MSE News: NS&I revives inflation-beating savings certificates

Rollinghome

lisyloo wrote: »

No, you only get the interest if you stay in for complete months, not odd days.
This is all defined in their terms and conditions.
They even define what happens if the next month doesn't have a 29th, 30th or 31st.

If you cash in you ideally want to do it on a monthly addniversary.

Ah well, always fun to consider the possibility of little wheezes. It seems the only one on offer that might give some advantage is to invest just after the new RPI figure is known, rather than just before, to avoid investing in a month that's followed by a lower starting point the following month.

adindas

Good thank you for the info

oldvicar wrote: »

No disadvantage if it takes a day or two for them to take your money - your certificates will be issued at the date your application is received.

JamesU

Rollinghome wrote: »

Ah well, always fun to consider the possibility of little wheezes. It seems the only one on offer that might give some advantage is to invest just after the new RPI figure is known, rather than just before, to avoid investing in a month that's followed by a lower starting point the following month

You are nearly there. The flaw is considering two sets of RPI in the ILC twilight zone i.e. from tomorrow until end of May to buy the current RPI start vs buying in June at tomorrow's released RPI figure. That approach is more useful and may work in a period of deflation when you expect RPI values to subsequently recover in advance of the first year anniversary. But outside of a deflationary period RPI generally increases (often with exceptions in January and July for reasons I do not understand). Then you have the option to decide between two sets of start RPI values, but that is not predicitive for making an informed decision on which month may give a better return, as it depends on the differential between monthX 2012/monthX 2011 vs monthX+1 2012/monthX+1 2011 where you cannot predict the result as, although x2 2011 RPIs are known, RPI in months X and X+1 in 2012 are crystal ball territory but needed in advance to decide between the two possibilities. But there is a little compromise wheeze.

Looking at the month/month change in RPI (not %RPI over the last 12mths) it is easy to establish a relatively high % increase in mth/mth RPI when figures are released, then in the ILC twilight zone fix that amount into the ILC purchase as X% + %bonus + next 11 months inflation. If the mth/mth RPI change is say 0.1-0.5% might not be so interesting, but when e.g. 0.5%-1.0%+, it certainly is. If you read through post #142 and especially the two links in the post, you will understand what I mean with reference to an optimum purchase month in 2010 based on locking in part of the 12mth inflation predictively.

No harm in dividing two RPI numbers once a month before deciding when to buy ILCs with an optimum lock in of reported inflation during the ILC twilight zones. Would be ideal to do this a few times a year with smaller purchases rather than a lump sum in a single month e.g x4 optimal lock and then also more cost averaged wrt inflation over the 12mth period aswell (bearing in mind there can also be +/- 15-25% variation in %RPI, and hence also returns, in any 12 month period). Trouble is how long the ILCs are likely to remain on sale this year in order to choose. However in any case this approach still does not mean you are guaranteed to get the best return in a given 12 month period as that still depends on two months of RPI figures 12 months in the future that are unknown, and the resulting differential as described above.

As OldVicar mentions, for a few £s it would not be worth the effort. But if there is a guaranteed say 1% lock in of inflation that is equivalent to £150 in the first year on a £15K investment with compounding of the total sum thereafter. So not huge amounts to consider but not to be sneezed at either. Fun to assess similar wheezes with RBPI (%RPI or 3.9%) and RBPX (1.3x %RPI) within a S+S ISA where additions are added quarterly and less restriction on period held with trading in real time, but various pros and cons to this alternative, and the bonds are not as secure as ILCs for pensioners and anybody who is risk averse, so a bit off topic on this thread.

So far there has been one good month in 2011 for purchasing ILCs this way but they were not on sale at the time. Link below for RPI, %RPI and the previous reporting dates for inflation. Easy to work out which one that was, % return that would be locked in from the start (assume 0.25% bonus), the RPI value and month, and the twilight dates when the ILCs would have been bought.

http://www3.hants.gov.uk/finance/retailpricesindexandconsumerpriceindex.htm

Must have been a good barbeque given the level of inspired thought and provoking discussion.

Update: Mar RPI=232.5, Apr RPI=234.4, so (0.82+0.25)= 1.1%+11mths lockin until end of May.

JamesU

oldvicar

JamesU wrote: »

.........

As OldVicar mentions, for a few £s it would not be worth the effort. But if there is a guaranteed say 1% lock in of inflation that is equivalent to £150 in the first year on a £15K investment with compounding of the total sum thereafter. So not huge amounts to consider but not to be sneezed at either. Fun to assess similar wheezes with RBPI (%RPI or 3%) and RBPX (1.3x %RPI) within a S+S ISA where additions are added quarterly and less restriction on period held with trading in real time, but various pros and cons to this alternative, and the bonds are not as secure as ILCs for pensioners and anybody who is risk averse, so a bit off topic on this thread.

......

JamesU

JamesU - you have whetted my appetite.

Can anybody tell me where to read more about RBPX and where to get 1.3x RPI ??? I realise it may not be the widows & orphans type of investment which NS&I offers, but I would like to find out more

ffacoffipawb

Consumerist wrote: »

Strictly speaking, it should be on the day after the monthly "anniversary".

Edit
Should that be "moniversary" or something similar ?

"Mensaversary" I think.

JamesU

oldvicar wrote: »

Can anybody tell me where to read more about RBPX and where to get 1.3x RPI ???....I would like to find out more

http://forums.moneysavingexpert.com/showpost.php?p=38107316&postcount=2

https://forums.moneysavingexpert.com/discussion/comment/38115966#Comment_38115966

Best to discuss this on the thread above to avoid confusion with ILCs on this thread though.

JamesU

inneed

I'm getting a bit jittery. I applied for some with money I had instantly transfered to my current account on Friday, but that money is still sitting in my current account. Has other peoples gone straight away?

le_loup

You will find the money is "reserved" on your account and it will leave tomorrow.
Most card transactions operate like this.

JoeCrystal

Went down to Lloyds TSB branch and appropriately, they cannot find this transaction since it is too far back and lastly, the woman actually rebuked me for not reporting this on Friday, rather than leaving it on Monday...

Either way, I am going to see if I can contract NS&I regarding my application and see if I can apply it this time by ancient paper forms, with written cheque (drawn from same Lloyds TSB account) and lastly, by snail mail. :cool:

Best of luck for me!

Cheers

Joe

inneed

le_loup wrote: »

You will find the money is "reserved" on your account and it will leave tomorrow.
Most card transactions operate like this.

Thanks for that. - How do you know it is reserved?