£12,000 to save- is an Index Linked Savings certificate a good idea?

bgscotty

Hello all!

I've got £12,000 I'd like to save, and came across the Index-linked Savings Certificates which offer tax-free returns of up to 5.65% (AER variable- for 3 or 5 years).

I'd welcome any comments as to how these certificates compare to, say, putting the money into a fixed rate Halifax Websaver at 6.5% for one year, or even just leaving it in a good savings account (I have a Sainsburys Internet Saver account)? I'm not too clear how the guarantee to beat inflation affects how much interest you'll get with each account *blush*.

For background, I'm a lower rate tax-payer and can leave the £12,000 untouched for the full 5 years.

Thank you.

Scotty

jem16

Your fixed rate of 6.5% is taxed at 20% as a BRT so you will receive interest at 5.2% net. The sainsbury's account is 6% at the moment so 4.8% net.

Both are currently giving you more than the rate of inflation(4.3%) at the moment but the index-linked certificates are a lttle higher at 5.65%.

So not a lot in it - around £54 p.a. for a BRT. They are more tempting for a HRT as the difference would be £156 as 40% tax is due on savings for higher rate taxpayers.

If rates stayed the same over 5 years, the index-linked certificates would give £333 more. However that's the unknown part.

Glen_Quagmire

Can you split your investment into more than 1 certificate. So if I have £8,000 to invest can I buy 8 x £1,000 certificates? So if I do unexpectedly need a few hundred during the first year, I can cash in 1 certificate and lose the potential interest on £1,000 but leave the other 7 still earning.

Or are you only allowed 1 certificate?

JoeCrystal

You can have many as you like as long the total within an issue is not more than £15,000. I for example, buy one at start of every month.

Sceptic001

Glen_Quagmire wrote: »

Can you split your investment into more than 1 certificate. So if I have £8,000 to invest can I buy 8 x £1,000 certificates? So if I do unexpectedly need a few hundred during the first year, I can cash in 1 certificate and lose the potential interest on £1,000 but leave the other 7 still earning.

Or are you only allowed 1 certificate?

From NS&I T&Cs:

Partial encashments
42. Part of the current value of a Certificate may be cashed in or reinvested as in paragraphs 35 to 41, 43 and 44. The value repaid or reinvested will be made up of part of the purchase price of the Certificate, together with any index-linking and interest that part has earned. A replacement certificate of investment, showing the original date of purchase and the balance of the purchase price remaining, will be issued.

Energize

Jesus this thread is old!

StevieJ

Energize wrote: »

Jesus this thread is old!

What a result I have some isa funds in those Halifax fixed isa 6.5% (4 years) :beer: