NS&I Certificates - the 'Real' deal
NS&I Index-Linked Certificates are tax-free, index-linked fixed term savings accounts (for 2, 3 or 5 years) which offer an inflation-proofed return plus a “sweetener” at a specific fixed rate. In the past, Certificates have offered rates of up to Index-Linking (RPI) + 1.35% but those days are long gone. The current rate for all terms (2, 3 and 5 years) is Index-Linking + 0.01%.
This headline rate seems pretty unexciting but with inflation currently sitting at 2%, the effective rate (2.01%) is actually very competitive. You will struggle to find instant access deposit accounts offering more than 1.00%. Even the mighty Santander 123 account (a current account with “bells and whistles”) has now dropped to 1.50%. The top paying 5 year fixed term deposit coincidentally offers exactly 2.01%
There are other reasons why you should cherish your Linkers:
Your capital is completely safe – there is no investment risk
The Government are no longer making them (issuing new ones). They stopped new issues in 2011. The only people who can get hold of Index Linked Certificates are those who already have them. If you cash them in, you can’t currently get them back or buy new ones.
When fixed terms mature you are able to roll over into new offers – what might these be in 2, 3 or 5 years?
They are backed by the government. So they are at least as well protected as any other UK banking institution.
They are tax-free. This means the interest accrued does not use up any of your personal savings allowance.
Most importantly, inflation is real, like it or not! The weakness of Sterling following the Brexit vote means that we are now importing inflation hand over fist. The National Institute for Economic and Social Research (NIESR) is already forecasting inflation of 4% by the middle of 2017.
So, not only are these little beauties safe, competitive and tax-free but they are likely to get even better: a government-backed treasure that guarantees to grow your money in real terms no matter what!
To discuss further or to arrange a face to face meeting please contact us.