I was in the process of taking out a 15k 5 year index linked bond as part of my 'safe investment portfolio'. But in the current climate and with talk of deflation and weakening commodity prices - is it still a good investment. Only a few months ago it seemed a cert with inflation and rising prices etc.. any thoughts and/or advice????

It's safe - that's the main thing. These days all you can really hope for is to see your money back in one piece, rather than getting any kind of return.

I was pondering the same question myself.

I currently have £30,000 in index linked bind which have been in a year. These have performed well. I am now wondering whether to take another £30,000 out in the latest issue.

It is true that we are looking at deflation from the signs given by the drop in oil and etc .But then again with the government borrowing all that money to inject into the banks I have the feeling that we are not going to get the drop back in inflation that the media are predicting. I expect it may drop a little but not drop to the extent they are predicting and in the longer term I believ we could see it rising as the pound loses value.

I am buying more when my Nationwide bond matures.

Just stashed a moderate amount in there myself (actually money I was going to have dabble in the stock market with last week!), may review whether to encash early. When I last did them I seemed to remember the terms were ok for withdrawing once they had done a 12 months & I think we have 6 months of inflation close or higher than B of E base rate so as a HRT payer they are a worthwhile & safe option.

At the moment they seem the ideal investment.

If low inflation / deflation does happen then I will just cash them in at that point.

Does anyone know if these are any good for expats? Non UK residents will have to pay tax in the country they live in anyway.

The ns&i site suggests they're available to non residents but I can't find what the current "index linking" rate is.

Otherwise maybe income bonds?

Thanks

Got loads of these , you can increase the amount you have of each issue by putting them in trust { they are still yours unless you pop it } , you can use anyone , partner , spouse , kids , family , friends etc etc , all the T & C's are the same when held in the trust option .

But when can you cash them in and not lose any interest?

I seem to remember someone saying you could cash them in after 1 year year and interest is still paid - but I'm not sure about this.

I'm looking at Anglo Irish 7% AER over 2 years instead of more NS&I bonds due to the inflation (or even deflation) outlook for the medium term.

From what I can gather, if you cash them in after 1 year you will get the index linking plus a small bonus percentage. The bonus increases if you hold them for the full 3 or 5 year term.