Savings if you have any - Index linked Certificates


Index linked certificates were introduced during the period of high inflation in the seventies. The rate of inflation was then much higher than the rate of interest you could normally earn. So savings declined in value. In 2009 the Government introduced index-linked certificates for pensioners where the interest rate was guaranteed to match the decline in value caused by inflation.

However, the rate of inflation fell and was soon below interest rates again. So the attraction of index-linked certificates declined. However, the Government made them more attractive by offering bonuses. The current issue, the 8th, offers a bonus of more than 8% on top of inflation over five years.

The income from index-linked certificates, like that from ordinary savings certificates, is free of all income tax and capital gains tax. And there are similar penalties for cashing them in early.

If you worry that inflation will rise again within five years, these certificates may be attractive to you, especially if you pay tax at the higher rate or lose some age allowance because of your income.

You buy these index-linked certificates at a post office and you can obtain a leaflet about them there.


What next:

Savings if you have any - Premium Bonds


Premium bonds were introduced in 1956 Interest is not paid to investors directly. Instead it goes into a prize draw and the holders of the bonds are eligible for the prizes. Today 89 million people hold at least one bond. Most prizes are 90 but the top monthly prize is now 1890000 and there are weekly prizes of £100,000, 90000 and 10 ,000.
Although the premium bond is a lottery, your capital is not at risk. You can withdraw your investment intact at any time.
The lottery simply determines how the interest is shared out. At the moment, the total premium bond investment earns interest annually at 7%. That amounts to over 11 million a month. Every bond has a fixed chance of 11000 to 1 in each . . . ... see: Savings if you have any - Premium Bonds