Index Linked Certificates

Trumpeter

I've never invested in NS&I certificates before & hope someone can advise on the following. I know that know that new certificates are issued on a certain date but it looks like you can actually buy them at any time. Is there any advantage (or disadvantage) in the timing of buying? (I assume that the maturity date is calculated from the date of purchase & not from the date of issue)

Thanks in advance.

Jonbvn

The maturity date is from the date of purchase.

I cannot see any advantage regarding the timing of your purchase.

Savings_Dave

I invested 5k for a 3 year term from 1st February. It took about 10 days for the paperwork to arrive through but it can all be done online and yes they begin from the purchase date - in my case 1st February.

I was looking for somewhere else for my money to go and decided to move a lump sum from my high interest savings account as the interest rate dropped (as its in line with BofE base rate). With inflation set to rise this year I think they are a good investment - but of course inflation can go down within that time frame of 3-5 years, but they should still be good performers as long as you leave them alone for at least a year...plus their tax free

I now have a good mix of savings with lots of help from this board and its members...nice to have little bits scattered about.

• cash ISA
• regular saver
• 1 year fixed rate bond
• index linked savings certificate
• high interest savings account
• two high interest current accounts

I think a Cash ISA would be your first start (if you don't already have one) although maybe best to get a fixed rate one...

Trumpeter

Thanks for the replies. Yes, I've already used my ISA allowance. Part of the reason for posting is that I am soon to become a higher rate taxpayer so it looks like Index Linked Certs may be the way forward.

As an aside to this, when my tax bracket changes, what happens regarding the interest paid on any other savings accounts? Am I expected to inform the IR? I've never had to fill in a tax form as I am PAYE & it's all sorted by my employer.

Biggles

If you keep the certificate till maturity, I can't see that it makes any difference. The index-linking would be for 36 (or 60) months, and so would the interest.

If, however, you were to have to cash it in early (after the first year), I imagine there could be something to be said for buying towards the end of a month.

If you bought, say, end Feb 08 and cashed in early Aug 09, you would get a full 18 months index-linking (the Jan 08 RPI to the Jul 09 RPI) although they would have only held your funds for a little over 17 months. Of course, you only get just over 17 months interest added.

At least, that's how it looks to me, though it doesn't seem worth the effort even if I'm right!

StevieJ

You just send the taxman a letter identifying the other income, sometime after the tax year end. They will then adjust your tax code for the next tax year, so don't throw away those tax deduction certificates you receive.

Jonbvn

Trumpeter wrote: »

As an aside to this, when my tax bracket changes, what happens regarding the interest paid on any other savings accounts? Am I expected to inform the IR? I've never had to fill in a tax form as I am PAYE & it's all sorted by my employer.

I think it would be best if you registered online to complete your tax-return.