NS&I Index-Linked Certificates - New Issue

MiserlyMartin

martinman3 wrote: »

Shouldn't that be Alistair Darling :cool:

Brown, Darling whoever. They are both as woefully incompetant. They all come from the same party of clowns.

ashm1

Does this mean inflations is set to rocket ?

lemonreptile

The true Socialist is running the show now .... he doesn't want to encourage investment(wealth) especially if the interest is tax free hence the lousy rates. I doubt the next issue will be much better. Anyway ... not toooo long and we can scrap the government .... once they have made a total balls of it all of course. As for Darling ..... who is he anyway? Does anyone really belive that Brown isn't still the chancellor????

bristol_pilot

I don't understand how the equivalent rate for a higher rate taxpayer is calculated for this product.

As an example, for the 3-year bond paying 0.25% above RPI and assuming RPI=4% for the sake of argument then the tax-free rate is 4.25% AER. According to the NS&I website, the equivalent rate for a higher rate taxpayer is RPI+0.42% (0.25%/0.6=0.42%) which is 4.42% - this is a very poor rate.

But surely you get the RPI part tax-free and not just the extra bit, so if you receive 4.25% AER tax-free this is equivalent to 4.25%/0.6 which is more than 7% and not too bad, especially if interest rates on other products are falling. And if RPI bombs to 1% or something you can always cash in the certificate.

Can anyone enlighten me?

jem16

bristol_pilot wrote: »

But surely you get the RPI part tax-free and not just the extra bit, so if you receive 4.25% AER tax-free this is equivalent to 4.25%/0.6 which is more than 7% and not too bad, especially if interest rates on other products are falling. And if RPI bombs to 1% or something you can always cash in the certificate.

I agree with your calculations. I had one issue which matured earlier this year. The tax-free was on the whole lot - RPI + whatever, not just the whatever.

amcluesent

Slim pickings indeed. IS it because HMG is getting huge inflow of funds?

Only today, it was reported that unsecured personal debt was soaring, so for most people they don't have any spare cash to put into index-linked.

I suspect it's more likely that inflation will spike, and the RPI is less able to be fudged by Gorrdunn than the CPI; the Treasury is panicking about the liability of interest on top of RPI, hence this issue does no more than preserve capital against inflation.

Biggles

bristol_pilot wrote: »

But surely you get the RPI part tax-free and not just the extra bit, so if you receive 4.25% AER tax-free this is equivalent to 4.25%/0.6 which is more than 7%

You're correct, it's just that they've always used sloppy wording for the IL Certs, you'd think they would explain it better.

RayWolfe

amcluesent wrote: »

Slim pickings indeed. IS it because HMG is getting huge inflow of funds?

Yes. Or at least, enough.
You will see, over history, that the rate varies all the time (over all governments) and depends entirely upon the lowest rate they can get away with to supply their needs. If they don't get enough, there will be a new issue at a higher rate.
If they were paying more than was needed, what would you think?
What is it with the current obsession with conspiracy theories?

amcluesent

> What is it with the current obsession with conspiracy theories?<

What else explains the deliberate wrecking of England by the globalist fifth-column and the many 'suicides' of those who got to close to the truth?

ManAtHome

ashm1 wrote: »

Does this mean inflations is set to rocket ?

Hmmmm, well it's shot up by 0.2% ish on the back of over 10% rises in food, fuel, train fares etc so it could well zoom up another 0.1% (and drop by several percent when we get round to the time of year when benefit and pensions increases are calculated).