NS&I Index-Linked Savings Certificates

tradetime

I don't know why the release of new issues has reduced in frequency.

Maybe the bank's in trouble!!!!!!!!

Sorry, with all the "Is this bank safe?" "Is that bank in trouble?" "Watch out for a meltdown!" I just couldn't resist.

baldbloke_2

http://www.nsandi.com/products/ilsc/calculator.jsp

Enter £1000 purchased for 10 yrs on 14 feb 1998 - and therefore reinvested in 2003 - and the tax-free return is £1594.90. Is that 5.94% annualised?
Base Rate was 7.25% in feb 1998.
Invesco Perp Corporate Bond Fund has returned 5.73% annualised over 10yrs
Fidelity Moneybuilder UK Index has annualised returns of 3.69% over 10 yrs

Enter £1000 purchased for 5 yrs on 14 feb 2003 and the tax-free return is £1239.70. Again, is that 4.79% annualised or does compounding come into things?
Base Rate was 3.75% in feb 2003.
Invesco Perp Corporate Bond Fund has returned 5.00% annualised over 5yrs
Fidelity Moneybuilder UK Index has annualised returns of 14.03% over 5 yrs

I suppose one has to consider all options to keep ahead of the game. One's attitude to risk is such a massive factor in all of this I think.

martinman3

missile wrote: »

If you open the spread sheet and enter as if you had deposited £7K 1,3 or 5 years previous, it will tell you what the value would be today. Remember the return is tax free.

But bear in mind that inflation has been lower in last few years than it is currently so recent performance of Index Linked certs was not great compared to a cash ISA for instance. That will change as looking at the official historic figures, RPI has not been this high since 1991/1992.:eek:

amcluesent

Because NS&I use RPI for index-linking, which includes housing costs, a house-price crash could reduce the RPI quite dramatically. Worst case, the bond would just pay the guaranteed compound rate of 1.35%.

baldbloke_2

amcluesent wrote: »

Because NS&I use RPI for index-linking, which includes housing costs, a house-price crash could reduce the RPI quite dramatically. Worst case, the bond would just pay the guaranteed compound rate of 1.35%.

Housing costs included in the RPI refers in part to the % rate of mortgage repayments which is usually and loosely related to Base Rate - a house-price crash does not affect the RPI in the way you suggest.

The CPI, which is lower, excludes such 'housing costs'. But for your 'worst case' to happen there would have to be annual deflation rather than inflation. Any interest rate payable would be a bonus if inflation and the CPI are actually falling to zero I should think.

nicko33

baldbloke wrote: »

a house-price crash does not affect the RPI in the way you suggest.

I agree, what gets cheaper for a homeowner if the value of their house falls?
Buildings insurance, contents insurance, gas, electric, water, council tax, tv licence, telephone? No.

All I can think of that would be cheaper would be the mortgage payments of people buying houses after the crash.

BabyDragon_2

Well I have gone for it and applied = so thanks to all in this thread and others about NS&I Certs

I think it will give good balance and added security to my existing savings.

EalingSaver

Ologhai wrote: »

I believe you are correct.

New issues used to come out about a couple or so times a year, but the current issues (of both 3- and 5-year certificates) were released around May '07 (I think).

Damn, sometimes you wish you hadn't found out something. I took out my first, 3 year, in April last year. Full £15k. When they sent me my certificate they enclosed a flyer with the interest rates posted on them. It was for 'Issue 15'. So I always thought I had issue 15...but just checked my certificate and I have issue 14!!! Not as good as 15, and worse still I could have taken out more long ago...instead of wondering when they would put out a new issue...