Ns&i il

joe134

Hi Guys, it’s time to decide on whether to roll my Ns&i index linked bonds over, or not !
As they have changed to CPI, are they still worth keeping, or have they had their day ?
The interest rates elsewhere aren’t exactly enticing, on long term bonds, and falling.


Do I stick or twist ?
:beer::beer:

bowlhead99

joe134 wrote: »

Hi Guys, it’s time to decide on whether to roll my Ns&i index linked bonds over, or not !
As they have changed to CPI, are they still worth keeping, or have they had their day ?

It depends what your purpose is for saving the money for the next few years.

If actually you are wanting to keep the money aside for ten to twenty years and just keep rolling and rolling, you could probably do better than CPI from a stock-market based investment fund.

However if you don't want the investment risk that comes with potentially higher rates of return, you just want to be able to have the money available in three or five years time without losing any of it, some bank-based or building society-based or NS&I-based product is the way to go.

In using a 'cash' rather than 'investment' product, the main risk is inflation eroding your capital so that you still have as many pounds but they fail to keep up with inflation and your purchasing power drops in real terms. As the NS&I index-linked bond solves most of the problem of keeping up with inflation (even if your personal inflation rate is a bit different to CPI or RPI) it seems like a useful thing to have.

Consider - if you didn't have the product, you would not be able to buy the product as a new customer. There is so much demand, and it is potentially so costly to provide the guarantee of keeping up with CPI, that the Treasury have decided they can't afford to offer the product to all the new customers who might want it. Instead you can only get it as a renewing customer. I would like it but can't have it. So if you have it, and it meets your requirements, sounds like you should keep it!

The interest rates elsewhere aren’t exactly enticing, on long term bonds, and falling.

You don't really know how it will perform compared to a traditional cash savings product with a fixed interest rate. Because all you can see is what *was* the CPI rate over the last few years (i.e. backwards looking) and what will be the fixed interest rate you would get over the next few years by signing up to somebody's fixed rate product (forwards looking).

Those things are not really a like-with-like comparison; you don't know whether CPI over next few years will be 1% or 5%. If CPI is 1% it will be better to have fixed instead, whereas if CPI is 5% it will with hindsight have been much better to have used the NS&I product. What you can say is that with the NS&I product you will have preserved the real value of cash in CPI inflation terms, whatever CPI inflation happens to be.

IMHO, if the main reason for using a bank or NS&I-based product instead of an S&S investment product is to avoid potential losses, you know you are not going to get a great return and the best you can really hope for over the course of several years is not to make a lot of 'profit', it is simply to avoid losing money in real terms so that your money has the same purchasing power as it does today. No commercial bank or financial institution is willing to offer that to you in a savings product. NS&I don't offer that to new customers either. But as a renewing customer, they are making *you* that special offer that nobody else can buy. I would take it.

joe134

Thanks bowlhead 99 for advice.
I have done with the markets, and not saving for long term, too late at my age.
Just looking after kids inheritance now, practically all cash based.
Got several long term fixed rate bonds, bank a/c’s etc.
I have a few Ns&i products, and the inflation is the thing.
That’s why I bought them, pity it was limited and they stopped them.
I don’t get that with my cash fixed rate bonds, but prepared for that, instead of the market risk now.
I cannot see interest rates going anywhere soon, so will take your advice and just roll them over, keep part hedged against inflation.
Sick of moving money around, but gotta do it.
:beer::beer:

A_T

The clue here is that the government doesn't offer them new anymore because they are such a good deal for those who are lucky enough to have them. Unless you need the cash you'd be mad to sell them.

Brilley

We role ours over every year and extend the 3 yr ones to 5 yrs. We have some money in SS ISA'S but I prefer the "security" of NSI and guaranteed indexing, (even though it is not as good as it was). If they still issued these bonds I would be buying more! At least knowing they will keep pace with inflation allows you to plan accordingly. Out of all our various "pots" these are the ones that will get "used" last!.

joe134

Thanks guys, rolling them over:beer:

Albermarle

As they are a tax free product, then they are even better if you are a taxpayer and have exhausted your personal savings allowance .
Even better still if you are a 40% taxpayer .

Brian65

The Government has borrowed an astronomical amount of money already, and judging by its pre-election promises is planning to borrow a lot more. A sure sign they will keep interest rates as far below inflation as they can, for a long as they can.
No wonder they don't want to sell any more index linked savings certificates, so it makes sense to keep those you have.