responsibility predicts inflation to be in the region of 4%-5% for the remainder of 2011 then fall to 2.5% in 2012 and to 2% the year after.

JP45

According to an item in today's FT, NS&I is not expected to reopen its index-linked savings certificates to new money until May at the earliest, though they did confirm that new issues would continue to offer a return higher than the increase in the RPI.

An NS&I offiical was quoted as saying that "the reintroduction won't be soon", adding that NS&I wanted to be able to keep the certificates on sale once reopened rather than having to withdraw them because of high demand.

In which case, given the pent up demand for ILSC's, I reckon we may not see them available until much later in the year - perhaps autumn or winter (unless they reduce the £15k allowance per customer as others have suggested).

Rollinghome

RobStaffs wrote: »

the Office for Budget Responsibility predicts inflation to be in the region of 4%-5% for the remainder of 2011 then fall to 2.5% in 2012 and to 2% the year after.

From what I can see, the OBR is predicting the CPI to fall to 2% by 2013 (page 82 of Economic and Fiscal Outlook document). But the NS&I say they will add the normally higher RPI so Danny Cox might be getting a bit muddled.

I wouldn't disagree though that investments have to be assessed on future expectations rather than the past.

MiserlyMartin

Masomnia wrote: »

If you take out VAT then inflation by CPI is 2.7%, so RPI a bit higher. So between now and the next few years inflation is gong to be lower than it looks to be now. They can anncunce it now because they know the situation re VAT.

In fact if they cut VAT in the next few years these certficates could become a bad deal with a year.

I can't see them cutting VAT for many years with the ever increasing deficit they have inherited from Brown.

6022tivo

MiserlyMartin wrote: »

I can't see them cutting VAT for many years with the ever increasing deficit they have inherited from Brown.

He was an incompetent fool wasn't he.

I remember him selling the queens gold, well our stock piles of around 60billion wasn't it??? Now worth 5 times that???

mis_sally

Can someone tell me is the cash invested 100% safe

Sceptic001

mis_sally wrote: »

Can someone tell me is the cash invested 100% safe

100% backed by HM Treasury, so it is safe unless the government goes bust.

StevieJ

6022tivo wrote: »

He was an incompetent fool wasn't he.

I remember him selling the queens gold, well our stock piles of around 60billion wasn't it??? Now worth 5 times that???

I have told you a million times not to exaggerate, or at least stop reading the Daily Mail, this was in 2007, got worse since but not that worse

The price of gold has almost trebled and the loss to the taxpayer has been calculated by one leading firm of accountants at more than £2 billion.

Then again the Tories also had their blonde moment

http://www.timesonline.co.uk/tol/news/politics/article1655001.ece

The decision to sell 400 tons of gold is seen in City circles as a financial bungle on the scale of the Tories’ “Black Wednesday” that cost the taxpayer £3.3 billion, according to Treasury estimates.