NS & I savings certificates index linked

lhsecons

bowlhead99 said:

lhsecons said:

tcallaghan93 said:

Haha not being aggressive just pointing out that it's a f****** good deal

Maybe over a period. Clearly this year it hasn’t been as the rate is less than half that available on income bonds!!!

Well, they're not bought to get the best rate in town every year, they're bought to avoid your money being eroded in value in real terms by inflation over a three to five year period. The income bonds are only guaranteed to pay 1.16% over the next few months (and it's a variable rate so maybe less over the rest of the year if there isn't sufficient political will to keep them paying so high), while you don't know what the inflation rate's going to be over the next year or three or five.

So looking back a year and noting that petrol dropped in price by x% and energy bills dropped by y% and household goods and clothes dropped in price by z% since June 2019 - meaning that it didn't take a high interest rate to 'beat' inflation over the last year - shouldn't be taken to imply that the promise to preserve your spending power in CPI terms is not a great deal. Unless you think perhaps that all those things are going to keep falling in price at the same rate as they did over the last year and the other things like food, council tax, transport etc won't be going up.

Hence the phrase ‘ maybe over a period’

bowlhead99

lhsecons said:

bowlhead99 said:

lhsecons said:

tcallaghan93 said:

Haha not being aggressive just pointing out that it's a f****** good deal

Maybe over a period. Clearly this year it hasn’t been as the rate is less than half that available on income bonds!!!

Well, they're not bought to get the best rate in town every year, they're bought to avoid your money being eroded in value in real terms by inflation over a three to five year period. The income bonds are only guaranteed to pay 1.16% over the next few months (and it's a variable rate so maybe less over the rest of the year if there isn't sufficient political will to keep them paying so high), while you don't know what the inflation rate's going to be over the next year or three or five.

So looking back a year and noting that petrol dropped in price by x% and energy bills dropped by y% and household goods and clothes dropped in price by z% since June 2019 - meaning that it didn't take a high interest rate to 'beat' inflation over the last year - shouldn't be taken to imply that the promise to preserve your spending power in CPI terms is not a great deal. Unless you think perhaps that all those things are going to keep falling in price at the same rate as they did over the last year and the other things like food, council tax, transport etc won't be going up.

Hence the phrase ‘ maybe over a period’

Well that's why they're offered 'over a period'. They do represent, as tcallaghan93 said: a [     ] good deal, as evidenced by the fact that no commercial organisation would offer the deal and NS&I won't let people have them if they don't have them already. 

You said that clearly it hasn't been a good deal this year, whereas I would say it has been a good deal this year, even though it happened not to pay off this time. 

Albermarle

I think over the years I have had them , they have been a good deal, especially for a higher rate taxpayer.
However when I saw  the low return over the last 12 months in black and white , it was less than I expected as I had not realised CPI was quite that low .