Next issue NS&I index linked certs

ManAtHome

MiserlyMartin wrote: »

Well that was his point. He said that whatever RPI Inflation does, the product is only 1.35% above it, and said that it was a poor return.

Quite a good return compared to some funds. I could "tip" you loads of investments which did better last year - I suspect most people could. Why didn't you get the nod on the winners this time last year.?

jem16

MiserlyMartin wrote: »

No hes an IFA and pensions adviser. I don't have the name of the fund to hand, its on my work email.

Any decent IFA would not recommend a single fund as it increases the risk - eggs all in one basket.

He advised emerging market funds.

High risk.

Certainly good to have a small proportion of a balanced portfolio here if it's adding to existing investments. The emerging markets funds that I have have been my best performers over this last year by a long shot but overall it's only a small percentage.

Aegis

I think you should go and chat to another IFA to see what he says. If he significantly differs from the first one's advice, see a third and work out which ones correlate. The odd one out would then possibly be guilty of allowing outside factors (like commission) undue influence over his recommendations to you.

As others have said, there are some funds that have done really well in the last year which are very high risk (emerging markets for example!). These can form part of a balanced portfolio, but if this is your first time considering a stock market investment, it would appear to be a very dubious choice to recommend a single very high risk fund. This is why I suggested he might be a tied adviser, as an IFA is not supposed to essentially throw all your money into a single fund and charge you for it, they are supposed to plan a balanced and diversified portfolio around your risk profile, unless you've specified that you don't want this for whatever reason.

I'd be a little bit wary at this stage!

phoebe03cat

Went on the website following NS&I thread as looking for somewhere to stash cash for my 14 year old. At present a couple of thousand sitting in Nationwide. Granny has left her a few thousand more so we want to put them for uni in about 4 years. Confused though by the website as it would appear that there are two types of index linked units available. Please could someone be kind enough to explain the differences and how these work for me. Am I on the right lines considering these for her? Thanks if you can spare the time...

mike407

I've recently received £6,000 and am looking to invest it. I need 100% security of the cash and won't need it back for atleast 1 year. I am looking at the index-linked certificates as my best option, however there is also a newly announced A&L one year fixed rate savings bond at 7%. After tax A&L will work out at around 5.6%, as index-linked certificates are tax-free this needs to be about the same rate if not better. I am however struggling to find the up-to-date RPI.
Can anyone help?

Lavendyr

http://www.incomesdata.co.uk/statistics/rpitable.htm

http://www.statistics.gov.uk/cci/nugget.asp?id=19

ManAtHome

Phoebe - the 2 types are different length of time - either 3 years (issue 15) or 5 years (issue 42). You can invest up to £15,000 in each - if you cash in before the 3 or 5 years, you get a reduced interest rate on top of RPI inflation.

Mike - RPI is announced each month - year to December was 4% (down from 4.3% in November), so RPI+1.35% slightly behind the latest 1 year bonds. Depends on where you think interest rates and inflation are going over he next few years.

Another 'history' link here http://www.moneyextra.com/dictionary/UK-Inflation-History-003663.html

Liz_the_Whizz

I was just googling RPI predictions as not only do my current Index-Linked certs mature in October 2008 but also my 1 October pay rise is linked to it.

Latest RPI figure (Dec 2007) was 4%, down from 4.3% in Nov 2007.

But gas prices etc look likely to keep RPI higher than target for some time, before falling to 3% by end 2008.

So I'm rooting for galloping inflation, at least till 1 October;).

jinkssick

I understand most of what people are saying but is this just a good savings rate with the only disadvantage being that its a long term thing.

What the minimum? Is 8k okay to put say in the index link for 3 or 5 years? Or has to be min. 15k?

And bonds? Martin keeps telling us there bad, I aint smart enough so I usually stick with his predictions.

Lavendyr

Actually, Martin has this to say about NS&I Inflation-Linked Certs:

"Inflation Beating Guarantee: The rate at which prices increase is called inflation. NS&I, the government backed savings organisation, has Index Linked Savings offering to pay 1.35% more than inflation. Better still the inflation rate it uses is the Retail Prices Index (RPI) which is the higher measure, at 4.1%. This means it pays 5.45% overall.

A further bonus is these savings are totally tax-free, meaning that to get the same interest from another account, basic rate taxpayers would have to be earning 6.81%, and higher rate a huge 9.08%.

However, the cash must be left there for at least three years, and at least £100 must be deposited, so this isn't for someone who wants a short term place to save. And if inflation drops, its relative performance could drop too.Yet as it's guaranteed to be higher than inflation and tax free, at least you know your money will always grow quicker than prices will rise. Overall I'd say it's definitely worth considering as a place to put some of your cash."

From http://www.moneysavingexpert.com/savings/savings-accounts-best-interest#guarantee