NS&I 2011 5 year - no downside to 5 year renewal?

kidmugsy

The RPI penalty for mistiming a withdrawal might be heavy, especially if inflation picks up. And yet you might really need a bit of money in an emergency. So I'm considering £5k in three year and the balance in five year: that way I can make an emergency withdrawal of £5k without penalising the rest of my money.

AnotherJoe

Thanks to all, some good points made. I think on balance its much more likely that at 3 years there will be an option to renew only at CPI than there will be a fantastic new deal with RPI and with extra interest, so I am going to stick with 5 years (which also means I don't need to do anything since it will automatically renews, if I read the small print correctly, must check that.)

le_loup

Yes, do nothing and it automatically renews for the full amount and the same term.

castle96

following this... for mine

[Deleted User]

AnotherJoe wrote: »

Thanks to all, some good points made. I think on balance its much more likely that at 3 years there will be an option to renew only at CPI than there will be a fantastic new deal with RPI and with extra interest, so I am going to stick with 5 years (which also means I don't need to do anything since it will automatically renews, if I read the small print correctly, must check that.)

If you split your maturity amount between 3 and 5 year terms, not necessarily 50/50, you will benefit to some extent whichever way it goes. Going all out for one option, where more than one option is available, may not be a good investment strategy.

[Deleted User]

AnotherJoe wrote: »

Thats my point, you arent locked in !

Sorry, I didn't mean that you're locked in with the 5 year term, just that the cost of getting out early is cashing in, meaning that you are locked out of index linking (unless ILSC happen to be on sale, which they haven't been since 2011).

talexuser

I'm doing nothing and leaving for the 5 year just because don't need the money for the forseeable and there's nowhere safer.

I doubt many of us would have predicted interest rates and inflation would stay this low for this long 7 years ago. It seems we have given up on a free market economy and bought into a debt fueled central bank manipulated one. We shall see if our path will be the same as Japans, in which case the return on RPI might be poor, but maybe not as poor as a big correction on the markets.

AnotherJoe

Deleted_User wrote: »

If you split your maturity amount between 3 and 5 year terms, not necessarily 50/50, you will benefit to some extent whichever way it goes. Going all out for one option, where more than one option is available, may not be a good investment strategy.

Or it may be.

I think the odds of a renewal in 3 years time, going to CPI are considerably higher than either it renewing RPI again or RPI plus extra interest. And even if it did, the extra interest is almost certainly going to be trivial, maybe 0.5%. (and if they did extra interest odds are they would open it up again because otherwise why would they need to have extra interest? So I could cancel the 5 year and renew.

I do see your point about covering both bases but I think one base (extra interest at year 3) is too unlikely to be concerned about.

Plus, I dont need to fill any forms out or hang on the phone for ages to implement the 5 year all-in strategy

[Deleted User]

We should revisit this thread in April 2019 and see what renewal terms (if any!) are being offered :eek:

AnotherJoe

Its a date. I'll be wearing a red carnation :cool: