NS&I index-linked tax-free certificates on sale again
Discussion
They're on sale again. The rate and term are not as attractive as has been available previously, but with RPI at 5.3% an interest rate of 5.8% is equivalent to 7.25% at 20% or 9.7% gross at 40% tax. Of course this interest rate should drop as inflation is curbed, and if the BOE uses the base rate to fight inflation then other accounts will offer better rates than they do at present.
Term is 5 years, max investment £15k as usual.
All the AIM oil share pundits will laugh at a boring, safe investment like NS&I - though I'm not averse to some AIM risk - Ormonde mining (ORM.L).
Term is 5 years, max investment £15k as usual.
All the AIM oil share pundits will laugh at a boring, safe investment like NS&I - though I'm not averse to some AIM risk - Ormonde mining (ORM.L).
Re: post 2 - look at the website for details - the rate varies with the current RPI, though in the last few issues, and, I expect, the current 48th one, though not checked, it was guaranteed not to drop below 0% + the "RPI+" percentage). As an example, £15k invested on 21 May 2008 in the 3yr RPI+1% is now, at maturity, worth £16,843.27, regardless of your tax band, and the whole £16.8k could be reinvested, index-linked, tax-free...
People probably buy them for four main points in their favour: 1, index-linked, 2, tax-free - this can be especially valuable, often trumping all other safe investments if you're in the 40 or 50% rate bracket, 3, UK Government-backed, 4, ability to re-invest - especially useful recently when there were no new certificates on sale. The disadvantages are: fixed terms (though you can cash them in for decreasing penalties (no interest in the first year, tiered from then on), and a max of £15k per issue which may not be so useful for the higher rate taxpayers.
ETA - yes, the hope of the BOE is that RPI and CPI will drop and if interest rate rises are used to try to achieve that (debatable, as much of our inflation is commodities / imported) then general savings accounts will become more appealing, but, if you're a taxpayer then the tax benefit of the NS&I keeps it ahead for quite a while.
People probably buy them for four main points in their favour: 1, index-linked, 2, tax-free - this can be especially valuable, often trumping all other safe investments if you're in the 40 or 50% rate bracket, 3, UK Government-backed, 4, ability to re-invest - especially useful recently when there were no new certificates on sale. The disadvantages are: fixed terms (though you can cash them in for decreasing penalties (no interest in the first year, tiered from then on), and a max of £15k per issue which may not be so useful for the higher rate taxpayers.
ETA - yes, the hope of the BOE is that RPI and CPI will drop and if interest rate rises are used to try to achieve that (debatable, as much of our inflation is commodities / imported) then general savings accounts will become more appealing, but, if you're a taxpayer then the tax benefit of the NS&I keeps it ahead for quite a while.
Well considering it took 200+ years for Rome to devalue its coinage to zero while the Fed has managed it in 100 suggests that Index linked bonds are a good investment. There are of cource index linked gilts as well and the current yield on them is just under 1%
Which for anyone with an ISA or SIPP is a better deal
http://uk.ishares.com/en/rc/products/INXG/distribu...
I guess if you have maxed our your ISA and SIPP then this is next best.
Which for anyone with an ISA or SIPP is a better deal
http://uk.ishares.com/en/rc/products/INXG/distribu...
I guess if you have maxed our your ISA and SIPP then this is next best.
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