NS&I ..renew or not ? 20 April 2022 at 11:57AM in Savings & investments 16 replies 1.8K views

ES10

I have NS&I index linked savings that mature this year.
They have made an amazing return over the last year due to high inflation.
However, should I renew ? as inflation will probably ease off over the next year meaning CPI will be lower next year than when I renew therefore possibly no CPI interest will be added next year and possibly even the following years 

eskbanker

Are you thinking that high inflation will actually be followed by deflation, rather than simply lower inflation in future years?

On every thread I've seen on here asking whether to renew these, the resounding consensus is 'yes', so don't see anything different about current circumstances that would give rise to an alternative view, unless you're aware of other ways of achieving capital-protected returns above inflation?

tebbins

CPI is currently 7%, the best easy access savings account is 1.5%.
Most expect this current inflation spike to ease off, even so you're being offered a savings account currently paying 7%.

ES10

Thanks for your reply ..just reread the explanation on calculation on NS&I website  ..its based on Consumer product prices and not the CPI percentage rate ..just read it wrong !

eskbanker

ES10 said:

Thanks for your reply ..just reread the explanation on calculation on NS&I website  ..its based on Consumer product prices and not the CPI percentage rate ..just read it wrong !

Yes, it's important to understand the distinction between an index and its annual percentage variances, especially when the latter is reported so ubiquitously....

soulsaver

Rising interest rates will be dragging many more people into taxed savings interest.
So factor in tax free interest.

Stubod

...this same question gets asked every few weeks, and the feedback is always yes, yes yes, and if you have 3 year ones it is generally considered best to extend them to the max. 5 year term.

ES10

Thanks all .. .just got confused by explanation on NS&I website and started doubting what I previously thought !

soulsaver

ES10 said:

Thanks all .. .just got confused by explanation on NS&I website and started doubting what I previously thought !

Easily done! 

LessImpecunious

Hello all - just wondering if the advice to renew NS&I index-linked certificates still stands (have some coming to maturity at end of this month)? Assuming we have reached a high in the CPI, and it is likely to drop over the next year at least, does that mean it's likely there will be no index-linking for at least the first year of any re-investment (and possibly longer if it takes several years for CPI to return to "normal")?

InvesterJones

LessImpecunious said:

Hello all - just wondering if the advice to renew NS&I index-linked certificates still stands (have some coming to maturity at end of this month)? Assuming we have reached a high in the CPI, and it is likely to drop over the next year at least, does that mean it's likely there will be no index-linking for at least the first year of any re-investment (and possibly longer if it takes several years for CPI to return to "normal")?

Why would there be no index-linking for the first year of any reinvestment? If the terms are CPI then you'll get CPI. It doesn't matter if the CPI is slightly less than the CPI it used to be.