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NS&I certificates

1192022242527

Comments

  • lisyloo
    lisyloo Posts: 30,094 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    I don't think RPI will fall. It will increase more slowly than over the past 12 months, but deflation is pretty unlikely in the short term.

    So you don't think even the VAT rate falling out will have an effect??
    Guess we'll have to agree to disagree.
    Your views don't fit in with the concensus, but that doesn't of course mean you are wrong.

    I'd be interested to know why you don't think it will fall though.
    One big reason for me is VAT.
    But another is oil and grain prices.
  • masonic
    masonic Posts: 27,893 Forumite
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    edited 7 August 2011 at 5:04PM
    lisyloo wrote: »
    So you don't think even the VAT rate falling out will have an effect??
    Guess we'll have to agree to disagree.
    Your views don't fit in with the concensus, but that doesn't of course mean you are wrong.

    I'd be interested to know why you don't think it will fall though.
    One big reason for me is VAT.
    But another is oil and grain prices.
    I'm not aware of any views at the moment that we are headed for deflation. The forecasts that I've seen are for RPI to increase by 3-4% in 2012. Nobody seems to be making predictions of less than 2% inflation and certainly nobody is saying RPI will fall.

    Edit: On the subject of VAT and inflation, we know that the VAT increase contributes approximately 1% to the current rate of inflation. It happens that the recent energy price rises are going to add about 1% to the RPI, so, in effect, these energy price rises will fill the void left by the VAT increase falling off the 12 month RPI inflation figure.
  • ffacoffipawb
    ffacoffipawb Posts: 3,593 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Photogenic
    edited 7 August 2011 at 6:09PM
    lisyloo wrote: »
    Oh I certainly don't. All my money is tied up in PPR (home), pensions, ISAs or NSI. I pretty much pay no income tax or CGT.
    However don't forget that I have a £10K CGT allowance per tax year and so does my husband.


    Totally agree and I'm following a similar strategy to you.

    Premium bonds next for me, as my fixed rate taxable bonds and regular savers mature...

    Fixed Rate Bonds (with less than 1 year to go)
    Nationwide £5k in December
    Barnsley £5k in July 2012

    Regular Savers
    First Direct £3,725 in November 2011
    Lloyds TSB £3,065 in November 2011

    I also need £10,680 (more if the limit is increased by RPI / CPI) for my Share ISA in April 2012. So some of the premium bonds purchased from the proceeds above may be cashed in for that. I have enough in a cash ISA for now (see signature).

    Haven't much free funds for savings at the moment - I am making very large pension contributions via salary sacrifice. Save on income tax, national insurance and chiild tax credit withdrawal - 73% relief in all (20% income tax, 12% NI and 41% child tax credit withdrawal) which is pretty much the tax free cash so the pension is pretty much free! This won't last much longer with the country's finances the way it is, so taking advantage of the situation while it is available.
  • Ark_Welder
    Ark_Welder Posts: 1,878 Forumite
    :) Aaah! The joys of discussing RPI versus the Rate of Inflation :)
    Living for tomorrow might mean that you survive the day after.
    It is always different this time. The only thing that is the same is the outcome.
    Portfolios are like personalities - one that is balanced is usually preferable.



  • lisyloo
    lisyloo Posts: 30,094 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    I'm not aware of any views at the moment that we are headed for deflation.

    Ok I think I get it now - ha ha.
    When I said I think RPI will fall - I didn't actually mean that. I meant that I bellieve the YoY rate of increase in RPI will fall.
    I didn't actually mean deflation (like may people I mis-used the term RPI to refer to the YoY increase).

    Latest consensus views are 5.2 for 2011 and 3.4 for 2012.
    I know forecasts can be wrong, but I reckon it's the best thing I have to "take a view".
    On that basis I will probably continue with NSI as RPI+0.25% beats cash ISAs but I'm keeping a close eye on it.
    I am making very large pension contributions via salary sacrifice

    Sadly my employer won't play ball on the salary sacrifice. Don't know why yet.
    I've tried to get an answer but they have recently been too busy selling off the companies assets and making people redundant.
  • ffacoffipawb
    ffacoffipawb Posts: 3,593 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Photogenic
    lisyloo wrote: »
    Sadly my employer won't play ball on the salary sacrifice. Don't know why yet.
    I've tried to get an answer but they have recently been too busy selling off the companies assets and making people redundant.

    As well as avoiding my own NI of 12% they also put half of their employer NI saving (employer NI rate of 13.8%) into the scheme too.

    So a 5% contribution (say) becomes 5% + 5% x 13.8% / 2 = 5.345% (a 6.9% extra uplift). There's a 6% employer contribution (max) on top, so not a particularly generous pension scheme.

    Don't know why they are keeping half their employer NI saving to themselves, as they wouldn't get it if we didn't salary sacrifice, but at least we are getting half of it.
  • capehorn
    capehorn Posts: 992 Forumite
    Part of the Furniture 500 Posts Name Dropper Combo Breaker
    Thank you for the interesting discussion.

    As even the pessimistic voice is saying that these are still worthwhile I will be investing.
  • hermante
    hermante Posts: 596 Forumite
    Part of the Furniture 500 Posts Name Dropper
    Does anyone know if there are any restrictions or terms on non-EU citizens investing in these? Do they have to be living in the UK and what happens when they leave the UK?
  • So what's the catch/downside with these assuming I have £15k that I'm not planning on touching but want somewhere safe with a reasonable return?
  • masonic
    masonic Posts: 27,893 Forumite
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    hutchingsp wrote: »
    So what's the catch/downside with these assuming I have £15k that I'm not planning on touching but want somewhere safe with a reasonable return?
    The only downside is that inflation falls back more severely than predicted. The worst case scenario is that you just get the 0.5% interest if the RPI isn't any higher on your anniversary date. That is very unlikely. Personally, I'll be very pleased if I get a 4% return from these at my first anniversary.

    The key advantage to ILSCs over long term fixed rate accounts is that they allow much better access if you do need the money during the term. If you can confidently lock your money away without needing access, you might end up with a better return from fixed rate. One option is to split your money between the two.
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