this is the welcome page for this particular product. you get a rate that is tracked a fixed % above RPI over the term. it sounds very safe to me and if it's what it seems i am very tempted.

http://www.nsandi.com/products/ilsc/index.jsp


what are the main issues with these products ?

Can someone who knows what they're talking about answer the man's question please! I looked at them earlier and worked out that these would pay about the same as one of the fivish per cent ones post tax for a 40%-er but are probably less tricksy (won't suddenly spring a rate drop on you) and you have the benefit, if you're not very good with money, of not being able to touch it without losing out. But I really don't know much about this sort of thing. I'm looking for somewhere that isn't proper dangerous investing to put the non-cash part of my ISA this year, tardy though that is (can't believe the reduction in cash ISAs next year - git - wants us not to save anything and if we do to save it with him).

Also, couldn't see on the site whether they use the RPI that includes mortgages or not. I suppose it's save to assume they're going to ding us and use the one that doesn't include them?

Here's an HPC question - should people lock their deposit savings away for 3 or 5 years?! Hmm. I'm probably going to do 3 - 5 would do my head in, even if it were the best option.

Thanks for any advices.

I think the rate of return is fixed/fiddled so that its more of less as you say market rate net of 40% income tax. Sorry I cant go into much more details, but I there migth be a thread already on something like this, or try googling it. I have a sneaky suspicion that they are not that good, and might just be a clever(i.e not totally honest) way of getting the public and finance illiterate to lend its money to the govn rather than private business e.g those banks offering 5%, but like I say I cant back this up.

If you a good old fashioned socialist whose appaled that the government is not taxing the hard workers of the UK enough, then I suppose by lending the government some of your money, to spend it in a far more enlightened way than you ever could, on directors of exellency and public efficiency, smoke cessation assistant commissar for minorities and subsidising public pension then they are probably a great investment vehicle.

Hhmmm did I stray off slightly there

hmm. what you say does bother me and is the reason i posted in the first place. all looks too good to be true - especially if you are fortunate enough to be earning in the 40% tax band ! which i aint

the sum the post is this

index link + 0.95% (AER, tax free)

....it never defines what the index link actually is and here is where i reckon the contention lies. without defining the function of RPI they are using the whole thing is totally ridiculous.

They are tax free, hence better value for rich people/high earners, you didn't think the government would help the poor .

You are limited to £15K per person, per issue.

Inflation is measured using RPI as showed here http://www.statistics.gov.uk/CCI/nugget.asp?ID=19 current issue is rpi +0.95% for 3 year and +1% for 5 year.

Are they worth it? If you are a high rate tax payer, then they are worth having at the moment (and over the last few years), however that can change.

currently they are paying 3.7%, equilivant to gross interest of:
~6% for high rate tax payers.
~4.5% for basic rate tax payers.
3.7 for non tax payers.

hmm. you missed what i was banging on about.

'index link' + 1% does not necessarily mean rpi + 1%.

function(RPI) + 1%... what is the function, it does not specify !

It states clearly:

Interest Index-linking to Retail Prices Index (RPI) plus guaranteed interest rates for length of term.

Check the terms and conditions, says exactly that.

i know, but 'index linked' can mean anything. it could be RPI - 1, RPI * 0.95, RPI - gordon's champaigne budget * 0.001...

Thanks Sminty and erd for info. Losing Faith - I wrote to them to check and they use the RPI that includes mortgages - .2% at the moment in the savers' favour. Yes, really not sure about these - might put a bit in one for 5 years and regard it as a bit of pension, of which I have precisely nix at the moment so can't be a bad thing.

I thought that the limits of £7000 for a maxi ISA and £3000 and £4000 for cash and mini shares ISAs respectively had been retained until 2010, or has that reversal been, er, reversed?

Really? That would be brilliant - will see what I can find out about this. Thanks.