NSI Index-linked Savings Certificates

cc123mm456

Personally, I can't justify renewal for myself, as I don't like the idea of no access for 5 years (or even for 3).

Even though my previous ones were held for 5 years (and multiple years before that). I didn't need to access them, but I liked the access being available, just in case.

Of course, everyone is different, and many will be quite happy with locking them away for 5 years.

They are tax free, and can provide protection against unexpected inflation. The best years for me were years 2021 to 2022 at 7% and 2022 to 2023 at 10%.

We cannot predict future inflation, but at least it's known that these savings certificates will approximately keep pace with inflation, as measured by CPI.

As to how CPI works, the Office for National Statistics (ONS) publish an index number each month, and that can be used to calculate the percentage increase since the index 12 months before. The ONS also publish a rolling annual inflation percent figure.

It takes about a month and a half for the ONS to produce the index, so NS&I use the index from 2 months before the Savings Certificates were issued. So for a holding starting in May, NS&I will use the CPI annual increase % from March to March.

NS&I calculate the increase once a year, on the anniversary of opening the account, and add it to the account. That means it is compounded annually.

For a higher rate tax payer, they have been a good deal in the past, but personally I will be cashing them in, and investigating other ideas mentioned in this thread. For example index linked gilts.

GeoffTF

It depends on your circumstances. There is no one size fits all answer for everyone. I can get a better deal with index linked gilts, but the rules could change. My index linked savings certificates account for less than 1% of my portfolio, so it does not matter much anyway. Nonetheless, I want to simplify as I get older. I am not renewing my savings certificates as they mature. Every line that disappears from my spreadsheet is good.

Aminatidi

I agree it depends on circumstances. I have about £25K in index linked certs that expire in August and I don't think I'll be renewing them.

Right now I think of them as part of my emergency fund because with a slight penalty I can realise that £25K pretty quickly if I ever need it.

I can't do that if they are locked away for 3-5 years.

Others may of course take a different view which is appropriate for their circumstances .

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/81957208#Comment_81957208

As mentioned already I would suspect that renewing on a joint basis would not be possible, and maybe disadvantageous even if you could.