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

lisyloo

It seems there is no difference in returns if you sumbit your investment on the first day of the month, or on the last day of the month. The interest amount is the same. If that is the case I think I will wait until 30th May to submit my application.

I think you are right, but I'm not sure you get any advantage from this.
Sure you pay your money later but you get it back later too, so what's the difference?

dzug1

billieboy wrote: »

Can you add to it after initial investment? I've got a lump sum coming my way but won't get it for about a month and was thinking of opening one sooner rather than later in case it's pulled. Can't see anything on the NS&I website.

You can't actually add to it but you can buy more. Whether you can do so or not depends on what's on offer when the day comes. Each purchase will have a separate maturity date.

Min investment is £100, maximum £15000 total

Don't know if it has to be in £10 or £100 multiples for example - for past issues I don't think it did

Just looked it up - just whole pounds only, no pence

coley54321

Quick question on these. Lets say I have £5k and buy these today is that me done? Or next month when I get paid (if they've not been with drawn by then) I can add £500 at a later date? Can I literally just buy as often as I like until I reach the £15k limit.

Or is it one purchase per person per issue?

thanks

lisyloo

I can add £500 at a later date?

Yes, you can continue to buy as long as you meet the minimum of £100 each time.

Vortigern

coley54321 wrote: »

Quick question on these. Lets say I have £5k and buy these today is that me done? Or next month when I get paid (if they've not been with drawn by then) I can add £500 at a later date? Can I literally just buy as often as I like until I reach the £15k limit.

You can make several purchases - as long as it remains on sale

pocketstrings

Hallo
I have been keeping an out, like many of us, to see when these would be available again, mainly after reading on MSE that they were a good idea before.

Would you recommend I invest? I have a sum of money and I want the following things:

1) Tax free
2) Happy not to touch it for 5 years
3) No risk
4) Given the above want it to grow as much as possible or at least not lose value due to inflation (which, like most of our savings it has been doing)

I would not say I am financially literate, though I have the time to keep an eye on things if I know what I am supposed to be looking for.

Any tips?
Thank you!

pocketstrings

I mean I've been keeping an eye out (!)

Rollinghome

androidpower wrote: »

It seems there is no difference in returns if you sumbit your investment on the first day of the month, or on the last day of the month. The interest amount is the same. If that is the case I think I will wait until 30th May to submit my application.

It would be great if someone can clarify. Thanks.

Yes, you'll get the same RPI start point if you invest on the last day of the month as you would if you invested on the second day of the month.

Obviously you'll miss out on the warm feeling of helping Mr Osborne by giving him free use of your money for a month.

gordylad

easy to understand...............from T.I.M.

How you can apply for the scheme
Visit the NS&I website, https://www.nsandi.com, or call 0500 500 000 and apply over the phone or ask for an application form to be sent to you.
You will need a debit card, and, if you apply online, an email address.
New customers will need to produce proof of address.
The application process could take 30 days.
What do you get?
Annual interest on the five-year certificates is fixed at the rate of inflation, as measured by the retail prices index (RPI), plus 0.5%.
RPI is currently 5.3%, so the interest rate would be 5.8%.
The interest rate is adjusted each year on the anniversary of the opening of the account, according to the RPI on that date.
Government predictions show the RPi could average at least 3.5% between now and 2015.
How good is the deal?
At the moment, excellent. When tax relief is added, the present interest rate rises to the equivalent of 7.25% for basic-rate taxpayers and 9.67% for higher rate taxpayers.
If the Bank of England raises its interest rate over the next five years, high street savings rates will follow and the RPI is likely to fall. But it is hard to see the NS&I certificates being beaten for value in the forseeable future.
Restrictions
The maximum investment is £15,000.
Money is tied up for five years, so savers cannot draw an annual income from their bonds.
Early withdrawal carries a modest penalty.
For example, if you withdraw after one year the interest rate falls to inflation plus 0.5%.
Children aged under seven cannot have an account set up in their own name.
Clearing up the confusion
Editor's note: A suggestion in a number of reader comments on these bonds is incorrect and has confused the Retail Prices Index with the annual percentage change in the RPI, i.e., inflation as measured by the RPI.
These are comments stating that the RPI inflation percentage figure must be higher at the end of the year than the start for savers to get a return.
The bonds are linked to the Retail Prices Index - this is an index that, as long as prices in the UK are rising, rises each month from an original base level of 100.
NS&I explains: 'If the RPI end level is higher than the RPI start level – then we add it to your investment.'
Some readers have confused matters and thought that this means in order to get a return, RPI inflation has to be higher at the end of the year than at the start, i.e., it starts the year at say 5.2% and ends it at 5.3%. They have also read this to mean that if the RPI inflation percentage figure is lower then there is no return, i.e., it starts the year at 5.2% and ends the year at 5.1%.
This is not the case. As we have explained in each of our articles on the NS&I savings certificate, the bond pays the RPI inflation figure at the end of each year plus an average of 0.5% per year over the five years.
Savers will see their rate fall if RPI inflation falls, and it may be the case that the rate becomes less attractive than other savings accounts.
The only instant when savers would not get a return and the index would be the same or lower is if the RPI does not change (i.e., RPI inflation is 0%) or falls (i.e., negative RPI inflation or 'deflation'), at that point savers would only get the fixed interest of 0.5%. We hope this clears matters up.

Rollinghome

gordylad wrote: »

easy to understand...............from T.I.M...

How good is the deal?
At the moment, excellent. When tax relief is added, the present interest rate rises to the equivalent of 7.25% for basic-rate taxpayers and 9.67% for higher rate taxpayers....

But extremely misleading and factually wrong.

The latest RPI figures and return are only relevant for those who invested a year ago, not those investing now for whom the increase in the RPI by next year and subsequent years will determine their return.

And

For example, if you withdraw after one year the interest rate falls to inflation plus 0.5%.

- no, the return falls to RPI plus 0.25%.

No wonder people get confused.