NS&I Index Linked Certificate Renewal

13

Comments

  • Morphoton
    Morphoton Posts: 90 Forumite
    What was the value in 2017 compared to the original purchase price in 1992? Must have at least doubled??

    £10000 in 1992 is now £32614 after 25 years.
  • Davina40
    Davina40 Posts: 45 Forumite
    First Post First Anniversary Combo Breaker
    AnotherJoe wrote: »
    If you dont have a better use for the money, renewing for 5 years is a no-brainer.

    Reason being, as long as you time the withdrawal right, you dont lose out on RPI paid, and so you get the same benefits as if you'd signed up to 1,2,3 years without the risk that these will be withdrawn at next renewal, and losing out on a few years at RPI instead of CPI or some other figure.

    I know this is an old thread, found it by googling the same issue.

    My question is, is the above still valid? According to the NSI website, there's a withdrawal penalty of 90 days interest plus losing the index-linking on the whole certificate for the year. Is this a new thing since this thread started?
  • Reed_Richards
    Reed_Richards Posts: 4,144 Forumite
    First Post Name Dropper First Anniversary Combo Breaker
    Given that the interest rate is 0.01%, I would not worry about losing 90 days worth (about 0.0025%). So it all hinges on what is meant by "for the year". Does that mean no loss if you withdraw after exactly 1,2,3, or 4 years as AnotherJoe seems to imply?
    Reed
  • Stubod
    Stubod Posts: 2,164 Forumite
    First Anniversary First Post Name Dropper
    ..for me it's still a no brainer to roll them on for another period while you still can...index linked / "safe" money. (Unless you need the cash for something else).
    .."It's everybody's fault but mine...."
  • dividendhero
    dividendhero Posts: 2,417 Forumite
    It's a general rule in life that deals get worse as time goes on, so regard Index linked bonds I'd renew - it's a no brainer really
  • londoninvestor
    londoninvestor Posts: 1,350 Forumite
    First Anniversary
    edited 6 August 2018 at 11:20AM
    Davina40 wrote: »
    According to the NSI website, there's a withdrawal penalty of 90 days interest plus losing the index-linking on the whole certificate for the year. Is this a new thing since this thread started?

    It's new but not that new - it came in sometime between 2011 and 2016, because it wasn't there when I bought my first 5-year certs, and was there when I renewed them.

    I think AnotherJoe's point is as Reed_Richards suggests - i.e. that you can cash in after X years (or perhaps X years + 1 day) with a penalty as close to zero as makes no difference.

    Here are the relevant T&Cs. Para 19 defines that index-linking is credited on the anniversary of buying the cert. And para 61 defines the cashing-in penalty, referring back to para 19 for its definition of "the year in which an early encashment is made".

    My interpretation of that is the same as AnotherJoe's. Cash in on the anniversary (or perhaps the day after) and you only lose the 90 days' interest, i.e. 0.0025% of the principal, i.e. 25p for every £10k that you hold.
  • ffacoffipawb
    ffacoffipawb Posts: 3,593 Forumite
    Name Dropper First Anniversary First Post Photogenic
    londoninvestor wrote: »
    It's new but not that new - it came in sometime between 2011 and 2016, because it wasn't there when I bought my first 5-year certs, and was there when I renewed them.

    I think AnotherJoe's point is as Reed_Richards suggests - i.e. that you can cash in after X years (or perhaps X years + 1 day) with a penalty as close to zero as makes no difference.

    Here are the relevant T&Cs. Para 19 defines that index-linking is credited on the anniversary of buying the cert. And para 61 defines the cashing-in penalty, referring back to para 19 for its definition of "the year in which an early encashment is made".

    My interpretation of that is the same as AnotherJoe's. Cash in on the anniversary (or perhaps the day after) and you only lose the 90 days' interest, i.e. 0.0025% of the principal, i.e. 40p for every £10k that you hold.

    I make it 25p not 40p.
  • londoninvestor
    londoninvestor Posts: 1,350 Forumite
    First Anniversary
    ffacoffipawb wrote: »
    I make it 25p not 40p.

    Duh, of course. Thanks!
  • talexuser
    talexuser Posts: 3,498 Forumite
    Name Dropper First Post First Anniversary
    Exactly, cash in just after an anniversary and the loss of interest is insignificant. I still have my rolled over one running as a good, if not the best, cash option for that amount of money.
  • nrsql
    nrsql Posts: 1,919 Forumite
    First Anniversary First Post Combo Breaker
    gatters wrote: »
    Out of interest, what determines whether they allow renewals or not?

    My guess it will be allowed until enough have been dropped that they can cope with the sudden outflow of funds.
    Maybe they will play with the term for which they can be renewed first and start trying to encourage people to drop out.
    Maybe move from RPI to CPI or try negative interest rates on top.

    Another reason for going for 5 years.
    I took out loads of them in smallish tranches which means I get lots of letters now and keep missing the ones that talk about renewals so still have some 3 years. Must look at the site and see what can be done some time.
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