NS&I Index Linked (Again)

6022tivo

I have 5, maybe 6 full fat NS&I index linked accounts dating back to around 10 years. 
Mix of 3 and 5yr. 
Looking at what I have received from them in the last 12 months (5-7%) depending on which ones are CPI and RPI and the potential inflation issue the world is facing, I'm quite glad and will be keeping hold of them. 


One of my 3 year ones is due to expire and I've had the paper work. 
Cash in
Continue for 3 years
Change to 5 years

I'm thinking of switching this one from a 3yr to a 5yr. 
I won't get a penalty if I close early (Apart from mid year) and it's 90 days interest of 0.1% so pennies. 

I'm thinking of switching to a 5 year in case they pull them from renewals because of the global situation with inflation. If so, at least this one will hang on for the remainder of the 3 years and not 5? 
If I pulled out after 3 I wouldn't lose anything other than 90 days interest at 0.1%



This is how I see it, is my rational good? 

Thanks in advance. 

Chickereeeee

Seems so to me (and I may do the same, if offered the opportunity, as I am in a similar situation).

IanManc

6022tivo said:

I'm thinking of switching to a 5 year in case they pull them from renewals because of the global situation with inflation. If so, at least this one will hang on for the remainder of the 3 years and not 5? 

I've some of these, and over the years I've changed my 3 year ones to 5 year ones at renewal time for this very reason.

It also meant that I kept some on RPI for a couple of years longer than if I'd renewed for 3 years when they changed to CPI, so a longer term would protect you against any other adverse rule changes. On the other hand it would mean a longer wait if they put up the interest rate for new issues, but I honestly can't ever see that happening as there's no incentive at all for NS&I to do that.

6022tivo

IanManc said:

6022tivo said:

I'm thinking of switching to a 5 year in case they pull them from renewals because of the global situation with inflation. If so, at least this one will hang on for the remainder of the 3 years and not 5? 

I've some of these, and over the years I've changed my 3 year ones to 5 year ones at renewal time for this very reason.

It also meant that I kept some on RPI for a couple of years longer than if I'd renewed for 3 years when they changed to CPI, so a longer term would protect you against any other adverse rule changes. On the other hand it would mean a longer wait if they put up the interest rate for new issues, but I honestly can't ever see that happening as there's no incentive at all for NS&I to do that.

Do you think they would not do that if inflation flattened out and interest rates rose? 
Renewals at CPI + higher than 0.1% interest? 

Malthusian

6022tivo said:

Do you think they would not do that if inflation flattened out and interest rates rose? 
Renewals at CPI + higher than 0.1% interest?

In normal conditions it currently costs the government 2%pa more to borrow money via NS&I Index-Linked Savings Certficates than via gilts. At the moment it's 5% more. There would have to be very significant changes for the Government to offer higher interest rates to NS&I Index-Linked savers to dissuade them from cashing in their certificates.

The Government does not want savers to roll over Index-Linked Savings Certificates, but preventing them from doing so would create far more bad publicity than it's worth.

Stubod

..always roll ours over and last time increased all the 3 year ones to 5 years, it's a no brainer for me.

GillyFlower

Ours are Index-Linked Certificates 5 year and I must make a decision now.  I would have been happy to roll it over and we are both in our late 70's.  We may need to call on this money for a project BUT it is NOT certain.  We both have the same amount invested in each of ours.

I am trying to understand the penalty terms.  Part of me thinks why not leave it in as where else could it go?  I know it is safe in there.  Any thoughts appreciated. 

So have I got this right e.g.

1. We could draw an amount from the fund BUT we would loose 90 days interest on it?
2. The remaining amount left in the Bond would not earn any index-linking on the whole Certificate for the investment year in which we cash in.

Thank you

Albermarle

It's not unthinkable that banks could go to negative interest and hyperinflation is a real possibility.

Well which one would it be, as it is will not be both ?

Thrugelmir

Deleted_User said:

6022tivo said:

I have 5, maybe 6 full fat NS&I index linked accounts dating back to around 10 years. 
Mix of 3 and 5yr. 
Looking at what I have received from them in the last 12 months (5-7%) depending on which ones are CPI and RPI and the potential inflation issue the world is facing, I'm quite glad and will be keeping hold of them. 


One of my 3 year ones is due to expire and I've had the paper work. 
Cash in
Continue for 3 years
Change to 5 years

I'm thinking of switching this one from a 3yr to a 5yr. 
I won't get a penalty if I close early (Apart from mid year) and it's 90 days interest of 0.1% so pennies. 

I'm thinking of switching to a 5 year in case they pull them from renewals because of the global situation with inflation. If so, at least this one will hang on for the remainder of the 3 years and not 5? 
If I pulled out after 3 I wouldn't lose anything other than 90 days interest at 0.1%



This is how I see it, is my rational good? 

Thanks in advance. 

It's not unthinkable that banks could go to negative interest and hyperinflation is a real possibility.

That boat has sailed. Interest rates have been negative in the Eurozone for some years. Still hasn't induced inflation. Same old chesnut of a level fiscal playing field that the member states will never come to an agreement on. 

Stubod

..I find it rather frightening that our latest annual statement (just received), has shown an incresae of 7.5%!!....great for the bonds but crap for everyhting else given that that is the current rate of inflation.. (last bonds we have that are still based on RPI).

GillyFlower

Just trying to make a decision and reading through your thoughts - mine now are -

1. Despite our age keep to 5 year re-invest. (If I change to 3 year at the end of this period the option may not be there to continue who knows they may cease.)

2. If in that 5year period we needed some money we could withdraw all or some of it and know that interest is lost BUT it would be if I had it sitting in our bank current account. 

3. What remains in the account (if we withdraw) will start earning interest again the following year.

Do you think I have understood this correctly?