NS&I Index Linked - don't cash them in!

Uncle_Tom_2

NS&I Index Linked Savings Certificates are no longer available. However, if you have an existing one and it reaches maturity, you are allowed to re-invest it for either 3 or 5 years. The yield on a 3 year certificate, which has just reached maturity, is 5.2% pa tax free! Unbeatable with most other cash investments, so if you have one, don't cash it in!

The return for re-investments is based on RPI +0.15% which is not as good as the previous RPI +1.35%, but with inflation running high it's got be a winner.

Tom

kidmugsy

Uncle_Tom wrote: »

if you have one, don't cash it in!

Unless you want some of the money out; if so, take it out now. The penalty for taking some out during the term of the new certificates can be nasty - you lose all the index-linking on all the capital (i.e. not just on the sum withdrawn) for the whole of that anniversary year of the certificate.

Otherwise I agree with you: they're such a good investment that the government's stopped selling them.

bugbyte_2

kidmugsy wrote: »

The penalty for taking some out during the term of the new certificates can be nasty - you lose all the index-linking on all the capital (i.e. not just on the sum withdrawn) for the whole of that anniversary year of the certificate.

Are you sure about this? I thought the penalties applied to the first year only. Its been an age since I brought mine so I can't remember.

xylophone

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

bugbyte_2

For certs brought / renewed before sept 2012:

Cashing in
Index-linked Savings Certificates are designed to be held for the whole investment term to receive the full compound interest. This is because the fixed rates of interest we pay increase each year during the investment term.

But if you need access to your money you can cash in your Certificate early. Any return you receive will depend on when you cash in:

During the first year
You won’t earn any index-linking or interest, but we’ll pay you the full amount of your original investment.

On an anniversary date
We’ll pay you the anniversary value for that year, which will include any positive index-linking and fixed interest at the rate that applies for that year.

Between anniversary dates
We’ll pay you the most recent anniversary value plus any positive index-linking and fixed interest for each complete month since then.

For certs brought / renewed after sept 2012:

Cashing in
You can cash in all or part of your Index-linked Savings Certificate before the end of the term, but we will deduct a penalty equivalent to 90 days’ interest on the amount you cash in. You’ll also lose the index-linking on your whole Certificate for that year. Please note that if you cash in within the first 90 days, you will get back less than you invested. If you cash in part of your Certificate, you must keep at least £100 invested.

Stubod

I have some of these, and I have already rolled them over once...how many times can you role them over?

Blackdog

Stubod wrote: »

I have some of these, and I have already rolled them over once...how many times can you role them over?

There is no limit so it is until NS&I change their rules.

kidmugsy

Stubod wrote: »

I have some of these, and I have already rolled them over once...how many times can you role them over?

And as the commenter Old Vicar once explained to me, you can even leave them to your heirs.

There aren't many heritable tax shelters I can think of.

isofa

Uncle_Tom wrote: »

NS&I Index Linked Savings Certificates are no longer available. However, if you have an existing one and it reaches maturity, you are allowed to re-invest it for either 3 or 5 years. The yield on a 3 year certificate, which has just reached maturity, is 5.2% pa tax free! Unbeatable with most other cash investments, so if you have one, don't cash it in!

The return for re-investments is based on RPI +0.15% which is not as good as the previous RPI +1.35%, but with inflation running high it's got be a winner.

Tom

Issues of these are periodically available and then withdrawn from sale and have for many, many years - it is how they are sold. They certainly aren't ever "no longer available"...

A new issue will be on sale again when the Treasury want to raise funds and can afford to pay the IL interest. Hence why NS&I still prompt you to register your interest.

IMO they are a very good shelter, I've got several issues which have rolled over many times, but the new rollover reinvestment terms are very punitive if you decide to cash in (as mentioned by kidmugsy). but for me the form only a small part of my portfolio, and I'm happy with the terms as have non intention of early cash-in.