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Will New Ns&i Il Certs Be The Titanic Or The Lifeboat?

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Made my application this morning.

When I applied last year shortly before the certs were withdrawn, my application was rejected because I had apparently used the wrong customer number, even though I had a screen grab showing that the number was correct.

I bet these get withdrawn pretty soon too, given the likely level of interest.

In normal economic times, a rate of 0.5% above RPI should be a cr@p rate, and lower than the marker, which should be the 'catch'. At the moment, there doesn't seem to be much of a catch. If a sovereign default happens, my NS&I saving ceritificates would not be my foremost concern.

Edited by WageslaveX14

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Where's the catch?

Not sure.. perhaps they are expecting housing costs to negatively skew the inflation index over the next few years ;)

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I'm not sure why so many people with so little faith in the finance establishment are willing to put all their money on 'black'.

Where's the catch?

I have advised both my boss and my mother to move some savings into these, so I am pretty confident there is no catch.

When I was talking it through with my mother yesterday, I mentioned that the appeal of the Certs represents a curious mixture of trust and distrust in the government/BoE. Trust in the government not to default; distrust in the inflationary forecast (expectation that inflation will be high for at least a year).

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I have advised both my boss and my mother to move some savings into these, so I am pretty confident there is no catch.

When I was talking it through with my mother yesterday, I mentioned that the appeal of the Certs represents a curious mixture of trust and distrust in the government/BoE. Trust in the government not to default; distrust in the inflationary forecast (expectation that inflation will be high for at least a year).

Is this a shoe shine boy moment?

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I'm not sure why so many people with so little faith in the finance establishment are willing to put all their money on 'black'.

Where's the catch?

Last port Titanic set out from was called 'Cork'

No 'White Stars' for guessing what happened to the 'unsinkable' ship

Edited by erranta

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Is this a shoe shine boy moment?

Harsh. It's not exactly a risky investment unless you think the government will default. Personally, I doubt that in the next year. Each to their own though. :rolleyes:

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I'm not sure why so many people with so little faith in the finance establishment are willing to put all their money on 'black'.

Where's the catch?

My twopence from my own perspective: catch or not it's the best cash investment I know of (thanks to hpc for this) and I need some funds diversified into cash whether I like it or not.

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Harsh. It's not exactly a risky investment unless you think the government will default. Personally, I doubt that in the next year. Each to their own though. :rolleyes:

Or unless they can fiddle rpi?

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The government can't default; they own the printing press. And they can't devalue your certs because they are RPI linked. And you aren't locked in, you can get out anytime with a week or so's notice and just loss of interest.

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Not sure.. perhaps they are expecting housing costs to negatively skew the inflation index over the next few years ;)

That's what I was thinking. Put housing into the "basket" and it can completely overshadow commodity surge as the means to domestic credit are removed.

Edited by TwoWolves

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The number always engaged when I ring, how can that be - call centre isn't it? Also online website doesn't recognise my address from my existing certificates so can't order online.

Edited by scrappycocco

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I'm not sure why so many people with so little faith in the finance establishment are willing to put all their money on 'black'.

Where's the catch?

As the cap is 15K I don't see how this can be called "all their money!".

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“With lending rates at a record low, the Bank of England finds itself in the unenviable position of fighting both deflation and inflation.

Stagflation/biflation, who would have guessed that 4 years ago..

Wiki: Stagflation

In economics, stagflation is a situation in which the inflation rate is high and the economic growth rate is low. It raises a dilemma for economic policy since actions designed to lower inflation may worsen economic growth and vice versa. The portmanteau stagflation is generally attributed to British politician Iain Macleod, who coined the phrase in his speech to Parliament in 1965.[1][2][3] [4]

The concept is notable partly because, in postwar macroeconomic theory, inflation and recession were regarded as mutually exclusive, and also because stagflation has generally proven to be difficult and, in human terms as well as budget deficits, very costly to eradicate once it starts.

In the political arena one measure of stagflation termed the Misery Index (derived by the simple addition of the inflation rate to the unemployment rate) was used to swing presidential elections in the United States in 1976 and 1980.

Wiki: Biflation

Biflation is a state of the economy where the processes of inflation and deflation occur simultaneously.[1] The term was first introduced by Dr. F. Osborne Brown, a Senior Financial Analyst for the Phoenix Investment Group.[2] During Biflation, there's a rise in the price of commodity/earnings-based assets (inflation) and a simultaneous fall in the price of debt-based assets (deflation).[3]

The price of all assets are based on the demand for them versus the volume of money in circulation to buy them.

With biflation on the one hand, the economy is fueled by an over-abundance of money injected into the economy by central banks. Since most essential commodity-based assets (food, energy, clothing) remain in high demand, the price for them rises due to the increased volume of money chasing them. The increasing costs to purchase these essential assets is the price-inflationary arm of Biflation.[4]

With biflation on the other hand, the economy is tempered by increasing unemployment and decreasing purchasing power. As a result, a greater amount of money is directed toward buying essential items and directed away from buying non-essential items. Debt-based assets (mega-houses, high-end automobiles and other typcially debt based assets) become less essential and increasingly fall into lower demand. As a result, the prices for them fall due to the decreased volume of money chasing them. The decreasing costs to purchase these non-essential assets is the price-deflationary arm of biflation.

Edited by libspero

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The number always engaged when I ring, how can that be - call centre isn't it? Also online website doesn't recognise my address from my existing certificates so can't order online.

Same issue. Android phone is currently auto redialing... again & again & again...

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Am I the only one who is still nervous about rushing in for this product?

From my limited understanding, nsandi only pay the difference between the RPI as of today and what it will end up 1 year from now + 0.5%.

So inorder to beat current average saving rates (2.5%), in one years time the RPI will need to be at least 2% higher. RPI is 5.3% with new results released 17th May 2011.

Ignoring last month, the dates previously when RPI hit 5.3% are between:

Aug 1988 and July 1991

http://www.statistics.gov.uk/downloads/theme_economy/RP04.pdf

To look at it another way the difference in RPI between April 2010 and April 2011 is just +0.9%

Prior to that, the largest jump was between March 1988 and March1989 which equates to 4.5% increase between the two years at a time when BOE rates went from 8.38% to 12.88%.

Thoughts?

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Thoughts?

I think you are mistaken. It will be index linked to RPI (+ Interest)

To link it to the change in the rate of RPI would be extremely strange and I'm sure would have been picked up on.

Unless you can find a link which states that explicitly?

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I think you are mistaken. It will be index linked to RPI (+ Interest)

To link it to the change in the rate of RPI would be extremely strange and I'm sure would have been picked up on.

Unless you can find a link which states that explicitly?

Thanks - I am mistaken.

So just to clarify, current RPI is 5.3 which means as a minimum I would earn 5.3%+0.5%?

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Could be...

inflation_0510_2.jpg

Mortgage servicing costs or interest rates can't go any lower so I don't think we'll see a repeat of 2008 in the RPI. The OER portion will have an impact obviously, but to a lesser extent.

Thanks - I am mistaken.

So just to clarify, current RPI is 5.3 which means as a minimum I would earn 5.3%+0.5%?

Nope, it's got nothing to do with what the headline RPI rate is at the moment. You get the % change in the index every year whilst you hold your certificate. Say the index is 100 when you invest, and one year down the line the index is 101. So your certificate only increases in value by 1%, plus a small kicker (read the NSI website for how the 0.5% bonus is calculated).

I guess these are the least toxic thing you can do with sterling. Unless there are some heavy-handed rule changes brought on by a financial crisis, these things are pretty damn liquid, so I'm comfortable keeping my 'dry powder' in this form.

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That's what I was thinking. Put housing into the "basket" and it can completely overshadow commodity surge as the means to domestic credit are removed.

Fine

Then I'll pull my money out and stick it somewhere else. If that happens within a year I stand to lose my interest but, given the interest my deposit account is paying, my opportunity cost is somewhere in the region of biff all

I just moved a chunk of cash online from my deposit a/c to my current a/c in anticipation of applying for a certificate and my transaction was interrupted by a message saying something like 'Looking for a better savings rate? Give us a call on xxxxxx and maybe we can help'

Yes, yes I am

No, no you can't

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      • down 5% +
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