NSANDI saving certificates

RedRuby_2

I have a couple of saving certificates that will be maturing at the end of this month. I've been offered the opportunity to reinvest them and wanted peoples opinions on whether or not the new rates on an offer seem like a good deal.

One certificate is an index-linked certificate and the new rate offered is 5 years index linked plus 0.25% pa tax free

The other certificate is 5 years fixed interest at 2.65% pa tax free

In both instances I don't need access to the money but if the above rates aren't good then I'll cash in the certs and invest the money elsewhere.

TIA

lisyloo

I don't think anyone can tell you what inflation will be over the next 5 years.
However if you want to protect from inflation risk then these are good.
Be aware that the ts&cs have changed recently wrt cashing in early, so they are less good if you can't hold for the full term.

alanq

The fixed rate doesn't seem attractive for a 20% tax-payer. . (Worth just 3.31%). For a 40% tax-payer however it may be worth considering (worth 4.41%)

Unlike previously one cannot reinvest a fixed rate certificate into an index-linked one.

StevieJ

Not only have the t&c changed but the possible change in RPI calculation may result in a further deterioration

gozomark

"but the possible change in RPI calculation" ?

Sceptic001

gozomark wrote: »

"but the possible change in RPI calculation" ?

Yes. There is currently a consultation on changing the basis of calculating RPI which could significantly reduce the stated rate of inflation as calculated by the Retail Prices Index by bringing it more in line with CPI.

I posted a thread about it a couple of weeks ago, hoping that MSE might get involved on savers' behalf, but nobody seemed very interested. Presumably everybody will wait until it is too late and then complain.

grey_gym_sock

as a taxpayer, i'm looking forward to shelling out less money to the holders of the £100bns of index-linked gilts if/when RPI is reduced ...

Rollinghome

grey_gym_sock wrote: »

as a taxpayer, i'm looking forward to shelling out less money to the holders of the £100bns of index-linked gilts if/when RPI is reduced ...

I assume then that none are held in your company or private pension. I hope that works out ok for you.

grey_gym_sock

Rollinghome wrote: »

I assume then that none are held in your company or private pension. I hope that works out ok for you.

fair point. there are indeed both pluses and minuses to changing how RPI is calculated.

by taking the opposite point of view, of preferring a lower RPI, i was only aiming to point out that there are both pluses and minuses. everybody seemed to be thinking that a lower RPI was clearly worse.

richyg

Grey gym sock,

I have never thought of it that way. I guess your saying is that NS&I Index linked are indeed a Government RPI guaranteed gilt. I assume noone outside of individuals with £15k are invested ? But I guess that exposure is still Billions. Im new to all this finance malarkey but interested in learning as i have no mortgage and £120,000 balanced in 22 ISA's earning an ever decreasing interest rate which is concerning me. I also would like a low inflation environment but i assume all the QE or what I would call printing money must be supporting something, is this equities prices at the expense of inflation or am i too simpistic in that. Do you have any pointer to books for a beginner.

Best Regards

Rich G

StevieJ

grey_gym_sock wrote: »

fair point. there are indeed both pluses and minuses to changing how RPI is calculated.

by taking the opposite point of view, of preferring a lower RPI, i was only aiming to point out that there are both pluses and minuses. everybody seemed to be thinking that a lower RPI was clearly worse.

We would just like it to reflect RPI not like that Marie Antoinette index CPI, bread is up 20%, well let them eat cake, or was that Marie-Thererea?