Ns&i index linked savings certificates

wishingthemortgaheaway

Good evening all,

I'm just wondering if there is anybody knowledgable about these. I have 2 of these bonds, left to me in trust from my Grandfather. They are worth about £7k in total.
At various points I've cashed in various bits and bobs for the things they were intended, house deposit, renovations, Maternity leave etc.
Today I received my 'your product is about to mature' letter. So my question is, what do I do?
I don't need the money now, and I don't really need it accessible currently.
The information says it will earn RPI +0.01% which they are saying, based on December 2017 rates is about 4.1%.
This doesn't seem very generous, but equally December 2017 is about 15 months ago, so, how have things changed?

So do I:
Reinvest for another 3 years?
Take it out?
If I take it out what do I do? I want risk free - so no stocks and shares, peer to peer lending or anything 'whoo'
I've seen some fixed term isa's for 5% I don't want a lifetime isa as, although I don't need/want the money yet, I'm not in a position to tie it up until I retire. Just in case.

Suggestions welcome.

Thank you very much.

wishingthemortgaheaway

Sorry, I should add, it's one of the certificates maturing - this one is only worth about £2.5k the other one will mature April 2020.

londoninvestor

wishingthemortgaheaway wrote: »

The information says it will earn RPI +0.01% which they are saying, based on December 2017 rates is about 4.1%.

Good timing - if they were renewing a month or so later, you'd get CPI + (probably) 0.01%. CPI inflation is about 1% below RPI.

This doesn't seem very generous, but equally December 2017 is about 15 months ago

Arguably it is indeed pretty generous:
- The market rate for an inflation-linked, capital-guaranteed return over 5 year, through purchasing index-linked gilts, is roughly RPI minus 2.3%! (Look at the "implied real forward curve" here: https://www.bankofengland.co.uk/statistics/yield-curves)
- It's generous enough that the government long since stopped offering it to new investors (no new ILSCs have been sold since 2011) and is about to stop offering it to renewing investors (who will get something CPI-linked instead).

So do I:
Reinvest for another 3 years?
Take it out?
If I take it out what do I do? I want risk free - so no stocks and shares, peer to peer lending or anything 'whoo'
I've seen some fixed term isa's for 5% I don't want a lifetime isa as, although I don't need/want the money yet, I'm not in a position to tie it up until I retire. Just in case.

Given you want something risk-free, the opportunity to renew should be tempting and you should seriously consider reinvesting.

Do you have the option of renewing for 5 years? If so, consider that too.

What are the 5% fixed-term ISAs you have seen? Are they truly risk-free?

justme111

If they offer you to continue holding those certificates at that rate bite their hand off. There are NO safe cash Isas that would pay 5% , you must have come across advertisement for a dodgy product (likely an entity similar to London Capital and Finances that recently went into admijistration) which is a Ponzi scheme.

buffman

If you don't need the funds, investing for a further FIVE years is a no-brainer.

I have some 3 year index linked bonds maturing next month which I will renew for a further five years. I also have some certificates maturing in May - unless NS & I offer CPI+0.8% (which I very much doubt), the rate on offer will be significantly less than now.

Thrugelmir

wishingthemortgaheaway wrote: »

The information says it will earn RPI +0.01% which they are saying, based on December 2017 rates is about 4.1%.
This doesn't seem very generous,

Where else are you guaranteed to achieve this return?

wishingthemortgaheaway

Thank you all, so much more knowledgable than I am.
I am in fact so inept, I can't even manage the multi quote thing successfully. But I shall try and respond to all the points made.

Ns&i moving to CPI thanks for this info, I read something somewhere about them stopping the ability to make a withdrawal for 30days interest penalty and loss of index linking, but I hadn't seen this. Good to know.

The generosity of the rate 4.1% didn't seem fabulous when I get 5% on the £1500 I have in a tsb account, and nationwide offering 5% for £2.5k (ok only for 12 months) I stand corrected. Thank you for the explanations

Reinvesting for 5 years I will have a look and see what they are offering.

5% isa again, I stand corrected. I thought I'd seen 5% on the mse website for isas, but it looks like it was just the two current accounts I mentioned earlier. Thank you for all your pointers.


My decision
Reinvest for 5 years if I can, 3 years if I can't.
I'm going to look to see if I can add some money into the investment - don't think I can, but it's worth looking. (Not that I have a vast amount I can put in given the amount of building work we are having to have done currently)

Thank you
Once again, thank you for your comments. I don't venture to this board often as it's all a little overwhelming for me, but I'm pleased I asked.

Wish

alanq

wishingthemortgaheaway wrote: »

I read something somewhere about them stopping the ability to make a withdrawal for 30days interest penalty and loss of index linking, but I hadn't seen this.

Are you sure you read that correctly? The only thing I have read similar to this concerned NS&I Guaranteed Growth Bonds and Guaranteed Income Bonds not Savings Certificates.
https://forums.moneysavingexpert.com/discussion/5982604/ns-i-will-no-longer-allow-early-withdrawal-on-new-bonds

polymaff

I don't immediately see the relevance of a December 2017 rate. ILSCs are variable rate products.

No-one can tell you what a reinvestment will earn until the end of the computation year - but at present that coupon is 2.5%, soon falling to 1.8%

justme111

Op, I can not do multiquote either

eskbanker

justme111 wrote: »

The word "dilemma" comes from Greek where "di" means two and "lemma" means premise. Refers to difficult choice between two undesirable options.
I came across so many occasions when people use the word without understanding what it means I decided to use the definition above as a signature.

I know you're not alone in deciding to use a forum signature to issue an unsolicited and pre-emptive mini-lecture on vocabulary (loose v lose, etc) but I can honestly say that I've never heard or read anyone using that word incorrectly!