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NS&I closes index-linked savings certificates Go compare with our comparison table

NS&I closes index-linked savings certificates

07 September 2011 / by Oliver Roylance-Smith

National Savings & Investments (NS&I) announced today that is has withdrawn its Savings Certificates from general sale.

The Index-Linked Savings Certificates had proved particularly popular with nearly 500,000 transactions into the latest issue in recent months. More of a concern however is the gap left by its removal which highlights the challenges facing savers who are looking to beat inflation.

Head of savings and investments at Fair Investment Company, Oliver Roylance-Smith, considers the current economic environment and the various options available.

Fixed rates falling short

“Low interest rates, increased inflation and anaemic growth is a toxic combination for both savers and investors alike, and with the Retail Price Index running at 5%, the outlook is bleak. Fixed rate savings provide us with a fair benckmark, but even here you need to make sure you are confident in the institution itself and with an increasing number of new entrants, it might be prudent to go with a name you are familiar with.”

“However, conventional savings accounts such as these are falling short with no rate available getting close to beating inflation, even if you can tie up your capital for the longer term. So the challenge is to find an attractive alternative and the decision, although tough, is a simple one – either lose money in real terms or take more risk”.

Alternative options

He concludes: “the ideal here is to have the opportunity to receive an income over and above inflation whilst not putting your capital at risk any more than you would with a savings account."

"One such alternative is the FTSE Income Deposit Plan from Meteor which provides the opportunity of 7.5% per annum and also has a quarterly payment option available. Your capital is protected and although the income is not fixed, this is the trade off for the increased rate and you need put this in the context of the current economic landscape.”

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