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

eskbanker

Fair enough, I was looking at https://www.nsandi.com/files/asset/pdf/index-linked-savings-certificates-summary.pdf, which states:

What is the interest rate?

2-year term, Issue 44 (only available when renewing an existing 2 year Certificate)
Index-linking to CPI + 0.01% tax-free/AER

3-year term, Issue 27
Index-linking to CPI + 0.01% tax-free/AER

5-year term, Issue 54
Index-linking to CPI + 0.01% tax-free/AER

which implies to me that all of that is regarded as interest, but the key features document does seem to differentiate between interest and index-linked growth and is likely to be more reliable as the more comprehensive document - the dangers of trying to squeeze everything into a standardised FCA-prescribed summary box format!

colsten

IanManc said:

Therefore I think it is sensible to roll them over for as long as possible - 5 years - in case they stop roll overs altogether.

A lot would depend on how old the holder is, and what their plans for the money are. A 70-year old who wants to pay for their round-the-world cruise with the money would probably not consider it sensible to tie the funds up for another 5 years. OTOH, a 90-year old who wants to leave the money to their heirs may well decide it's a no-brainer to roll it over. So might a 40 year-old who plans to use the money towards early retirement in their 50s. But not a 40 year-old who needs the money later this year for a new kitchen or a new car or a wedding or what have you.

Bottom line is that for some people it's sensible to roll them over for the max duration, for others it isn't. FWIW, I will roll mine over for 5 as I don't need the money in the next 5+ years (and it wouldn't make sense for me to redirect the money to investments).

naedanger

colsten said:

IanManc said:

Therefore I think it is sensible to roll them over for as long as possible - 5 years - in case they stop roll overs altogether.

A lot would depend on how old the holder is, and what their plans for the money are. A 70-year old who wants to pay for their round-the-world cruise with the money would probably not consider it sensible to tie the funds up for another 5 years. OTOH, a 90-year old who wants to leave the money to their heirs may well decide it's a no-brainer to roll it over. So might a 40 year-old who plans to use the money towards early retirement in their 50s. But not a 40 year-old who needs the money later this year for a new kitchen or a new car or a wedding or what have you.

Bottom line is that for some people it's sensible to roll them over for the max duration, for others it isn't. FWIW, I will roll mine over for 5 as I don't need the money in the next 5+ years (and it wouldn't make sense for me to redirect the money to investments).

Though the 70 year old could still get their money out after exact 1, 2, 3, or  4 years for a £1 penalty per £40,000 of bonds. (And the penalty for early encashment does not depend on the bond's duration.)

The person who needs the money later this year shouldn't invest at all. They will at best make less than £1 on encashment within a year on a £10,000 bond of any duration (2, 3 or 5 year bond).