NSI Index Linked savings certificates

Keensaver

Hi all,

Would appreciate some advice...I don't fully understand the NSI index linked savings certificates..what interest do you actually earn? I know it is 0.5% above the RPI...but that does not mean alot to me...

thanks

whu

It's tiered over the 5 year period

Sceptic001

There is an article here:
http://www.moneysavingexpert.com/savings/inflation-linked-savings#nsi

Or look at NS&I website
http://www.nsandi.com/savings-index-linked-savings-certificates

bigfreddiel

Keensaver wrote: »

Hi all,

Would appreciate some advice...I don't fully understand the NSI index linked savings certificates..what interest do you actually earn? I know it is 0.5% above the RPI...but that does not mean alot to me...

thanks

have you googled RPI?

if so did you understand the results?

http://www.statistics.gov.uk/cci/nugget.asp?id=19

says rpi=5.2% so add the .5% - thats what above means - so the interest rate is 5.7%

and its tax free so to beat it as a basic rate taxpayer you woud need 7.125% and so on.

hope that helps

fj

Keensaver

Thanks for comments so far, helpful! this is my situation: have maxed out cash ISA this year, have some riskier assets - shares, a regular savings account...and have just taken a good return on a Stocks and Shares ISA - sold the fund I was investing in, but still have the cash in the S/S ISA wrapper with Hargreaves Lansdown.

Looking to put this money into something but not sure whether to put into another fund (but is that realistically going to give me a return over a year?) or into a safer place such as the index linked NSI with guaranteed return...thoughts? Getting married next year and hoping to buy property so don't want the money tied up for long periods...

thanks again

xrjtg

Very, very crudely: when you take out an ILSC for £100, the government goes and buys half a ton of potatoes. 5 years from now the price of potatoes has gone up, so they sell your potatoes, then they add about 2.5% and give you back the cash.

The main differences with the real system are that they don't actually buy the potatoes, and they look at a wider range of goods and services (rather than just the price of potatoes) that more accurately reflect the reduced value of the cash that you lent them.

Keensaver

xrjtg/ bigfreddiel - does that mean if I remove the cash after 1 year (no penalties I believe) I get a return of 5.7% (assuming RPI at 5.2% still)? guess that is main consideration..

alanq

No. 5.45%. http://www.nsandi.com/savings-current-interest-rates-year-year-rates

lisyloo

xrjtg/ bigfreddiel - does that mean if I remove the cash after 1 year (no penalties I believe) I get a return of 5.7% (assuming RPI at 5.2% still)? guess that is main consideration..

No.
You get RPI+0.5% after FIVE years.
After ONE year it's RPI + 0.25%.

Still a good deal IMO although I do expect RPI to drop.

kidmugsy

Seconded - as long as you keep them for at least a year, ILSCs are a very good deal. That's why they limit you to £15k!

Sceptic001

lisyloo wrote: »

Still a good deal IMO although I do expect RPI to drop.

Yes. The Bank of England is predicting that inflation will fall next year, so don't rely on getting 5%!

On the other hand, the Bank of England has been predicting a fall in inflation for the past two years and has been consistently wrong:mad:, so your guess is probably better than the BoE