NS&I Index Linked Savings Certificates - Changes Announced

National Savings & Investments have announced changes to the way their Index Linked Savings Certificates operate.  These changes take effect on the 20 September 2012.  The link to the NS&I Announcement is here.

The change that hurts me the most is likely to be:
"penalty and loss of index-linking for cashing in early  
The penalty is equivalent to 90 days’ interest on the amount cashed in. And you’ll lose the index-linking on your whole Certificate for the investment year in which you cash in."
 
This is likely to hurt as should house prices resort to a sensible valuation I would likely liquidate all of my NS&I Index Linked Savings Certificates to maximise my deposit and hence minimise my mortgage rate.  Although at the rate we're going I won't have to worry about that for a long time.

I have my Index inked Savings Certificates. Do you? – UK savings interest rates – June 2011 Update

It has been a little bit of a faff and my recent adventure didn’t help but as with Salis Grano and Ermine I now have in my possession Issue 48 NS&I Index Linked Savings Certificates which offer index-linking to RPI plus 0.5% pa compound if held for 5 years.  Unfortunately I wasn’t able to buy them on the day they were re-issued for 2 reasons:

-          Following my overseas adventure I had to update my address details with NS&I.  This is quite a clunky process and takes a few days as it can’t be done via internet or telephone.  Instead I had to send off a signed letter requesting my details be changed which took a few days for them to process.

-          I had to transfer the funds from my online savings account into my current account which takes the usual 3 days.  I still can’t believe that in 2011 it takes 3 days to move money electronically.  In fact, yes I can, because we all know that this limbo period is where the banks hold on to your money and not pay you interest on it.  A nice little earner I’m sure.  What was also interesting was that my online savings account provider very quickly sent me a survey saying that I had recently moved a large sum of money from my account and they would like to understand why.  I’m amazed that they have gone to the trouble of paying somebody to set up a survey.  Surely the answer is always going to be because “I want to buy something” or “your rates are uncompetitive”.  Funnily enough they didn’t have an option that said “moving money from poor insulting interest rate to NS&I”.

NS&I Index Linked Savings Certificates Are Back

It’s been 297 days since NS&I Index Linked Savings Certificates were withdrawn from the market and I’m happy to say that today I received an email saying there back.

Bank of England really does want to punish savers – NS&I Index Linked Savings Certificates Mature

So Charlie Bean, Bank of England Deputy Governor, has now confirmed what I suspected all along. They definitely wanted to cut the incentive to save when they decided to bail out the reckless with their 0.5% rates, which they then thought would give all those savers an incentive to go out and spend those savings. What sort of crack pot notion is that? Hey everyone you’re now going to earn no return on your money so why not just go out and spend it all! Well I for one am not taking that advice. I can think of many reasons but how is this for a few:

- I never know when I might lose my job and so might have to survive for many months before finding a new one.
- I never know if I might become ill and so need some savings to tide me over.
- One of my family or friends could need my help due to either of the above.
- I don’t believe a state pension will exist by the time I am at the end of my life and even if one does it would be about sufficient to allow me to buy baked beans and toilet paper only. I therefore fully intend to support myself when I no longer want to work so I am not forced to live in poverty.
- I don't want to work until I'm dead.
- Someday soon I might want to “retire” to take up a new career that I might enjoy more with less stress, learn something new, undertake some charity work or if I choose just sit on a beach drinking margarita’s.

Government supports the banks ripping off the average saver – NS&I Index Linked Savings Certificates suspended

I’m sure by now that most readers will be aware that this week National Savings & Investments closed for sale its RPI+1% index linked savings certificates (ILSC’s). If they stay closed for a long time or even reopen in a few months linked to the CPI instead of RPI its going to give me and I’m assuming many others a few problems. My retirement investing strategy uses NS&I ILSC’s extensively. I currently have 20.7% of my net worth ties up in them.

The Non Event - Bank of England holds the UK Bank Rate at 0.5% - July 2010 Update

Today’s announcement that the Bank of England had held interest rates at 0.5% for the 16th month in a row plus decided to do no more quantitative easing (QE) was so predictable and such a non event that I nearly didn’t bother posting. I did however discover some interesting data from the Office of National Statistics (ONS), which I’ll cover in a minute, which made a post worthwhile. Firstly let me get the data out of the way.

NS&I Index Linked Savings Certificates – review of previous issues and why I think they suit me as an investment

Regular readers of Retirement Investing Today will already know that I personally think National Savings and Investments (NS&I) Index Linked Savings Certificates are a good investment class and I currently hold 19.7% of my Low Charge Portfolio in them. A previous post detailed why I like them however I wanted to learn a little more about them given my large holdings. A web search turned up very little so I have had to do some analysis of my own. I have followed a similar style of analysis to that of all the asset classes I invest in or someday would like to invest in (these can all be seen in the right hand side bar under Latest Charts) that I regularly post about however because of their complexity the analysis is not perfect but in my opinion more of a trend.

Buying NS&I Index Linked Savings Certificates

As I highlighted here National Savings and Investments (NS&I) today released a new issue of both 3 and 5 year Index Linked Savings Certificates. I’ve made use of this and invested around 4% of my retirement investing low charge portfolio into the 3 year 20th issue of these certificates by transferring some cash holdings. This new issue is paying index linking + 1%. This now means that I have 19.6% of my retirement portfolio invested with these tax efficient certificates.