NS&I saver question

Rollinghome

Reaper wrote: »

It seems even some NS&I staff don't understand how Index Linking works and also think it functions the way Financial Advisor describes. See:
http://www.thisismoney.co.uk/savings-and-banking/article.html?in_article_id=534155&in_page_id=7

They probably read the nonsense hype that This Is Money initially put out. Was enough to confuse anyone.

Rollinghome

TheMatrix wrote: »

I don't know what to make of these certificates now. If inflation stays at 5.2% in 12 months time, does this then mean all I get is 0.25% as it has not gone up, or does it mean I get 5.45% after 12 months

If prices, as measured by the Retail Price Index, have gone up by 5% in a years time you'll have earned 5% plus the extra 0.25% bit. Or whatever the increase in the RPI is. If prices go up by just 3% you'll get 3% plus the extra bit.

So in other words, your savings will keep pace with inflation plus a small amount. Don't wory too much about how it's calculated.

Sceptic001

Financial_Adviser wrote: »

It seems some here really are missing the point (noh included). The index, if you look at it on a month by month basis, has actually decreased on many occasions since it started (This is Money - is it Jan 1987 or 1988??!). There is a very real chance that year one of your investment could provide a negative return i.e March 2008 the index was 212.1 and March 2009 it was 211.3, therefore if this happens again the first year could bring a return of 0.25%. A gamble it is - the gamble then is if this happens is do you hang out for the end of year 2 to try and make up the loss in the growth that was expected? 5.2% should not be banded around and is mis-leading. Cash ISA investments should remain where they are!

Financial Advisor,
Now you have shifted your position please can you remove your original post, which is causing confusion.

Of course it is true that if inflation as measured by RPI goes negative (ie. prices actually fall) then you only get the fixed element, but that is very different from a fall in the inflation rate. Given that predictions for inflation over the next year are hovering around the 4-5% level, the probability of an absolute fall in prices is practically zero.

You mention the period 2008-09. You may have forgotten that base rates fell from over 5% to 0.5% in that period, having a massive impact on mortgage interest. That is what caused the fall in RPI. It cannot be repeated with base rates at 0.5%.

lisyloo

If inflation stays at 5.2% in 12 months time, does this then mean all I get is 0.25% as it has not gone up, or does it mean I get 5.45% after 12 months

You would get 5.45% if it was 5.2% between the relevant months (note that's not 12 months time as I think it works a little in arears).

noh

Sceptic001 wrote: »

Financial Advisor,
Now you have shifted your position please can you remove your original post, which is causing confusion.

I would also suggest you sign up with a different user name as using the name "Financial Adviser" suggests that there is some sort of experience or authority behind your posts which judging by your first post and your subsequent shift in position there clearly isn't.

dqnet

noh, have you invested in these? You obviously seem very clued up on the whole thing..

noh

Yes I hold some of the last issue and some of the present issue.
Similar posts were made last year when Index Linked Savings Certificates were discussed on this forum. Here is a thread from last year:-
https://forums.moneysavingexpert.com/discussion/2340725

Then as now there seems to be people who are incapable of understanding how they work despite having it explained numerous times.

dqnet

noh wrote: »

Yes I hold some of the last issue and some of the present issue.
Similar posts were made last year when Index Linked Savings Certificates were discussed on this forum. Here is a thread from last year:-
https://forums.moneysavingexpert.com/discussion/2340725

Then as now there seems to be people who are incapable of understanding how they work despite having it explained numerous times.

Couldnt agree more

le_loup

noh wrote: »

I would also suggest you sign up with a different user name as using the name "Financial Adviser" suggests that there is some sort of experience or authority behind your posts which judging by your first post and your subsequent shift in position there clearly isn't.

Worse than that, in his post he used the words:
"I'm a financial adviser and it took me a while to understand this after reading and re-reading the documentation."
If true, it's terrifying!

SCARFACEK

SCARFACEK wrote: »

Yeah I used the 2nd freepost one. Still assuming no one's heard anything which ever address they used?

Just checked my bank online and the cheque's been banked today, so looks like things have gone without a hitch.