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View Poll Results: Which will do better?
RPI Bond 6 50.00%
CHF 1% deposit account 6 50.00%
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  #1  
Old 12.07.2011, 18:14
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CHF vs RPI bond

Which will perform better, the NS&I 5 year RPI bond, or Postfinance e-deposito account with 1% interest (consider only pre-tax performance for simplicity).

To be measured 5 years from 1.7.2011
FX exchange rates for comparison to be taken from oanda.com day average.
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Old 12.07.2011, 20:15
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Re: CHF vs RPI bond

would also be interested in hearing your reasoning.
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  #3  
Old 12.07.2011, 20:27
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Re: CHF vs RPI bond

Lines in the sand and all that... We're taking some directions here!

On the RPI side for someone investing on the first of july the index level is that of May. If anyone can find it on the ONS site please post it here as i'm on the IPhone and it's a pain!

I think that if after five years (if we're still around) and the result is tight we should take into consideration the tax rate.
Since the 0.5% aer is actually equivalent to 0.63% for the basic rate tax payer and 0.83% for a higher rate tax payer. For the post-finance account to really outperform the rpi certificate the pound has to go down by more than inflation year on year for the next five years...

Somehow I really don't see that happening...
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  #4  
Old 12.07.2011, 20:34
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Re: CHF vs RPI bond

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Lines in the sand and all that... We're taking some directions here!

On the RPI side for someone investing on the first of july the index level is that of May. If anyone can find it on the ONS site please post it here as i'm on the IPhone and it's a pain!

I think that if after five years (if we're still around) and the result is tight we should take into consideration the tax rate.
Since the 0.5% aer is actually equivalent to 0.63% for the basic rate tax payer and 0.83% for a higher rate tax payer. For the post-finance account to really outperform the rpi certificate the pound has to go down by more than inflation year on year for the next five years...

Somehow I really don't see that happening...
tax is ignored. in any case, you should pay the same swiss tax on both.
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Old 05.07.2012, 11:42
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Re: CHF vs RPI bond

Reviving this old thread, I know we were supposed to check it after 5 years but I guess the RPI bond is a clear winner so far.

if you had bought the RPI bond on the 01/07/2011, then you would get 3.74% (Tax free) on your savings, compared to 1% in the e-Deposito account.

I actually opened mine in may, so the rate is even higher at 4.57%.

Good if you can get it, unfortunately you can only stick maximum 15k in this until the next issue.

Inflation is expected to fall, but how many times did the BoE get their predictions wrong, and given the current circumstances and expected stimulus, inflation might even go up a notch.

Link to the online calculator: here
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Old 07.07.2012, 11:07
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Re: CHF vs RPI bond

are these available in CH? swissquote for example?
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  #7  
Old 07.07.2012, 13:03
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Re: CHF vs RPI bond

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are these available in CH? swissquote for example?
I dunno, you'll have to look for RPI / CPI linked bonds.

The ones we were discussing as you probably know are from www.nsandi.com, which is a UK goverment agency which is fully backed by the treasury. The issue was fully subscribed so you'll have to wait until the next issue. In any case inflation is expected to fall, but as RPI includes mortgage interest payments, any rises in interests over the next 4 years will be reflected in the RPI in the short term.
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Old 08.07.2012, 09:24
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The answer is basically dependent on your view of the long term CHF GBP exchange rate. When I moved to CH 13 years ago it was over 3, now 1.5 artificially supported by the SNB peg to the EUR.

Personally I see little reason for the trend not to continue once the peg floodgates break in due course.
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  #9  
Old 08.07.2012, 10:09
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The answer is basically dependent on your view of the long term CHF GBP exchange rate. When I moved to CH 13 years ago it was over 3, now 1.5 artificially supported by the SNB peg to the EUR.

Personally I see little reason for the trend not to continue once the peg floodgates break in due course.
Not true , there have not been 3 chf to the at any point in the last 13 years.
When I arrived 18 years it was 1.8 went to 2.6 , low was 1,20 kast year now 1.50
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Old 08.07.2012, 15:25
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Re: CHF vs RPI bond

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Not true , there have not been 3 chf to the at any point in the last 13 years.
When I arrived 18 years it was 1.8 went to 2.6 , low was 1,20 kast year now 1.50
You are right, it was 2.70 in May 1992. Memory play tricks. But it was as high as 4 in 1982 and 3 in 1986.

Nevertheless, the decline is steady and inevitable given the long term differences in inflation rates. Add in distortions in purchasing power vs parity and I maintain the answer to the question on any given day sometime in the future is more of an FX punt than anything. Look at all the wisecracks who used to have JPY mortgages.

My reco would be to invest in the product that corresponds to the currency you want to eventually spend the money in.
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Old 08.07.2012, 16:21
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Re: CHF vs RPI bond

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You are right, it was 2.70 in May 1992. Memory play tricks. But it was as high as 4 in 1982 and 3 in 1986.

Nevertheless, the decline is steady and inevitable given the long term differences in inflation rates. Add in distortions in purchasing power vs parity and I maintain the answer to the question on any given day sometime in the future is more of an FX punt than anything. Look at all the wisecracks who used to have JPY mortgages.

My reco would be to invest in the product that corresponds to the currency you want to eventually spend the money in.
Of course London property is more than 10 times what it was in in 1982, & the prices in CH are not hugely different. There is a huge more involves than just the exchange rate when it comes to investment. I doubt London property will de very well for the next 30 years, unless it falls at least 50% quickly.

Over the last 30 years, most stock markets would have been the place to invest,investing the income would have more than doubled the investment V the index alone of course gold performing rather badly.
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Old 08.07.2012, 16:31
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The OP asked about the relative performance of two fixed income products, one RPI linked the other also with c. zero real yield based on CH inflation rates.

You are talking about a totally different asset classes!?
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Old 08.07.2012, 17:26
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Re: CHF vs RPI bond

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The OP asked about the relative performance of two fixed income products, one RPI linked the other also with c. zero real yield based on CH inflation rates.

You are talking about a totally different asset classes!?
I am assuming the OP actually wants to retain the value of his investments over time due to inflation & currency loss. Risk free investmenzs are anything but over time......
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Old 08.07.2012, 20:27
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Re: CHF vs RPI bond

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Reviving this old thread, I know we were supposed to check it after 5 years but I guess the RPI bond is a clear winner so far.

if you had bought the RPI bond on the 01/07/2011, then you would get 3.74% (Tax free) on your savings, compared to 1% in the e-Deposito account.

I actually opened mine in may, so the rate is even higher at 4.57%.

]
So in other words a 2.74% annual return premium has to cover unlimited FX risk.

GOOD LUCK.
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Old 27.05.2013, 13:48
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Re: CHF vs RPI bond

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So in other words a 2.74% annual return premium has to cover unlimited FX risk.

GOOD LUCK.

No one was saying it was risk free The FX risk is actually limited so you can only lose what you put in (i.e. GBP/CHF going to zero which has a chance of 1 in a billion, don't quote me on that ) Upside is actually the unlimited part as GBP/CHF could be higher than the starting point in July 2011.

15k invested on 1st of July 2011 is now worth 16k according to the NS&I calculator. which is 6.66% in just under 2 years. FX rate is almost unchanged in 2 years. So even after 2 years it's more than what you would get here.

Good luck with e-Deposito
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Old 27.05.2013, 14:21
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Re: CHF vs RPI bond

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No one was saying it was risk free The FX risk is actually limited so you can only lose what you put in (i.e. GBP/CHF going to zero which has a chance of 1 in a billion, don't quote me on that ) Upside is actually the unlimited part as GBP/CHF could be higher than the starting point in July 2011.

15k invested on 1st of July 2011 is now worth 16k according to the NS&I calculator. which is 6.66% in just under 2 years. FX rate is almost unchanged in 2 years. So even after 2 years it's more than what you would get here.

Good luck with e-Deposito
I think e-Deposito reduced their rates meaning the return on that is even worse now.

The SNB brought in a currency floor limiting the FX downside. We'll see how the floor pans out in the next few years



obviously things were looking a bit different prior to the SNB actions.

a move of 1.45 to 1.35 would wipe out the entire gains made on the NS&I.

Last edited by Phil_MCR; 27.05.2013 at 15:40.
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Old 27.05.2013, 15:30
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Re: CHF vs RPI bond

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a move of 1.45 to 1.35 would wipe out the entire gains made on the NS&I.
For me that risk is equally offset by possible move of 1.45 to 1.55, in fact I'd go as far as saying the GBP is more likely to go to 1.55 than to 1.35 but that's just my opinion I suppose.
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Old 27.05.2013, 15:39
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Re: CHF vs RPI bond

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For me that risk is equally offset by possible move of 1.45 to 1.55, in fact I'd go as far as saying the GBP is more likely to go to 1.55 than to 1.35 but that's just my opinion I suppose.
while the peg is in place, i'd agree with you.
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Old 04.05.2016, 17:58
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Re: CHF vs RPI bond

So just reviving this thread to settle some old bets / scores

For someone who put money into these RPI Linked Certificates from NS&I back in 2011 around the time we started this thread (I got mine in May 2011). The certificate is just about to mature with a value of around 17680 from an original investment of 15000. That's the equivalent of 3.35% yearly compounded over 5 years.

Given that the certificates had 0.5% interest and the rest was inflation as measured by RPI (which coincidentally has been higher than CPI for most of the 5 year period), it's quite interesting to see the effects of inflation!

Interesting to see that the GBP/CHF rate is also quite close to what it was back then in 2011 despite the Brexit fears.

Anyone else got one of these? Will you cash or let it renew automatically?

Note that when you renew now the interest part has been reduced to 0.01% and any renewed certificates would lose both index-linking + interest for the whole year if you cash them in early as opposed to just the 90 day interest in previous issues.

More info: here
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Old 04.05.2016, 18:11
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Re: CHF vs RPI bond

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So just reviving this thread to settle some old bets / scores

For someone who put money into these RPI Linked Certificates from NS&I back in 2011 around the time we started this thread (I got mine in May 2011). The certificate is just about to mature with a value of around 17680 from an original investment of 15000. That's the equivalent of 3.35% yearly compounded over 5 years.

Given that the certificates had 0.5% interest and the rest was inflation as measured by RPI (which coincidentally has been higher than CPI for most of the 5 year period), it's quite interesting to see the effects of inflation!

Interesting to see that the GBP/CHF rate is also quite close to what it was back then in 2011 despite the Brexit fears.

Anyone else got one of these? Will you cash or let it renew automatically?

Note that when you renew now the interest part has been reduced to 0.01% and any renewed certificates would lose both index-linking + interest for the whole year if you cash them in early as opposed to just the 90 day interest in previous issues.

More info: here
I'm too lazy, please give the CHF equivalent for comparison :P

EDIT: OK. not so lazy

on 1.5.11 15kgbp = 15k*1.4026 = 21'039
on 1.5.16 17680gbp * 1.4009 = 26'767

if you'd compounded at 1% for 5 years, the 21'039 would be 22'112.

so 4-5k difference.

Last edited by Phil_MCR; 04.05.2016 at 18:23.
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