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

Ferdy147

Could you potentially make a loss with NS&I or make no return on ur capital?

I know that's unlikely but it's something I need to know as I want to invest only if the gains are not guaranteed?

dtsazza

The gains will be completely guaranteed, insofar as they'll be RPI + x% (where the amount above RPI hasn't been confirmed yet). So I suppose that in absolute terms you can't guarantee that you'll make a certain numeric amount of money - if RPI amazingly dropped to 0.5% and stayed there, you'd get less than most normal savings accounts.

However, in real (inflation-adjusted) terms, you're guaranteed to make a little bit of a bonus above RPI - and that's much more than conventional accounts can realistically manage at the moment. You are guaranteed to get the advertised interest paid, and since it's a government scheme you're guaranteed to get your principal back as well.

In other words, it's a saving scheme (with an index-tracking rate), rather than an investment - you can't actually lose money.

Ferdy147

Ok so if you can't lose money could there be an instance where you don't make any gain either?

RPI could be negative couldn't it? Even if it is unlikely. Ie say the RPI was -1.5% and then the bonus above RPI as you put it is 1.5%. This would mean a total of 0% which would mean no growth right?

Arthurian

In previous issues if RPI was negative, they didn't use it in their calculations. So if RPI was negative, you earned the bonus only - in your example, that would be 1.5%. But you'd have to read the terms and conditions for any new issues, of course.

Ferdy147

Thanks for that.....

umbopuk

heard a rumour they will be back onsale at end of may/begining of june

gadgetmind

poppy10 wrote: »

Diversification is the key. If you've already got everything in stocks and shares, it's worth having some bonds to balance the risks.

I did go for shares in a few good value and high yielding FTSE shares (I use the "what is Woodford buying now?" approach!) but I also invested in some "steady eddie" ITs (RIT, RICA, and PNL) and some preference shares (NWBD and a punt on LLPC)

I did look at bonds, but I'm sure that some time in the next 6-9 months, rates will rise and thus yields will fall.

hostage2

they are returning on sale on the

SnowMan

They are back now paying RPI + 0.5%

http://www.nsandi.com/savings-index-linked-savings-certificates

edit: beaten to it by wriggly

wriggly

SnowMan wrote: »

edit: beaten to it by wriggly

But you did post it in the right place.

Two caveats I see with more perusal:
1. The non-indexed interest rate starts at a very low 0.05%, and stays low until the last two years. This seems a more "exponential" rise than previous issues, which punishes early withdrawals more.

2. Last year the March and April RPI values were 220.7 and 222.8. This year, March was 232.5 and April appears likely to be lower. So certs bought this month face a strong headwind in the first month. Buying in June may be better, with the risk that they are well-subscribed and go off sale. [EDIT - After waking up a bit, the first part of this is bogus - the 2010 numbers are irrelevant - the expectation that RPI may drop soon is more relevant]