NS&I Index Linked Certificates

ss53

I have a 3 year bond just about to renew and have the option to roll this into a new certificate. The option is to roll to either a 3 or 5 year certificate. The rate on both is Index-linking +0.05%. I cant see what the benefit is in choosing the 5 year over the 3 year. It seems you lock the money up for an additional 2 years for the same rate? Why would you do that - rather than rolling to a 3 year and then having a further choice to roll at the end? Am I missing something? Thanks in advance.

noh

Yes.
What you are missing is the possibility that in 3 years time the rate on offer could be worse than that currently offered.

Savings_Dave

Had my letter today regarding maturity date and options...nobody knows the future inflation rates, but the Bank of England does have 'forecast' predicitions...I'm holding for another 3 years despite the miserable +0.05%...then there is the possiblity of deflation

ILSC are not on offer at the moment so I think anyone who currently holds these should re-invest and they should be part of a diverse savings portfolio (when available). Depends how long you want to lock away your money - do you need it in the short term?

ss53

Thanks for the responses. I hadn't considered that the rate in 3 years could be lower than IL +.05% but I suppose it is possible. I don't need the money for the next few years so will definitely renew - just got to decide on 3 or 5 years.

Wilkins

ss53 wrote: »

Thanks for the responses. I hadn't considered that the rate in 3 years could be lower than IL +.05% but I suppose it is possible. I don't need the money for the next few years so will definitely renew - just got to decide on 3 or 5 years.

They could also be higher or linked to CPI rather than RPI. I rolled over mine to 3yr a few months ago. Definitely worth doing either way.

kidmugsy

noh wrote: »

Yes.
What you are missing is the possibility that in 3 years time the rate on offer could be worse than that currently offered.

Such as, for example, even rolling over being prohibited.