Question: How good are nsandi index-linked savings certificates?

(Posted by: MARTYN on 2010-07-11 03:54:03)

Posted by: PHIL D on 2010-07-14, 10:16:13

Backed by UK treasury, so almost as close as you can get to risk free. Run for 3 or 5 years, you can withdraw money early but some interest is lost. Interest is currently 1%+ RPI tax free. If RPI is negative interest will be 1%. Its a gamble on what RPI will do over the next 3 or 5 years, what building socs will pay and your rate of tax. Current RPI rate is 5.1% so if it remains unchanged the interest rate would by 6.1% tax free. I think interest is added yearly, check NS &P web site.

Posted by: Steve B on 2010-07-11, 14:53:01

Umm - they repay your capital plus some level of Interest based on (I believe) the RPI (inflation Index) Since they are Government backed (and we are not Greece) there seems zero capital risk .. and since they are 'inflation proof' it would seem to be that there is no inflation risk either .. This makes them virtually 'risk free' = = since returns are always dependent on the level of risk, I am going to guess you can get higher returns by taking higher risks (Greek savings certificates, perhaps :-) )