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

Sceptic001

Masomnia wrote: »

The only catch is if you think RPI will be the same next year as this year, which is very unlikely.

Don't make the mistake of looking at the current inflation figures and thinking that is what you will get, because it isn't. So I guess the only catch is the uncertainty of what your return will be.

That is not a catch. The USP of this product is that it pays inflation (as measured by RPI) plus 0.5% AER if held for 5 years, tax free. If inflation falls, your savings are still protected against inflation.

Masomnia

Sceptic001 wrote: »

That is not a catch. The USP of this product is that it pays inflation (as measured by RPI) plus 0.5% AER if held for 5 years, tax free. If inflation falls, your savings are still protected against inflation.

Of course, but you still don't have the certainty of knowing what your return is going to be. 0.5% is quite low compared to previous releases, and 5 years is a long time.

CLAPTON

Masomnia wrote: »

Of course, but you still don't have the certainty of knowing what your return is going to be. 0.5% is quite low compared to previous releases, and 5 years is a long time.

but as endlessly stated you are NOT tied in for 5 years

Masomnia

CLAPTON wrote: »

but as endlessly stated you are NOT tied in for 5 years

I know. But it does limit you, especially if you're planning on using up the maximum investment for each issue, as a lot of people will.

noh

Masomnia wrote: »

I know. But it does limit you, especially if you're planning on using up the maximum investment for each issue, as a lot of people will.

Don't understand that comment.
In what way does the 5 year investment period limit you? Given that you can withdraw at any time and even roll over your investment when the 5 years is up.

littly_kitty

Thanks for all the responses. Just one more question.

On the NS&I website (under savings-current-interest-rates) it says:

Index-linking +
0.63% basic rate
0.83% higher rate
1.00% additional rate

What does all these basic/higher/additional rates mean?

Sceptic001

noh wrote: »

Don't understand that comment.
In what way does the 5 year investment period limit you? Given that you can withdraw at any time and even roll over your investment when the 5 years is up.

Indeed - it is very similar to an instant access ISA. You can put in £15k per issue and roll it over for as long as you like, but once you withdraw it you lose the tax-free wrapper and benefits.

JamesU

Out of curiosity, what happens if you buy say three £5K ILCs for the issue, sell one £5K (e.g. emergency boiler change) and then save up £5K and want to reinvest in the issue while it is still on sale (£15K and part encashment of £5K possible of course, just splitting things for the example here). Is taking out £5K and then putting it back into the same issue allowed? or have you "used up" you £15K allowance for that issue until a new issue becomes available? NSI suggest they want the ILCs on sale for a sustained period (anybody's guess for how long really though) but that does not mean they will be promoting further issues. If the flexibility discussed above exists, that could be interesting for OPs to know regarding savings flexibility.

JamesU

StevieJ

littly_kitty wrote: »

Thanks for all the responses. Just one more question.

On the NS&I website (under savings-current-interest-rates) it says:

Index-linking +
0.63% basic rate
0.83% higher rate
1.00% additional rate

What does all these basic/higher/additional rates mean?

I presume they are grossing up the bonus (i.e. the 0.5%) to show the equivalent pre tax for different tax bands, they can't do it for the inflation bit because they don't kmow what that will be.

adindas

Based on historical data. How long will it take until sold out or withdrawn.
Will it be more than two months ? ..

Stompa wrote: »

FWIW I see that their Q&As say:

Q. How long will the current Issues of Savings Certificates be on sale?
We’re aiming to keep Savings Certificates on sale for a sustained period to allow as many savers who want to invest to do so.

of course we don't know what they mean by 'a sustained period'.