New NS&I Issues - how know?

I think you can sign up to be informed on their website:

Otherwise, look in the newspapers or even here on this group.

There's 3 and 5 year issues. You can invest 15k in each. (I know that wasn't the question you were asking)

Tim.

There's another point to consider too. Forecasts I've seen show RPI inflation falling to -1.1% or thereabouts in the middle part of this year (it's already down to 0.9%). Add the 1% 'premium' for the index linked bonds, and they'll actually be deducting 0.1% of what you've invested from you for as long as that situation lasts.

Is that a good reason to invest more?

The RPI bit never goes below 0% so you'll get 1% regardless.

What happens in a deflationary environment? Iman Asante, a spokesperson for NS&I, says index linking cannot generate negative returns. "If RPI has fallen from one anniversary to the next then no index-linking is added. Instead, just the guaranteed interest will be added to the value," she explains. Additionally, because calculations are carried out for discrete years, even if the RPI falls sharply one year, this won't necessarily affect the return in other years.

Tim.

>

I didn't know that, so thanks, even if it means I'm wrong!

Tim Woodall wrote in news: snipped-for-privacy@feynman.home.woodall.me.uk:

I did not know that - thats very useful. I have invested the max in the 5 year and will now invest also in the 3 year. thanks DAvy

"Norman Wells" wrote in news:DSYjl.37996$ snipped-for-privacy@newsfe30.ams:

seen show RPI

part of this

for the index

what you've

Norman, I accept that the rate of interest paid is likely to fall to 1% (zero plus 1%)in the short term. However pundits are stating that the government will eventually start printing money and soon inflation may go through the roof. NS&I inflation-linked savings accounts will then look very attractive - and probably the only way of guaranteeing that ones savings will not be devalued. It is tempting to wait until inflation happens before investing in NS&I but their issues are limited to 15k - so it will be too late. Because I am a persioner and must protect the value of my savings then I need to start getting them in 15k tranches into NS&I now. Does that make some sense? DAvy

The important quantity should always be the real return after tax and inflation. With NS&I you will get, very simply, a real rate of return over the term of 1% per year. No-one can tell what the inflation rate will be in one year's time, but it is possible to put your money into a 1 year bond at

3.75% or thereabouts at present. That would give an after 20% tax return of 3%. So, if RPI inflation in a year's time is less than 2% (it's currently 0.9%), the real return on that would be greater than NS&I.

The inflationary effects of printing money will not be felt for some time, and I would have thought they will not be felt for a couple of years or so at least. In the meantime, we will certainly have deflation (ie negative inflation), and I think I can make more than a 1% real return at least while that lasts.

There are other building societies who provide index linked bonds at a higher margin than National Savings.

Leeds building society has one at RPI+2%. It is collared at an RPI of -2%, compared with RPI of 0% for National Savings, so if there is deflation, National Savings is better.

Britannia and Newcastle sometimes offer them, but don't have any at the moment. Typically they offer 1.5% to 2% above RPI.