No-brainer to renew NS&I index-linked certs?

AnotherJoe

Mine will roll over for another 5 years at RPI plus effectively zero interest.

I cant see any downside to this, i wont need the money in a hurry*, at RPI I'm likely getting 1.5% "interest" compared to 0.5% anywhere else and its tax free.

Don't even have to do anything to have them roll over.

Don't think I've missed anything except the opportunity loss of investing the cash instead?

* so if i did ever cash them in I can time it so as not to miss out on a years worth of RPI.

MX5huggy

It’s CPI not RPI on renewed certificates.

Stubod

We will be rolling ours over as and when

Seems like the best option at the mo. particularly if you also have a "spread" of other investments / savings / Premium Bonds....

Albermarle

Stubod said:

We will be rolling ours over as and when

Seems like the best option at the mo. particularly if you also have a "spread" of other investments / savings / Premium Bonds....

Same here .

ErinGoBrath

You can split them too.

A Maturing bond of 5 years worth £18,000 (say) can be into a further 5 year bond of any amount up to this amount plus as many 3 year bonds as you like up to the total residual maturity amount. 

So you can specify £10,000 for a 5 year bond plus eight 3 year bonds of £1,000 each (should you wish). Cant open more than one 5 year bond though which is odd.

If you need to cash some in in the future, by splitting them you can avoid losing CPI interest that you would have lost had you not split them.

HansOndabush

Shame they changed to CPI and reduced the additional interest down to a negligible amount but even the CPI lie is higher than most savings interest rates on offer at the moment.

Matt17

Is there any advantage renewing for 5 years over renewing for 3 years as the additional interest on offer is virtually zero. The additional interest on offer might have increased when you come to renew in 3 years which would be better than being stuck with zero interest for a further 2 years. 

colsten

I am still hoping they will launch the promised Green Bonds before I have to decide

Notepad_Phil

Matt17 said:

Is there any advantage renewing for 5 years over renewing for 3 years as the additional interest on offer is virtually zero. The additional interest on offer might have increased when you come to renew in 3 years which would be better than being stuck with zero interest for a further 2 years. 

or you could find that in 3 years time they remove the choice of renewing, or only allow you to continue on 3 year terms with a lower rate than what 5 year terms will start to receive  - ours are up this summer and we'll be renewing for the max term possible.

ErinGoBrath

Notepad_Phil said:

Matt17 said:

Is there any advantage renewing for 5 years over renewing for 3 years as the additional interest on offer is virtually zero. The additional interest on offer might have increased when you come to renew in 3 years which would be better than being stuck with zero interest for a further 2 years. 

or you could find that in 3 years time they remove the choice of renewing, or only allow you to continue on 3 year terms with a lower rate than what 5 year terms will start to receive  - ours are up this summer and we'll be renewing for the max term possible.

Or even lower rates in future, e.g. CPI - 0.5%

Still technically index linked, just below CPI.

underground99

ErinGoBrath said:

Notepad_Phil said:

Matt17 said:

Is there any advantage renewing for 5 years over renewing for 3 years as the additional interest on offer is virtually zero. The additional interest on offer might have increased when you come to renew in 3 years which would be better than being stuck with zero interest for a further 2 years. 

or you could find that in 3 years time they remove the choice of renewing, or only allow you to continue on 3 year terms with a lower rate than what 5 year terms will start to receive  - ours are up this summer and we'll be renewing for the max term possible.

Or even lower rates in future, e.g. CPI - 0.5%

Still technically index linked, just below CPI.

There would probably still be a demand for people to renew on CPI minus a small amount.  The commercial banks are not offering deals where they will guarantee to make you as much as RPI or CPI or CPIH or any of those inflation measures, which is why the OP is happy to keep rolling his product.  But likewise, the commercial banks are not offering deals where they will guarantee to make you half a percent below RPI or CPI or CPIH or any of those inflation measures.  The banks are saying you can have x% or y%  on a fix for a year or two or three, but they won't say that if inflation ends up being is 5% they will look back at the inflation rates and top your interest up to 4.5% or if it's 8% they will give you 7.5%.  People concerned about inflation would be happy with the NS&I product. 

It's a decent and unique product.  If you want to grow your assets in real terms over the longer term you would use investments. and accept investment risk. If you don't want to accept investment risk you would use cash and accept inflation risk. If NS&I can allow you to use a 'cash-like' product that doesn't have investment risk but also doesn't have inflation risk they have an attractive offer.  That could still be an attractive offer if it didn't actually pay inflation and instead paid 'a known amount less than inflation' - you're not really taking inflation 'risk' if the inflation cost is a known amount.

Of course, we all have our own personal rates of inflation and CPI +/- x% may not be nearly enough to cover the changing costs of the things you personally buy.  But as the commercial banks will not offer the same thing (because they don't want to take on the open-ended risk themselves) it may still be the best option you have.