Index linked certs

groveburn

I currently hold some of the above and I regularly check the current valuation. The last 4 months has shown the valuation decreasing each month. National savings will only comment that it is the valuation at the end of the period that is important. Does anyone else have similar issues.

Albermarle

I have these but to be honest I have never checked them regularly , on the assumption over the three/five year period they will pay as per the terms. 

jsinc

Relevant inflation indices have fallen a little, but you shouldn't have had a valuation decreasing each month. The RPI index was 292 in Feb, 292.6 in March, 292.6 in April and 292.2 in May. If you have a more recent renewal linked to CPI, that index was 108.6 in Feb, 108.6 in March, 108.5 in April and 108.5 in May
https://www.ons.gov.uk/economy/inflationandpriceindices/datasets/consumerpriceinflation

groveburn

Yeah, I realise that. It's the fact national savings don't seem interested in providing any explanation other than it's an estimate. Lacks transparency imo.

jsinc

Ok I didn't realise they gave regular estimates. Seems odd given there's no need to estimate but if you know how to work things out I wouldn't worry about it - they're formally valued on definite numbers.

eskbanker

groveburn said:

Yeah, I realise that. It's the fact national savings don't seem interested in providing any explanation other than it's an estimate. Lacks transparency imo.

Are you saying that the figures you're getting don't correlate with the published inflation indices?

Notepad_Phil

I get valuations every couple of months (as part of my 'how are we doing' exercise) and have noticed on a couple (or so) times that the latest price had gone down compared to the previous value - however that wasn't the case when I did it earlier this week (29th if I remember correctly) or the previous one.

I did wonder what could have caused it on the rare times that it happened, but it never piqued my interest enough to look into it further. 

AnotherJoe

How can the price of these go down?  Not that i ever bother looking at mine.

eskbanker

AnotherJoe said:

How can the price of these go down?

It's the difference between the value of the index and the rate of inflation - as per the CPI extract posted above, the index itself can drop from one month to the next, even if the inflation rate is positive, since the latter is based on a comparison with 12 months earlier.

bowlhead99

AnotherJoe said:

How can the price of these go down?  Not that i ever bother looking at mine.

If the price of a loaf of bread was £1 when you made the investment and it is now £1.20, your projection is that when the bond matures it will be giving you 20% profit. However next month the bread might be £1.19, so you are on course for the bond to mature with only 19% profit instead.  There is no other way to show that than 'the price going down', but of course £1.19 for bread might still be more than the £1.10 for bread last year or the £1.00 for bread at the time you last renewed the bond.

eskbanker

bowlhead99 said:

AnotherJoe said:

How can the price of these go down?  Not that i ever bother looking at mine.

If the price of a loaf of bread was £1 when you made the investment and it is now £1.20, your projection is that when the bond matures it will be giving you 20% profit. However next month the bread might be £1.19, so you are on course for the bond to mature with only 19% profit instead.  There is no other way to show that than 'the price going down', but of course £1.19 for bread might still be more than the £1.10 for bread last year or the £1.00 for bread at the time you last renewed the bond.

Everyone expects their dough to rise....