NS&I index linked saving certificates.

Ballard

I also have £15k of these bought in May 2011 and with CPI falling below zero expect RPI to be negative (or very close to it) when the rates on these certificates are set. I'll have to look at the terms of the things in detail but I'm fairly sure that I can withdraw cash on each anniversary without penalty.


I have an offset mortgage which I'm keeping running because it allows me to borrow at 1.5% so I could either pay almost all of that off or try to find an ISA worth worrying investing in.


I've never held these certificates before so my question is whether I might be better off holding them for another year at a very low rate in the hope that NS&I give me the chance to roll it into a new product.


I shall probably cash it in but any advice will be welcome.

alanq

Ballard wrote: »

I'll have to look at the terms of the things in detail but I'm fairly sure that I can withdraw cash on each anniversary without penalty.

You will keep index-linking but lose 90 days' interest by cashing in on an anniversary but before maturity

Ballard wrote: »

I've never held these certificates before so my question is whether I might be better off holding them for another year at a very low rate in the hope that NS&I give me the chance to roll it into a new product.

If these are long term savings then certainly consider this. There is every likelihood that you will be allowed to roll over into another index-linked product and inflation will not stay this low.

Referring to CPI not RPI....
"Inflation is projected to fall further in the near term, as the recent falls in energy prices continue to be passed through to petrol prices and utility bills. Inflation begins to rise in the second half of 2015, as those effects and the recent fall in food and other goods prices drop out of the twelve-month comparison. As the remaining margin of domestic slack continues to be absorbed, inflation is projected to return to target at the two-year point before rising a little further." The "target" referred to is 2%.
http://www.bankofengland.co.uk/publications/Pages/inflationreport/infrep.aspx

The price of oil has already begun to rise.

lisyloo

You will keep index-linking but lose 90 days' interest by cashing in on an anniversary but before maturity

Any idea when this term came in? I think it was 2013 but I don't know which month.

Mine mature in spring 2016 when I plan to cash them in to pay a 0.99% mortgage that ends in 2018.
I am unsure whether to take them 1 year early, but first need to find out if the 90 day penalty applies to the ones I took in spring 2013.

apt

The 90 day interest penalty only applies if you invested or renewed after 20 September 2012.

Rollinghome

lisyloo wrote: »

Any idea when this term came in? I think it was 2013 but I don't know which month.

As above, started with the 5yr 50th and 3yr 23rd issues iirc.

rexel wrote: »

is it time to sell these certificates with inflation still going to fall

Not quite the no-brainer they once were so that your tax position and other savings/investments will be a factor.

Important to bear in mind that the inflation figure is historical and the prime reason for the RPI fall has been oil prices. You need to decide whether you think oil prices are likely to fall further or more likely to rise again from here.

Chris75

I hold Index Linked Certificates and I expect to be keeping them, Investing isn't about what is best today but rather about a strategy for the future. Index Linked Certificates may not have been the best return at any point in time but they are nearly totally risk free, have always meant that you will be a bit better off at the end of the period than you were at the beginning and, so far at least, have always offered to continue that with a new bond when the old one matures.


They are the safest bit of my Portfolio.


Remember that whilst maturing Index Linked Certificates can be Reinvested you cannot buy new ones and they will not pay a negative rate. The lowest that they can go is 0% plus the bonus in any year and inflation is RPI rather than CPI. RPI is currently 1.1% plus the bonus.


Quite honestly if I could put all my money in them over the next 12 months I probably would.

Kilmar

So RPI is now a mere 1.1% + my 0.5% bonus. That's 1.6% current interest.

Time to cash them in and put the money into 65+ Granny Bonds paying 4% gross or 3.2% net.

Anyone got a better plan?

Chris75

1.6% Tax free if your bonds are the inflation + 0.5% type. The ones being renewed now are down to inflation RPI plus 0.05% .


65+ Granny Bonds look interesting IF you are old enough which fortunately I am not. The limit on holdings is also a potential problem.


I guess that a lot depends upon your expectation of future inflation.

veryintrigued

0.75% reduction on the valuation of mine (2011 version) from last month to this.

http://www.nsandi.com/ilsc-calculator

lisyloo

As above, started with the 5yr 50th and 3yr 23rd issues iirc.

Cheers.
I have some of both with/without the penalty.
Unfortuantely the ones I would want to cash in would be the ones with the penalty.
Not complaining - just working out the best thing to do - as always.