Inflation Linked Savings discussion area

kar999

I can't see inflation moving much lower than it's present rate of c 3% RPI in the next couple of years (and nor can may of the economic pundit reports you read). Interest rates are unlikely to go higher either. The pound is at it's weakest for years and so commodities like oil etc wiill stay high and it's likely the BoE will get it's printing presses out again soon.

Whatever happens, you are inflation proofing yourself and c. 3.15% tax-free still seems like a reasonal rate to me given todays appaling savings rates elsewhere.

redbuzzard

Only you can answer that, southdownspecial.

Are you happy not to access it until maturity, or with the cost of withdrawing before then? What is your attitude to risk?

It's risk free and will preserve the purchasing power of your money, guaranteed for 3/5 years. Can you get that anywhere else, and what value do you put on it?

Perhaps what you are really asking is will there be savings rates available to beat inflation in the foreseeable future? In 2011 people were cautioning against locking up savings at RPI + 0.5%, with expectations of early interest rate rises. Look where we are now.

FWIW, we have £30k in the last issue of index linked. Our other cash is currently in the Coventry BS at I think 2.72%, taxable, and when that expires in June I don't know what we can do with it that's even that good.

Unless you want risk, and providing you are unlikely to need access, the NSI renewal looks a good deal.

You might also note that the BoE has gone wobbly on the inflation target. Surprise, surprise. A growth target may well be better for the economy, but by a happy coincidence the public debt (and the public's private debt) gets inflated away - a default by the back door.

The only nasty bit of that is that it effectively transfers wealth from savers to borrowers. Get in the bunker now ;-)

Not advice. Just a stream of consciousness I'm afraid.

Ark_Welder

2013-14

NS&I’s 2013-14 Net Financing target, published in today’s Budget, is to deliver £0 Net Financing in a range of £2 billion either side of this, from -£2 billion to £2 billion. NS&I hopes to be able to return three of its fixed rate savings products to general sale during 2013-14: Fixed Interest Savings Certificates, Guaranteed Growth Bonds, and Guaranteed Income Bonds. However, given that its Net Financing target for 2013-14 is to balance inflows and outflows, it does not anticipate being able to return Index-linked Savings Certificates to general sale in 2013-14.

http://www.nsandi.com/media-centre-nsi-provisional-q3-2012-13-results

Which, I will confess, does tend to b***er up my plans.

[I can't believe it's not Butter either ]

Spudsta

Hi everyone, total newbie, so please be gentle

I have £10k invested in the N,S & I savings bonds product, and was under the impression that if I leave it in there for 5 years, it will track inflation + a small % (that I can't quite remember right now)
Having read a few of the posts in this thread and a couple of items on the main site, I am very confused.
Could one of you please perhaps try to simplify it for me?
Do I get inflation proofed savings + the small % or not, and if not, what do I get?
Thanks in advance.

Ark_Welder

Spudsta wrote: »

Do I get inflation proofed savings + the small % or not, and if not, what do I get?
Thanks in advance.

Yes, you get the proofing plus the small %, how much the % is depends on which issue of bonds were bought.


You can work out how much they're worth by entering the details here:

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

alanq

Spudsta wrote: »

I have £10k invested in the N,S & I savings bonds product,...
Do I get inflation proofed savings + the small % or not, and if not, what do I get?.

Yes assuming that the "N,S & I savings bonds product" is an Indexed Linked Savings Certificate. NS&I have, or have had, a range of products called bonds - Income, Guaranteed Income, Guaranteed Growth, Guaranteed Equity etc. Each has its own interest rates and Ts&Cs.

Spudsta

Ark Welder and alanq thanks for your advice.
I dug out the information when I got home, I have:

Index-linked Savings certificates from issue 48 in June 2011, offering RPI + 0.50% pa compound if held for 5 years.

Is this still a sound investment, or should I move £5760 into the best performing ISA or another product?

kidmugsy

Spudsta wrote: »

Ark Welder and alanq thanks for your advice.
I dug out the information when I got home, I have:

Index-linked Savings certificates from issue 48 in June 2011, offering RPI + 0.50% pa compound if held for 5 years.

Is this still a sound investment, or should I move £5760 into the best performing ISA or another product?

Oh no, keep it where it is. Remember: the deal is so good that the government stopped selling them. These old-style certificates are irreplaceable: the new-style ones are distinctly inferior, so hold on until maturity, then consider the T & Cs of whatever replacement certificates you are offered.

Spudsta

kidmugsy wrote: »

Oh no, keep it where it is. Remember: the deal is so good that the government stopped selling them. These old-style certificates are irreplaceable: the new-style ones are distinctly inferior, so hold on until maturity, then consider the T & Cs of whatever replacement certificates you are offered.

Thanks very much for the advice, this stuff is so confusing sometimes, I really appreciate you guys sharing your knowledge and experience :T

Ark_Welder

Spudsta wrote: »

Is this still a sound investment, or should I move £5760 into the best performing ISA or another product?

It is a sound investment on the grounds that you are receiving a guaranteed return above future rates of inflation (which can only be guessed at), and there is next to nothing that can do that for you (certainly not equities: even though they tend to generate higher returns over certain time periods, there is no guarantee that they will do this between now and the time that they are sold - not even with reinvested dividends).

However, the rate of inflation going forward might end up being lower than the rates of interest that can - and might - be earned in a cash ISA. The problem is that no-one can know, for sure, which will give the higher return. Hence my own particular preference, right now, for inflation-beating cash holdings - even if the 'beating' bit is only 0.15% per year for rollovers.