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Inflation +1.5% National Savings

(11 Posts)
CogitoErgoSometimes Tue 09-Aug-11 10:14:50

If anyone has more than £500 spare that they're happy to tie up for 5 years, National Savings have an offer on at the moment of RPI +1.5%.... closes September 1st. Inflation-proofing a chunk of my savings seems like a good idea at the moment. Seriously considering it.

commanderprimate Tue 09-Aug-11 22:28:41

Plus 1.5? Are you sure? I think it's 0.5. If not, I'm shifting my money first thing tomorrow!
Oh, and if it is the one I'm thinking of, you can get out after a year and still benefit from some index-linking, or so I read on moneysavingexpert.

CogitoErgoSometimes Wed 10-Aug-11 13:31:42

When I first looked there was a 3 year bond which was +0.5% and a 5 year bond which was +1.5%. But now when I look the 5 year bond seems to be RPI +0.5%. There is, however, an explanation of how the interest is worked out here which I'm sure will make sense if I stare at it for long enough.

CogitoErgoSometimes Wed 10-Aug-11 13:37:31

I see now where I went wrong. It's actually a Post Office product I was looking at, not National Savings.... here

GrimmaTheNome Wed 10-Aug-11 13:41:09

Even at RPI 0.5% - I'd buy. Its the only thing I know of which is sure to keep up with inflation. Its likely there will be higher inflation to come, but interest rates may stay low - where else can you put your money and be sure it won't erode? And as commander says, you can get it out if you have to after a year.

Tax free too - I'm not a higher rate taxpayer but if you are its very good indeed

GrimmaTheNome Wed 10-Aug-11 13:51:04

I was referring to Nat savings bond...

hm, not sure about this:
'The Inflation Linked Bond is a deposit account provided by Bank of Ireland UK.' ... ho hum, well presumably its insured up to £50k...

It says:
Save for a 5 year & 1 day fixed term and receive the annual RPI inflation rate plus 1.50% gross1 / 1.46% AER2 fixed each year, paid at maturity.

so if you keep it in it is RPI+1.5%; however it is taxable unlike NS&I

CogitoErgoSometimes Wed 10-Aug-11 13:52:43

Just trying to work out if RPI +1.5% with tax deducted is better or worse than RPI +0.5% with no tax deducted.

GrimmaTheNome Wed 10-Aug-11 13:58:38

won't it depend what RPI actually is?

CogitoErgoSometimes Wed 10-Aug-11 14:02:00

I think RPI +1.5% minus the tax works out better if the RPI is 4.5% or lower, anything over 5% RPI and the NSI offer without tax pays more. Crystal ball anyone?

GrimmaTheNome Wed 10-Aug-11 18:53:40

Nearest thing to crystal ball - BOE inflation report out today. I wasn't listening to the radio properly but I think it said Mervyn King was predicting inflation up to 5%

CogitoErgoSometimes Wed 10-Aug-11 22:19:48

So NSI looks like the better bet at the moment. Worth a flutter then!

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