Any one worried about the effect of inflation on their long terms savings might be interested to know that NS and I have re-introduced their inflation linked bonds.
RPI plus 0.5% over 5 years - Max investment £15,000
www.nsandi.com/savings-index-linked-savings-certificates
|
Excelent - was waiting for this
|
Indeed. Shame I'm not UK resident.
I think NS must have more faith in Mervyn King than many...
|
I just got an email from NS & I about these bonds.
How good an offer they are depends on how far you believe that the official RPI is a true measure of *real* inflation.
I may take up a few, because I like to spread investments to reduce risk, but last year the return on Stocks and Shares ISAs was comfortably better than anything that NS & I offered.
|
Londoner:
>> I may take up a few, because I like to spread investments to reduce risk,
>> but last year the return on Stocks and Shares ISAs was comfortably better than anything
>> that NS & I offered.
Over the long term, 5 years+, I would always go for stocks and shares assuming the market is not overheated, and at the moment whilst it is not at a low, I think it's not too high either. Of course it depends on which market you choose. I once chose Japan .... cough cough, I waved good bye to many thousands of pounds. Fortunately other investments easily compensated me for the loss, so clearly it pays to diversify.
|
With inflation targeted to hit 5% at year end, that 5.5% for year one tax free.
I reckon
y1 5.5%
y2 4%
y3 3.5%
y4 2.5%
y5 2.5%
At worse. I missed the last lot so I will stuff some in these.
|
|
Better than spending it on a money-pit motor.......15k committed to it. Had to phone in as my new postcode didn't compute.
|
Oh I dunno. I've had some money-pits I still don't regret.
And the urge hasn't entirely vanished. I went to look at a one-owner Integrale yesterday...
|
|
Me too had a punt for a few grand, better than the bank, tax free as well.
|
|
Although they're not for me, it does seem unfair that they can only be bought online. There's still plenty of people around without computers, and many of these will be pensioners who would welcome the security these bonds offer.
|
>> Although they're not for me, it does seem unfair that they can only be bought
>> online.
They can also be bought over the telephone.
I have bought some of this issue and have also bought previous issues. It is interesting to note how the additional interest rate has dropped over the last few years from 1.35% to 1.0% and now 0.5%
|
its a measure of they (the government) really see inflation going.
The higher inflation is expected to be, the lower the additional interest rate. By fixing the bond for 5 years, and offering a 0.5% additional rate, they are in effect saying inflation will not drop below 3% for the next 5 years.
|
"it does seem unfair that they can only be bought online."
It would be if it were true. The bonds can be applied for "online, by phone, or by post" as per the NS and I website.
www.nsandi.com/savings/tax-free
|
I must have misread the article in today's Money Mail. Specsavers appointment is imminent.
Thanks.
|
Martin Lewis reckons although there's a supposedly five year term, you can withdraw if you wish after a year and a day without harming the interest rate level:
www.moneysavingexpert.com/savings/inflation-linked-savings
|
Around 1995 when interest rates were over 10% on TESSA accounts (proto-ISAs), the index-linked bonds were paying RPI+3.5%.
I guess that while UK plc can borrow internationally at around 3.5%, there is no need to offer that good a rate through NS. The non-index-linked bonds are paying 2.25 or 2.5% when I looked earlier - if our national borrowing rate rises, expect NS rates to rise.
NS are basically a vehicle for the govt to borrow from the population.
|
double post glitch
Last edited by: Lygonos on Wed 18 May 11 at 19:27
|
Good idear these bonds I give them a ring.Uk Interest 0.5%.Eurozone 1.25%.
Crazy how they get away with such a low interest rate and inflation is running at 5%.
|
>> Crazy how they get away with such a low interest rate and inflation is running at 5%. >>
Back to Martin Lewis again - he reckons they'll be worth up to around 9 per cent tax free to the very top level tax payers and pro rata to others.......
|
Inflation linked bonds - Zero
