NS&I 5 year index linked saving certs 2011 issue - half way point!

AnotherJoe

littly_kitty wrote: »

Out of interest, what are you basing the "optimistic" on? I'm not saying that you are right or wrong and I am not trying to disagree or agree, I'm just curious. Thanks!

I look at it this way.
If there is going To be a fabulous rate* offered to renewers at 3 years, that wont be because they love the three year renewers
It will be because they need the money ! In which case they will need more than just the renewers.
So the fabulous rate won't just be offered to the three year renewers, it will be an open market offer, so you could just buy into that offer like any one else.

* which I think is exceptionally unlikely anyway for reasons posted by ColdIron

AnotherJoe

dqnet wrote: »

@AnotherJoe, if you remember I mentioned it all depends on your personal circumstances. Yes, you could cash out at the start of the 4th year but that's just the same as renewing in the 4th year for a further 3 year one. NS&I have told me in not so many words that this product will not be removed for those who already own them. As others have said, its optimistic for the rates to go up by that much and you may be able to do more with 15k (or whatever) somewere else.

It's only the same if there is in fact a renewal offered at 3 years. It's very possible that at 3 years they will either not offer renewal at all, or they will tie it to CPI instead especially if RPI has been rising, which its forecast to do..

I wouldn't trust what anyone in a call centre said about what will happen in three years and renewals. First, that's simply out of their scope to know or comment on , second it's government policy which can change so whatever their intentions today, three years from now their needs may be different.

max11

AnotherJoe wrote: »

There is a clear difference.
With 5 year you are locked into RPI for 5 years but can withdraw with no effective penalty as long as it's timed right. So you could get exactly the same as a 3 year as long as you cashed in at say 3 years one week but you have the certain option to keep it going for 4 or 5 years.

Thanks for your very intelligent post.

I understand that, if necessary, it is advisable to withdraw soon after the end of each anniversary, but I am unsure about the penalty charge ("A penalty equivalent to 90 days' interest on the amount you cash" )

Would that be 0.01% on the amount cashed in, divided by 4 (as 90 days are a trimester)? Is that right ?
Thanks
Max

SallyG

Wonder why they made it RPI based if it's such a bad indicator - see
https://www.statisticsauthority.gov.uk/wp-content/uploads/2016/03/Letter-from-John-Pullinger-to-Sir-Andrew-Dilnot-090316.pdf
"Third, users have sought clarification on the future of the Retail Prices Index (RPI). Put simply, I believe that the RPI is not a good measure of inflation and does not realistically have the potential to become one. I strongly discourage the use of RPI for as a measure of inflation as there are far superior alternatives.
Nonetheless, RPI is still used for a number of legacy purposes and its production is mandated by legislation. My intention is that from the start of 2017, ONS would publish the minimum of RPI-related data necessary to ensure the critical and essential needs of existing users are met........"

AnotherJoe

max11 wrote: »

Thanks for your very intelligent post.

I understand that, if necessary, it is advisable to withdraw soon after the end of each anniversary, but I am unsure about the penalty charge ("A penalty equivalent to 90 days' interest on the amount you cash" )

Would that be 0.01% on the amount cashed in, divided by 4 (as 90 days are a trimester)? Is that right ?
Thanks
Max

No idea

It sounds about right. But since its 0.01% even the effort of thinking about it probably burns more calories than the penalty.

jsinc

Will reinvest for 5 years. Tax free, RPI currently 1.56% and rising, lowest annualised RPI has been 0.7% (when CPI was negative), alternative saving rates not much better and falling, 90 day cashing in penalty rate of annual 0.01%.

No real cash alternative. 'Saving' alternative is in pension for the uplift, but not comfortable with that for next 30 years until Government settle down with their tinkering.

Don't think it's a bad rate these days, unless saving for a house where headline inflation indices bear zero resemblance to the reality of awful % price rises vs incomes.

max11

AnotherJoe wrote: »

No idea

It sounds about right. But since its 0.01% even the effort of thinking about it probably burns more calories than the penalty.

:o
thanks....it does seem negligible !

Eco_Miser

SallyG wrote: »

Wonder why they made it RPI based if it's such a bad indicator

Because at the time it was not thought to be a bad indicator. RPI was devised to be a good indicator of inflation, it's only with hindsight that it's been declared bad.

colsten

jsinc wrote: »

No real cash alternative. 'Saving' alternative is in pension for the uplift, but not comfortable with that for next 30 years until Government settle down with their tinkering.

I sincerely hope your ILSCs aren't the only savings / investments you are making for your later years because you don't like "government tinkering". You'd be doing yourself a royal dis-favour and you'd curse your younger self if you'd find yourself with just the money in your ILSCs and some state benefits to live of.

jsinc

colsten wrote: »

I sincerely hope your ILSCs aren't the only savings / investments you are making for your later years because you don't like "government tinkering". You'd be doing yourself a royal dis-favour and you'd curse your younger self if you'd find yourself with just the money in your ILSCs and some state benefits to live of.

They're not, but I do focus equally on accessible funds. Choosing to move ~£17k lump sums into pension demands taking a view of future needs vs future environment, like most retirement decsions.

Concluded best to have a mix of savings (inc ILSC), investments, housing, private pension etc, which includes not assuming too much of today's pension rules and therefore not so much in a pension wrapper that I couldn't cover costs re. changes (e.g. to access age).

ILSCs offer a partial allocation to non-negative real returns, something worth keeping over the coming years/decades in my opinion.