Forum Home» Savings & Investments

MSE News: NS&I inflation-beating savings: stick or twist?

New Post Advanced Search

MSE News: NS&I inflation-beating savings: stick or twist?

edited 30 November -1 at 1:00AM in Savings & Investments
91 replies 16.9K views
Former_MSE_HelenFormer_MSE_Helen
2.4K posts
edited 30 November -1 at 1:00AM in Savings & Investments
"It's just over a year since NS&I launched inflation-beating savings, so many customers can withdraw penalty-free ..."
«13456710

Replies

  • MoneySaverLogMoneySaverLog Forumite
    3.2K posts
    So do I hold on to them or cash them in, the first year is now up on mine.
  • redmalcredmalc Forumite
    1.4K posts
    Part of the Furniture 1,000 Posts Combo Breaker
    ✭✭✭
    If you can get a better rate cash them in,i will be cashing mine because the wife as recently been made redundant and can get 3.6% Gross with Cahoot.I think last year will be the best for a time
  • jamesdjamesd Forumite
    24K posts
    Part of the Furniture 10,000 Posts
    ✭✭✭✭✭
    You predict whether inflation plus the fixed add on will beat an alternative. If you went for protection from inflation initially it may well be a good idea to keep that protection because there is a significant chance that there will be inflation at a rate high enough to beat alternatives. It's perhaps useful to consider that 2% inflation is the Bank of England target. Then note that the NS&I investments are tax free and it becomes hard to beat them with normal savings accounts if the BoE target is achieved, even harder if it isn't.
  • KTFKTF Forumite
    4.8K posts
    Part of the Furniture
    ✭✭✭✭
    Bit of a non-story as this site cant tell you what to do with them anyway...
  • kidmugsykidmugsy Forumite
    12.6K posts
    Hung up my suit!
    ✭✭✭✭✭
    Cash them in and you may have lost that purchasing-power-preserving tax shelter forever.
    Free the dunston one next time too.
  • edited 28 May 2012 at 11:41PM
    kar999kar999 Forumite
    648 posts
    Part of the Furniture Combo Breaker
    ✭✭
    edited 28 May 2012 at 11:41PM
    Am I missing something?... but the NS&I interest calculator today says my certs bought in May 11 are now worth £15687 rather than the MSE article's figure of £15573 (assuming I sell next month). The article appears to use March RPI but for most people who purchased in May 11 isn't the April RPI the most appropriate anniversary rate.

    Current value of your £15,687.00
    certificate

    This calculator was updated with the latest Retail Prices Index (RPI) figure, announced 22 May 2012

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

    EDIT: With the BoE predicting the rate of inflation to remain above the 2% target well into next year I'm sticking.
    If the ball had gone in the net it would have been a goal.
    If my Auntie had been a man she'd have been my Uncle.
  • oldvicaroldvicar Forumite
    1.1K posts
    Some people bought them as a gamble on the inflation rate versus savings rates elsewhere. They will be agonising as to whether to keep this 'accumulator'-style bet going and will be asking themselves: Whither inflation?

    Other people bought them to safely guarantee the purchasing power of their wealth. They don't give a fig what happens to inflation as far as these are concerned, although they will pat themselves on the back when it turns out higher than BoE targets.
  • oldvicaroldvicar Forumite
    1.1K posts
    kar999 wrote: »
    Am I missing something?...

    Yes you are missing something ... ;)
    kar999 wrote: »
    ...but the NS&I interest calculator today says my certs bought in May 11 are now worth £15687 rather than the MSE article's figure of £15573 (assuming I sell next month).

    The NS&I calculator uses the latest figures available and currently gives a value for selling next month (in June), thereby covering 13 months not 12 months and presuming you don't sell before the day in the month they were bought.

    The MSE article aims to cover values after 12 months, i.e. the figures that NS&I would have given you a month ago. But the MSE article doesn't purport to use NS&I figures from then.

    Nor does MSE claim to use the actual RPI figures directly as a method of calculation which is what NS&I use. Instead it appears that MSE have made up their very own method of calculation by firstly converting the annual change in RPI to a percentage, applying the percentage as an interest rate then adding the annual interest bonus. If they have done it right then it should result - within a few pennies - to more or less the same amount. MSE could be a few pennies wrong due to rounding errors they have introduced.

    It's not surprising that people get confused about how the certificates work and the difference between RPI and the annual percentage change in RPI when, in genuine efforts to explain, MSE (and others) make up alternative methods of calculation. Amazingly, lots of people seem to believe they get paid the difference in the annual percentage rates of inflation rather than the rate of inflation itself.
    kar999 wrote: »
    The article appears to use March RPI but for most people who purchased in May 11 isn't the April RPI the most appropriate anniversary rate.

    MSE is right to use March RPI figures, rather than April. NS&I use the RPI figures PUBLISHED in the previous month, which themselves relate to the month before. In other words the RPI figures relating to 2 months previously are always used now.

    The MSE article could have been written six weeks ago, on 17 April when the RPI figures for March were published, rather than waiting for the first anniversaries of purchase to have already gone past. But if it had been more timely, could it still have been billed as "Latest" or "News" ??
  • edited 29 May 2012 at 9:20AM
    MiserlyMartinMiserlyMartin Forumite
    2K posts
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    ✭✭✭
    edited 29 May 2012 at 9:20AM
    kidmugsy wrote: »
    Cash them in and you may have lost that purchasing-power-preserving tax shelter forever.

    Thats right. Quite clearly the Bank of England and that part of government are being run/advised by a bunch of total and utter morons (in particular Charles Bean and Mervyn King), who are continuing with desperate and doomed to fail inflation causing policies. The inflation could be even more horrendous if they were to carry out the loony idea of cutting the base rate further and printing even more, so this account can protect against that, but what I really worry about is what is going to happen to the pound when the smoke and mirror tricks stop working.
  • Mr_KMr_K Forumite
    1.1K posts
    Car Insurance Carver!
    ✭✭✭
    Can't quite see the point of this article. Unless you really need the money you be bonkers to take your money out of Index Linked certificates at the moment. No brainer.
This discussion has been closed.

Quick links

Essential Money | Who & Where are you? | Work & Benefits | Household and travel | Shopping & Freebies | About MSE | The MoneySavers Arms | Covid-19 & Coronavirus Support