NS&I index linked 5 year certificates are on sale again. RPI +0.5%
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At last, tax free inflation proof savings available again. They are 5 year certificates with a £15,000 max limit and start at £100. Good for long term saving.
Responses (4)
About time too. It is the safest way to ensure that your money does not lose value/buying power due to inflation.
Saying that, IMHO, it most probably means that interest rate rise is just round the corner and inflation is expected to go lower.
I think HSP has seen this for what it is. There is no such thing as a free lunch and for an apparently great and guaranteed deal to rise out of the recession ashes, suggests the advantage is on the provider's side. Call me cynical but people traditionally sign up for such deals simply because they 'seemed a good idea at the time'. And the promised financial gain on this particular deal has to come from somewhere. Plus I am never that comfortable when the words '5 Year' appear!
Maybe so Snoopy but there isn't anything else as good for the high street saver at this time. As I said, saving for the long term. I believe the interest is only added at the end of each year which means you can pull it just after each anniversary.
If we all sit and wait for interest rates to rise it may not happen, at least not as much as savers would like as that would be too severe for those with mortgages, overdrafts and credit card debt. It would probably push the country back into another recession. I fully expect inflation to drop next year once the VAT rise falls out so I wouldn't expect todays RPI of over 5% to apply.
Points taken Sealate. The offered rate is not as good as the previous issue when it was RPI + 1% and that was withdrawn on the basis that it was too good in the current climate. I understand that the rate will be set annually using the RPI every March. If the Bank of England is confident that inflation will fall early in 2012, the new yearly rate could be much less attractive I suggest and if average savings rates rise overall, you may well be able to do better elsewhere. I think the days of NS&I giving a good deal are on hold for now but as you say, the returns will always be above inflation, come what may. 'Making our money work' seems to constantly be getting harder!
It's interesting to read this 4 months down the line especially in the context of Snoopy48's reply. Now NS&I have closed this offer.Hope you took it up in time.
As far as inflation goes it has remained persistently high. In any event keeping money on deposit for the full five years and earning a real return of only a half a percent is fine for the short term.
Long term there are plenty of shares giving yields of 6% plus. If you're more cautious there are also some Investment Trusts giving yields of over 4% ('Murray International' and 'Edinburgh Investment Trust' for example) but always remember that shares may fall as well as rise and you may get back less than you put in.
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