Got my NS&I index-linked statement

polymaff

bigadaj wrote: »

Depending on your view linkers either offer guaranteed return in real terms or a poor return currently in subjective terms.

Currently don't hold any but that's primarily because they aren't on sale currently, it would be interested to see what they would currently be offered at, presumably a negative interest rate would be possible. In which case you would have thought new issues would be attractive to the government, unless they foresee inflation taking off, though they can borrow at incredibly cheap rates in any case, so a slight reduction from those isn't worth it for the extra risk.

We have steadily renewed - and so maintained our holdings. In the long term they will, I hope, have been a worthwhile part of a cash savings portfolio. At present, with an incredibly (literal use of the word intended) low RPI and a nugatory coupon, they're dogs.

I guess that the grey voters would take a dim view of a negative coupon.

masonic

polymaff wrote: »

An interesting analysis, flawed, I suggest, by assumptions, Masonic. Your main assumption, in your first sentence and then throughout, is that RPI reflects real inflation.

Unfortunately, your assumption about what I am assuming is flawed.
As addressed at the end, I appreciate the difference between RPI and an individual's personal inflation. However, there is no such thing as "real inflation" because everyone is different. However, RPI can still be useful as a measure of inflation. Of course, my comment starting "Unless your personal rate of inflation is completely detached from RPI..." would cover the case where you disagree that RPI is a useful measure of inflation, but if you believe that I can't fathom why you would put money into an RPI-linked product.

I'd question this. Setting my own circumstances aside, consider someone spending £1,000 per month. 0.89% equates to 74p per month. It'd be interesting to know how many have seen the prices they pay for food, energy, council tax etc. nett out at only 74p per month more than 12 months ago.

I'd be interested to know that too. I know that my own personal rate of inflation over the past 5 years has been a little below RPI, but RPI is a pretty close measure of inflation for me. Over the past 12 months, it is a little more difficult to determine, but my energy costs have fallen by 8%, my council tax has increased by 2% and my expenditure on food has decreased by about 5% (official food price inflation is around -1.8%) compared with the prior 12 months. Overall my spending has decreased in the year ending July 2015 vs the previous year. So I agree with your point that RPI does not equal everyone's personal inflation, but if RPI rises, so would my living costs and the same would be true for most people. So, to repeat my previous statement, "Unless your personal rate of inflation is completely detached from RPI, such that your spending wouldn't rise if RPI inflation was higher, then I really can't see any reason at all to wish for higher RPI inflation."

We may have a different interpretation of a "smiley". I interpret it as an indication that one is saying something with one's tongue firmly jammed into one's cheek.

You're right. I interpreted it as that you wanted the reader to know you weren't intending to convey any hostility with that last statement. I use the winky one when I am trying to be humorous and the grinning one when I'm being a smart-ar5e.

Savers have had it rough for some years now - and I suspect that we all push to the back of our minds how much return we are getting compared to, say, eight years ago. I know that I do. What brick-through-the-window-like disturbs that revery is a letter telling me that my "Renewed Investment" of £18,778.72 made last June yielded a year later "Interest Capitalisation" of £9.39.

One has to take the rough with the rough

Again, taking my own personal circumstances, I'm earning an average net real return (excluding P2P) of 2.9% (yes, based on RPI, which for me is a slight underestimate). Long term real returns from cash are around 1% (again 'real' in this instance is also based on RPI), so the current situation is quite unusual and I'm very pleased with current returns, which are among the best I've achieved over the past 10 years or so. It wasn't so long ago we had Martin coining statements such as "all savings are 'losing' accounts". The situation is much better now.

polymaff

masonic wrote: »

Unfortunately, ... .

Oh dear, you didn't get my subtle dig at your seven-fold use of the word real.

No, I didn't assume - I suggested. Later on, I questioned. I do wish one could have other than megaphone discussions on MSE. I don't really belong to 2015, though.

That said, my only intent was to reply directly to the OP's query - and to give him some comfort in feeling that he was not alone in his reaction to that document. He'll get even less comfort if he reads NS&I's definition of what they mean by RPI - a real "Humpty Dumpty" definition which I've failed to get NS&I to firm up on.

How long before they switch to RPIJ?

masonic

polymaff wrote: »

Aconsider someone spending £1,000 per month. 0.89% equates to 74p per month. It'd be interesting to know how many have seen the prices they pay for food, energy, council tax etc. nett out at only 74p per month more than 12 months ago.

Sorry, I only just noticed the error in your calculation above so didn't address it in my earlier reply. Someone spending £1000 per month would spend an extra £8.90 per month after 0.89% inflation, not 74 p. It would be 74 p per month if they were spending £1000 per year.

masonic

polymaff wrote: »

Oh dear, you didn't get my subtle dig at your seven-fold use of the word real.

Evidently there's quite a lot about you I don't get. If you are not willing to accept the accepted meanings of terms that are used in common parlance, then you are going to have difficulties communicating with others.

No, I didn't assume - I suggested. Later on, I questioned. I do wish one could have other than megaphone discussions on MSE. I don't really belong to 2015, though.

Your suggestion was based on an assumption and your question was founded on the same. You seem intent on splitting hairs. Not sure what your statement about megaphones is about, or your comment about not belonging to this time.

That said, my only intent was to reply directly to the OP's query - and to give him some comfort in feeling that he was not alone in his reaction to that document. He'll get even less comfort if he reads NS&I's definition of what they mean by RPI - a real "Humpty Dumpty" definition which I've failed to get NS&I to firm up on.

Yes, I got that, and my post was intended to point out that the current situation isn't actually that bad, and it would be worse on those with savings outside of this product if inflation were higher than it is now.

How long before they switch to RPIJ?

I think RPIJ will probably die out. If the measure changes to anything, it is most likely to change to CPI. But, there are some pretty long dated index linked gilts in issue that are linked to RPI, so I think there will be options to index link to RPI for quite some time to come.

veryintrigued

Curious what form this 'annual statement' comes in - I hold the 2011 variety of these and dont receive anything.

masonic

veryintrigued wrote: »

Curious what form this 'annual statement' comes in - I hold the 2011 variety of these and dont receive anything.

It started with the more recent rollover certs. I don't get statements either.

polymaff

veryintrigued wrote: »

Curious what form this 'annual statement' comes in - I hold the 2011 variety of these and dont receive anything.

Only applicable to bonds issued after 20th September 2012 - hence your older bonds not getting buried in paper! The ones I receive are typically three pages, but each contains less than a quarter page of unique data.

http://www.nsandi.com/how-do-i-go-paperless

You've reminded me to go paperless

MDMD

lisyloo wrote: »

Have you thought about moving the money to stock and shares?
Or putting it into a pension. You might get a 40% uplift or more

I have a small holding (£2k) of the 2011 'vintage' of these, the last time they were on sale (both generally, and under the old rules). Given the more onerous terms and the low RPI, coupled to the fact I am now higher rate, are these really worth reinvesting anymore? Especially for such a small amount?

I'm thinking of just taking the cash and sticking it in my pension for 40% relief (already maxed out all the over 3% current accounts, plus a 123).

bigadaj

MDMD wrote: »

I have a small holding (£2k) of the 2011 'vintage' of these, the last time they were on sale (both generally, and under the old rules). Given the more onerous terms and the low RPI, coupled to the fact I am now higher rate, are these really worth reinvesting anymore? Especially for such a small amount?

I'm thinking of just taking the cash and sticking it in my pension for 40% relief (already maxed out all the over 3% current accounts, plus a 123).

I think they are paid out with no tax liability, so whilst a low rate of return they would be attractive from an higher rate tax payer view.

They should be forming part of a balanced portfolio, and providing the stability part, though as you say the sums aren't huge.

If I wasn't maxing the 40% tax relief in pensions then I'd probably cash them in and put them in the pension.