So What Should I do

deemy2004

Yeh and we could get hit by a metorite

As for negative inflation, UK ? Negative RPI ? Uk Negative RPI ?Uk Negative RPI ? Uk Negative RPI ?

LOL ;D

THE WHOLE POINT IS TO PROTECT THE VALUE OF THE BONDS AGAINST INFLATION ! SO IF RPI GOES NEGATIVE THE VALUE OF THE MONEY INCREASES ! instead of being eroded by inflation.

The market price is not fixed at the RPI rate so whatever time you sell them at you pay the market price which fluctates but with an overall tendancy to increase in-line with inflation. So the market prices IN inflation, thats why the bonds are up some 5.5% this year whilst RPI is around 3%.

You also totally forget the indexed interest payments ontop of index linking of the bonds.

The BOE gives a realistic calc for the indexation of this bond ! The actual RPI does not matter could be 3% or 10% !!!!! AS THE REAL VALUE OF THE BOND IS WHAT YOU ARE SECURING AGAINST erosion by inflation.

The bond is far more secure against say other govement gilt edged bonds which ARE NOT protected against inflation.

Seriously you totally don't understand this investment instrument and what it means to hold it.

isasmurf

As for negative inflation, UK ? Negative RPI ? Uk Negative RPI ?Uk Negative RPI ? Uk Negative RPI ?

LOL ;D

I wouldn't laugh too loudly, even the strongest economies can suffer deflation - just ask the Japanese.

deemy2004

Japans problem is different tham what happened in the 30's
They basically kept bankrupt companies afloat during the early 90's by lowering interest rates to virtually 0%, so that the companies kept trading, instead of dealing with the problem as the west did durign the 90's recession, coupled with a giant trade surplus, high savings ratio means little domestic consumption to generate economic growth, until they manage to deal with these bankrupt companies their stuck and just tinkering. Or unless the Nikkei goes back up over 30k.