NS&I Index Linked Savings Certificates Maturing
Discussion
I have around £25K worth of these maturing in a month.
They make up the majority of what I'd consider my emergency fund as between those and £5-10K in the bank and a £12K credit card limit they make up the bulk of the "cash" I could get at without needing to sell down investments.
If I roll them over they're locked in so they are no longer accessible.
I already use my ISA limit each year.
I could look at gilts but right now I'm thinking the most viable option is Premium Bonds if I'm taking the view this is money where some return would be nice but mostly it's sitting there "just in case".
Am I overlooking anything please?
They make up the majority of what I'd consider my emergency fund as between those and £5-10K in the bank and a £12K credit card limit they make up the bulk of the "cash" I could get at without needing to sell down investments.
If I roll them over they're locked in so they are no longer accessible.
I already use my ISA limit each year.
I could look at gilts but right now I'm thinking the most viable option is Premium Bonds if I'm taking the view this is money where some return would be nice but mostly it's sitting there "just in case".
Am I overlooking anything please?
If they make up your emergency fund and that is the fund quantum you want, certainly locking them away for another 3 years appears not the right answer.
Equally PB’s with then halve the max will on average not even earn you the same return on a tax adjusted as if basis as a perhaps limited access savings account.
For balance those certificates over the last few years have done well given inflationary numbers.
It’s what you think they will continue to do but then you’ve still got the no access issue.
We’ve just had similar letters but they weren’t my emergency cash and have just rolled them over.
I think in your situation I’d be more minded to have my emergency cash in perhaps a limited ( times ) savings account with some PB’s for a small hedge.
Equally PB’s with then halve the max will on average not even earn you the same return on a tax adjusted as if basis as a perhaps limited access savings account.
For balance those certificates over the last few years have done well given inflationary numbers.
It’s what you think they will continue to do but then you’ve still got the no access issue.
We’ve just had similar letters but they weren’t my emergency cash and have just rolled them over.
I think in your situation I’d be more minded to have my emergency cash in perhaps a limited ( times ) savings account with some PB’s for a small hedge.
butchstewie said:
I have around £25K worth of these maturing in a month.
They make up the majority of what I'd consider my emergency fund as between those and £5-10K in the bank and a £12K credit card limit they make up the bulk of the "cash" I could get at without needing to sell down investments.
If I roll them over they're locked in so they are no longer accessible.
I already use my ISA limit each year.
I could look at gilts but right now I'm thinking the most viable option is Premium Bonds if I'm taking the view this is money where some return would be nice but mostly it's sitting there "just in case".
Am I overlooking anything please?
How many years have you had them and how have they performed? They're not based on real inflation right?They make up the majority of what I'd consider my emergency fund as between those and £5-10K in the bank and a £12K credit card limit they make up the bulk of the "cash" I could get at without needing to sell down investments.
If I roll them over they're locked in so they are no longer accessible.
I already use my ISA limit each year.
I could look at gilts but right now I'm thinking the most viable option is Premium Bonds if I'm taking the view this is money where some return would be nice but mostly it's sitting there "just in case".
Am I overlooking anything please?
One of the renewal options is 3 years. It’ll come around very quickly. Given they are risk free and your only other real options are ISAs and premium bonds I’d give some thought to renewing. There is still a very good chance we’re going to get some juicy inflation and so the risk free return could be quite good.
Yeah the tax free element is useful but I'm keen not to let the tax tail wag the dog by locking money away if there's little benefit in doing so.
When I posted I'd kind of discounted a traditional bank account but I salary sacrifice to just about stay within the basic rate tax so with a little juggling I could just about get interest on this within the basic rate allowance.
When I posted I'd kind of discounted a traditional bank account but I salary sacrifice to just about stay within the basic rate tax so with a little juggling I could just about get interest on this within the basic rate allowance.
Yeah I get they're (literally) a lottery so nothing is guaranteed.
I'm wondering if the "easy life" option here is just 50/50 it between PB and an NS&I Direct Saver.
It won't set the world on fire but I'm not a fan of chasing savings accounts and bonus offers just to get a few more bps interest.
I'm wondering if the "easy life" option here is just 50/50 it between PB and an NS&I Direct Saver.
It won't set the world on fire but I'm not a fan of chasing savings accounts and bonus offers just to get a few more bps interest.
butchstewie said:
Yeah I get they're (literally) a lottery so nothing is guaranteed.
I'm wondering if the "easy life" option here is just 50/50 it between PB and an NS&I Direct Saver.
It won't set the world on fire but I'm not a fan of chasing savings accounts and bonus offers just to get a few more bps interest.
If you don’t get any value from the “it could be you” lottery part if it (as in a sense of pleasure / dreaming about riches) then it probably makes sense to look at the median yield, not mean, taking out the effect of large but rare payouts.I'm wondering if the "easy life" option here is just 50/50 it between PB and an NS&I Direct Saver.
It won't set the world on fire but I'm not a fan of chasing savings accounts and bonus offers just to get a few more bps interest.
The catch is that an inaccessible emergency fund isn't really an emergency fund at all. Index Linked are now almost the hardest place to access cash from among all forms of investment/savings, which seems crazy. [N.B. Index Linked have been closed to new investment for some years. I'm sure the only reason they continue at all is because old-timers would get ripped off if the government did a "high street bank trick" and dropped the interest to a flat rate 0.01%.]
I keep them running but the "real" emergency fund is always instant access.
How about a split between,
1. NS&I Index linked (3 years)
2. The Marcus 4.9% "one year" account somebody flagged up recently, and
3. Tesco Bank instant access at about 4%
I keep them running but the "real" emergency fund is always instant access.
How about a split between,
1. NS&I Index linked (3 years)
2. The Marcus 4.9% "one year" account somebody flagged up recently, and
3. Tesco Bank instant access at about 4%
SchillingTwo said:
They are linked to real, actual inflation.
Now there's a concept.Some years ago they were switched from RPI (Retail Prices Index) to CPI (Consumer Prices Index).
CPI is definitely better than nothing but has significantly lagged behind RPI. The differential is about 0.8% a year, which doesn't sound much, but the compounding effect becomes very substantial.
So what's the difference?
CPI and RPI measure different "baskets". Most particularly, RPI includes housing costs and CPI doesn't. The government likes to use CPI because it makes inflation look less severe than it actually is. It's one of the overlooked reasons for the pensions "triple lock". After all, pensioners do actually need somewhere to live and their costs rise with RPI....
Edited by Panamax on Sunday 5th July 13:27
Panamax said:
The catch is that an inaccessible emergency fund isn't really an emergency fund at all. Index Linked are now almost the hardest place to access cash from among all forms of investment/savings, which seems crazy. [N.B. Index Linked have been closed to new investment for some years. I'm sure the only reason they continue at all is because old-timers would get ripped off if the government did a "high street bank trick" and dropped the interest to a flat rate 0.01%.]
I keep them running but the "real" emergency fund is always instant access.
How about a split between,
1. NS&I Index linked (3 years)
2. The Marcus 4.9% "one year" account somebody flagged up recently, and
3. Tesco Bank instant access at about 4%
Well that's the whole point of the thread I keep them running but the "real" emergency fund is always instant access.
How about a split between,
1. NS&I Index linked (3 years)
2. The Marcus 4.9% "one year" account somebody flagged up recently, and
3. Tesco Bank instant access at about 4%
To me "emergency" means a few grand available right now in the bank account(s).
With a credit card as well I'm happy with a tier that's a day or two away.
I'm just not a fan of having loads of accounts everywhere.
I did contemplate an aggregator like Flagstone.
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