MSE News: NS&I inflation-beating savings to return

adindas

Should be 4% + 0.5% (not 0,26%) ?
I just want to make sure that I understand it correctly

Stochasticity wrote: »

Not quite.

Example: Let's say that the annual increase in RPI from March 2011-March 2012 was 4%, the annual increase in RPI from April 2011-April 2012 was 4.2% and the annual increase in RPI from May 2011-May 2012 was 4.1%.

If you invested in a NS&I Index-Linked Certificate in May 2011, then the index-linked portion of your interest that you would receive in May 2012 would be 4%, plus 0.25% of your original investment. So, for £15,000 invested, you would receive £15,637.50 on the first anniversary which is rolled over and becomes the starting point for the calculation of your next year's interest.

If you invest in June 2011, then the index-linked portion of your interest would be 4.2% for the first year. If you invest in July 2011, then the index-linked portion of your interest would be 4.1% for the first year.

ffacoffipawb

adindas wrote: »

Should be 4% + 0.5% (not 0,26%) ?
I just want to make sure that I understand it correctly

The margin over RPI is 0.50% on average, 0.25% in year 1 up to 0.86% I think for year 5

Baldur

ffacoffipawb wrote: »

The margin over RPI is 0.50% on average, 0.25% in year 1 up to 0.86% I think for year 5

Correct, the rates are shown here - http://www.nsandi.com/savings-current-interest-rates-year-year-rates

5-year Index-linked Savings Certificates 48th Issue
Purchase price + index-linking for year 1+ 0.25% of purchase price = 1st anniversary value

1st anniversary value + index-linking for year 2 + 0.35% of 1st anniversary value = 2nd anniversary value

2nd anniversary value + index-linking for year 3 + 0.40% of 2nd anniversary value = 3rd anniversary value

3rd anniversary value + index-linking for year 4 + 0.65% of 3rd anniversary value = 4th anniversary value

4th anniversary value + index-linking for year 5 + 0.86% of 4th anniversary value = maturity value

adindas

Great, thank you

Baldur wrote: »

Correct, the rates are shown here - http://www.nsandi.com/savings-current-interest-rates-year-year-rates

10_66

I'm really confused by these (sorry, I have read the thread fully ). I can't decide whether to put mine and OH excess from Vantage accounts, combined around £20K) into these or into the Incentive Saver (3% gross AER). All I can work out is that it's not possible to anticipate what the end results will be. Do people think it's worth it for the amount concerned, please?

ffacoffipawb

10_66 wrote: »

I'm really confused by these (sorry, I have read the thread fully ). I can't decide whether to put mine and OH excess from Vantage accounts, combined around £20K) into these or into the Incentive Saver (3% gross AER). All I can work out is that it's not possible to anticipate what the end results will be. Do people think it's worth it for the amount concerned, please?

I wasn't offered this, so my £21k ...

£15k NS&I I-L certificate
£6K net pension contribution to my SIPPDEAL SIPP (shortly)
Lloyds Vantage nil.

gadgetmind

saveonarola wrote: »

What do people think about taking money from a Cash ISA to put into these NS&I Index-Linked Savings Certificates?

That depends on your circumstances. Do you have other ISA investments? Do you intend to continue doing your ISAs each year? Do you have other cash savings? What is the intended purpose of the money in your cash ISAs.

I only keep the recommended 6xtake-home as cash, and layer this with some instant access and some higher interest but longer notice. These NS&I bonds are ideal for the "lower layers" of cash savings and my paperwork is in the post, and I hope they are still around when my next two lots of money hit the end of their terms.

However, I've always regarded cash as savings and use S&S ISAs for investments. If you have other cash, maybe consider switching this to NS&I bonds and either leave your ISA as cash or (if you're happy with the risk and will leave it there for a decade or so) switch it to an S&S ISA.

TBH, I regard my ISA wrapped money as the last resort and intend to leave it in place as long as possible. I'll even be drawing down my pension as fast as rules/tax will allow rather than touching ISAs.

aspiration_2

Their phone line 0500 007 007 is always engaged.

Any other phone numbers? ( I do not want to do it online)

Cheers

Pinner_Ram

There are a lot of posts on here which though well intentioned and informative serve to complicate the issue leading to people getting wound up in the minutiae of this product.
I see things very simply:
Investment is about putting aside cash now to spend later.
Our aims are:
1. Not to lose capital (these are HM Treasury backed).
2. Match inflation, to preserve our spending power (RPI link).
3. Get ahead, if possible (the + 0.5% bit).
4. Be tax efficient (tax free).
This product does all four of these.
I believe index linked savings certificates therefore have a place in all investment portfolios, in mine they account for about 12% of the total.
It therefore doesn’t matter to me how it compares with other products and interest rates.
I hope this provides some clarity, particularly to those new to the product.

PR

Sceptic001

Pinner Ram, you make a good point, but on the other hand we are always being told not to put our money in a product we don't understand. People are so used to "catches" in other savings accounts that they assume that this product, which looks too good to be true compared to the competition, has a hidden catch. In fact it doesn't, but there is no harm in making sure!