NS&I index linked certificate new issue

Debt_Free_Chick

This is attractive if you want an investment that beats inflation - tax free.

That doesn't mean to say that the rate you get will beat all other savings accounts.

Whilst there is some correlation between interest rates & RPI, it can't be quantified. So if you want/need a rate linked directly to the Base (lending) Rate, index-linked won't do that accurately.

But if you want a rate linked to inflation, then this is exactly what an index-linked account/bond does.

As ever ... identify your needs and then choose the produce to match it

lolly5648

Where can you check the RPI and how often does it change?

IGK

lolly5648 wrote: »

Where can you check the RPI and how often does it change?

National Statistics Online

It's published once a month.

ED

New 3-year (Issue 15) now on the NS&I website - details as per my Post #6 in this thread.

From NS&I interest page re the 3-year + 5-year versions of this TAX-FREE savings product, I see possible advantage of the shorter term option would occur in event of closure prior to maturity becoming necessary for an account holder.

After 1st anniversary, the 3-year option earns Index-linking + 1.1% of purchase price, while the 5-year option earns Index-linking + 0.95% of purchase price.

For newcomers, remember ''No interest is earned on Certificates (except Reinvestments) repaid in the first year.''

david78

You can cash these certificates in at any time after the first anniversary and still get full index linking and some interest. You don't have to wait for the term to end. For example, you may prefer to cash in a 3 year certificate mid-way into year 2 and re-invest in a different 3 year certificate that pays a higher rate.

Reestit_Mutton

One particularly good use for these products that is often overlooked is the ability to effectively remove the top slice off your earnings by hiding the income from some of your savings behind a tax free wrapper i.e. if you are fast approaching the higher rate income tax threshold, these products can keep you safely under that threshold.

Basically, every time you invest 15K in one of these products you effectively take approx. £750 gross off your declarable earnings.

This isn't like an ISA where you can only move 3K of your savings per year into a tax free environment (hardly affecting your declarable earnings at all) - you can invest 15K per issue (i.e 15K in each of the 3 and 5 year products) and every time they get reissued (which can be more than once in a year) you once again get to reinvest up to 15K.

HtH
Reestit Mutton

david78

Totally agree. You can use these to mitigate paying HRT and the allowances are generous. You don't need to invest large lump sums either, you can just buy a few £100s worth a month if you want (minimum investment is £100).

ashm1

Reestit_Mutton wrote: »

One particularly good use for these products that is often overlooked is the ability to effectively remove the top slice off your earnings by hiding the income from some of your savings behind a tax free wrapper i.e. if you are fast approaching the higher rate income tax threshold, these products can keep you safely under that threshold.

Basically, every time you invest 15K in one of these products you effectively take approx. £750 gross off your declarable earnings.

This isn't like an ISA where you can only move 3K of your savings per year into a tax free environment (hardly affecting your declarable earnings at all) - you can invest 15K per issue (i.e 15K in each of the 3 and 5 year products) and every time they get reissued (which can be more than once in a year) you once again get to reinvest up to 15K.

HtH
Reestit Mutton

I have a student loan which lists the unearned income threshold as 2000 (although not a problem now) but I suppose it could become a problem in the future.

Lyncroft

These seem quite good but I have a question. I think I'm right in thinking the RPI is measured each month. If so, do they measure the interest earned each month (eg, RPI + whatever the interest rate is) or do they average the RPI over the year and do it at the end?

david78

I don't understand the question. What they do is work out a factor to multiply the investment amount by. They do this on each anniversary of opening (and when you cash in the investment certificate). The multiplying factor depends on the RPI values for the months you held your certificate plus the fixed interest paid on the certificate. In the second year, you get the benefit of RPI uplift on the interest earned in year 1. (same for year 2, etc).