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vinny

Beat Hpi

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Please reference the HPC " YOU ARE HERE" graph.

If believe in a HPC, cycles, history repeating, are prepared to accept low real returns, and are risk adverse this may be an ideal for you:

National savings and Investments Index-linked Saving certs.

If we look at previous HPC's, some involve small nominal drops, but say the 1974 crash was covered up by rampant inflation (as measured by the RPI). I know the way RPI is measured has changed, and I know it is flawed, but still I think my idea holds true.

Abbridged from the NS & I website.

"With inflation-beating Index-linked Savings Certificates, the value of your investment increases in line with inflation and earns guaranteed interest rates – with all your returns tax-free.

If you want to make sure your investment will grow ahead of inflation, tax-free

Minimum purchase £100

Maximum £15,000 per issue

Investment term Choice of terms — currently 3 and 5 years

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

Tax status Tax-free

Currently you can choose either a 3-year or a 5-year term. Or you can invest in both.

The rates of interest you’ll earn on top of inflation are fixed and guaranteed for the whole term. These fixed rates increase each year, so you’ll get the best return for your money if you keep your Certificates for the full term.

If you need to take money out before the end of the term, you can cash in your Savings Certificates whenever you like. Any returns you earn are still tax-free. Savings Certificates cashed in within the first year of investing don’t earn any index-linking or extra interest, so it’s best to keep them for at least a year. If you cash in Certificates any time after the first year, you will earn index-linking and extra interest for each complete month you’ve held them."

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Please reference the HPC " YOU ARE HERE" graph.

If believe in a HPC, cycles, history repeating, are prepared to accept low real returns, and are risk adverse this may be an ideal for you:

National savings and Investments Index-linked Saving certs.

If we look at previous HPC's, some involve small nominal drops, but say the 1974 crash was covered up by rampant inflation (as measured by the RPI). I know the way RPI is measured has changed, and I know it is flawed, but still I think my idea holds true.

Abbridged from the NS & I website.

"With inflation-beating Index-linked Savings Certificates, the value of your investment increases in line with inflation and earns guaranteed interest rates – with all your returns tax-free.

If you want to make sure your investment will grow ahead of inflation, tax-free

Minimum purchase £100

Maximum £15,000 per issue

Investment term Choice of terms — currently 3 and 5 years

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

Tax status Tax-free

Currently you can choose either a 3-year or a 5-year term. Or you can invest in both.

The rates of interest you’ll earn on top of inflation are fixed and guaranteed for the whole term. These fixed rates increase each year, so you’ll get the best return for your money if you keep your Certificates for the full term.

If you need to take money out before the end of the term, you can cash in your Savings Certificates whenever you like. Any returns you earn are still tax-free. Savings Certificates cashed in within the first year of investing don’t earn any index-linking or extra interest, so it’s best to keep them for at least a year. If you cash in Certificates any time after the first year, you will earn index-linking and extra interest for each complete month you’ve held them."

thanks but no thanks

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Whay do you say that?

I can perhaps understand people wanting a higher return etc. I can well understand why this would not be someone's cup of tea. BUT........

+I think this product MAY be ideal for, at least part of , a STR'ers portfolio.

+Looking at the HP cycle, investing in the 5 year bond at the top, would time the bottom well.

+ Your capital is protected from a bank going bust - "safe" cash ISA's may not be safe at at all. IMO there is a higher risk that (many) banks will colapse along with house prices. (Housing is a major part of their reserves, couple this with the other asset classes and derivative exposure they carry - we may see insolvent banks).

+ The best provider of safe "deflationary scenario" products in the UK (see above point). THOUGH I DON'T THINK THAT NS&I PRODUCTS ARE 100% SAFE!!!!!!!!!!!

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I thought about this, but then decided against it. You cannot rely on the government's idea of the rate of inflation. I think inflation is much higher at least 7% (the cost of stuff especially houses doubles at this rate in 10 years; which is about right for houses, forget about cheap foreign imports). So the return at the moment is like 1-2% (or something crap), which would not have protected your capital in the last 10 years.

I haven't looked into this properly but this is my take on it.

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I thought about this, but then decided against it. You cannot rely on the government's idea of the rate of inflation. I think inflation is much higher at least 7% (the cost of stuff especially houses doubles at this rate in 10 years; which is about right for houses, forget about cheap foreign imports). So the return at the moment is like 1-2% (or something crap), which would not have protected your capital in the last 10 years.

I haven't looked into this properly but this is my take on it.

The returns (nominal) are higher than you think (about 4% at the moment - and rising). This would at least kept in touch with HPI over the last year (probably already beating HPI on a compound basis when we strip out the flawed VI indices).

Let me be ultra clear - I have not suggested that your capital would have been protected looking backwards 10 years. I'm saying that your capital earmarked for buying a house WILL not only be protected from HOUSE PRICE INFLATION over the next 5 years or so, but IF history is a good guide -then infact it will out perform HPI by a considerable margin at very little risk.

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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