Yes, I know I keep having a go at National Savings & Investments, but it’s not that I’m prejudiced – it’s that they’re less than generous with some of their products. I used to tell people and particularly higher rate tax payers what excellent value this investment provided. Unfortunately ... Read review
Advantages: A safe investment which is particularly advantageous for the higher rate taxpayer. Disadvantages: Rates of interst paid are not generous but are partly inflation-linked.
...keep having a go at National Savings & Investments, but it’s not that I’m prejudiced – it’s that they’re less than generous with some of their products. I used to tell people and particularly higher rate tax payers what excellent value this investment provided. Unfortunately they seem to have realised and the returns offered have fallen.
Let me explain to you how Index-Linked Savings Certificates work. You need a minimum investment ... ...did you? This is National Savings!) but it is tax-free. At the moment the Two Year Bond pays Index-linking plus 0.5% AER and the Five Year Bond pays Index-linking plus1% AER. Although it looks as though the 2 year Bond is a good bet there’s no guarantee that you’ll get the same or better deal at the end of the two years, so the 5 year Bond is better if you feel that interest rates are likely to continue falling and they’ve fallen again this week ... more
Yes, I know I keep having a go at National Savings & Investments, but it’s not that I’m prejudiced – it’s that they’re less than generous with some of their products. I used to tell people and particularly higher rate tax payers what excellent value this investment provided. Unfortunately they seem to have realised and the returns offered have fallen.
Let me explain to you how Index-Linked Savings Certificates work. You need a minimum investment of £100 and the maximum amount in each issue is £10,000. You need to be able to put the money away for a fixed term of either two years or five years. Now the problem with most fixed-term investments is that inflation eats into the buying-power of the money you’ve invested. You may have earned net interest of 2.5% on your Building Society account, but if inflation has been more than that your money, even with the interest, is actually worth less than when you first invested it. Index-linked Savings Certificates pay tax-free interest PLUS index-linking, so you can be certain that your investment will actually be worth more at the end of the fixed term than it was at the beginning. It will be worth more in real terms – you will actually be able to BUY more with the money.
Now the rate of interest paid is not generous (well, you didn’t think it would be, did you? This is National Savings!) but it is tax-free. At the moment the Two Year Bond pays Index-linking plus 0.5% AER and the Five Year Bond pays Index-linking plus1% AER. Although it looks as though the 2 year Bond is a good bet there’s no guarantee that you’ll get the same or better deal at the end of the two years, so the 5 year Bond is better if you feel that interest rates are likely to continue falling and they’ve fallen again this week to a 48-year low at 3.75%.
In case you’re wondering “AER” stands for Annual Equivalent Rate. It’s really only useful for comparison purposes but does tell you what the notional annual rate of interest would be if the interest was compounded each time it’s paid. There, that’s clear, isn’t it? No?
Let’s imagine that you’ve got £1000 to invest and there’s a choice of two investments each running for two years. The first one says “5% per annum” and the other says “10.1% paid at the end of two years”. On the face of it the second investment looks like the better bet, but it isn’t. If you’d invested £1000 in the first account it would be £1050 at the end of the first year and £1102.50 at the end of the second year because you’ve received interest on the interest you’ve already got. On the second account you end up with £1101. Obviously it’s a bit of a faff to have to work all this out so an AER figure has to be provided. In the case of the two accounts I was using as examples the first one would say “AER 5%” but the second one would say “AER 4.93%” so it would be immediately obvious which account paid the better rate of interest.
Whilst we’re talking about definitions, we’d better be clear that we understand what’s meant by “tax-free”. I don’t mean that the interest that you get has already had tax deducted – as automatically happens with Bank and Building Society accounts. I mean that there’s no tax liability: no Income Tax and no Capital Gains Tax implications at all. There are no circumstances in which you have to pay any tax on the certificates and you don’t even have to show them on your Tax Return. This is useful if you’re a pensioner getting an increased tax personal allowance which would be reduced if taxable income increased.
An investment in Index Linked Savings Certificates doesn’t affect any other tax-free holding that you might have, such as PEPs, TESSAs and ISAs. You can hold these investments in addition to the Index-Linked certificates. Investment in these products doesn’t limit any sums which you might wish to invest in an ISA. This is particularly useful at a time when the Stock Market is going through a rocky patch – to say the least – and net returns guaranteed to beat inflation are hard to come by. This is a reasonable investment for the Higher Rate tax payer. If we assume inflation to be running at about 2.7% only an investment guaranteed to pay in excess of 5.33% gross for the two-year Bond and 6.17% gross for the five year Bond could match these returns. I’d be very sceptical about any investment making those sorts of claims in the current economic climate, but the Index-linked Certificates are rock-solid – they’re backed by the British Government! The comparative returns are less generous for a basic rate taxpayer at 4.05% for the two-year Certificate and 4.625 for the five-year. This might look reasonable against the current interest rates but it’s difficult to imagine interest rates remaining this low for the full term of the certificate.
These certificates can be bought for a child – even one under the age of seven. The child will have control of the investment from the age of seven. Contrast this with the National Savings Children’s Bonus Bonds where the investment is controlled by the parent or guardian until the child is sixteen! The income payable is at least comparable and provided the capital was reinvested each time the certificate matures would remain a tax-free investment. The downside of the comparison is that these certificates have a minimum investment of £100 whereas the Bonus Bonds have a minimum investment of £25.
Charities, Friendly Societies, some clubs and voluntary bodies can also buy certificates. Groups such as these frequently have their surplus funds languishing in accounts which earn a derisory amount of interest – generally less than inflation – and this would be a good, safe home for such funds.
This is an investment that’s obviously best held for the full term, but you can get your money back at an earlier date if it’s necessary. If you cash in the certificate on maturity you get the full guaranteed return including index-linking. You can cash in all or part of the certificate at an earlier date but there’ll be no interest added if it’s cashed in the first year. If you require the money after the first year but before maturity you will receive interest and index-linking for each completed period of one month, so it will pay to watch the dates very carefully if you do need to withdraw the money before maturity.
Getting the investment back is simple – or as simple as anything is with National Savings. You should complete the form on the back of the Certificate, send this to National Savings & Investments in Durham, and you should receive a direct credit to your Bank account within eight working days of their receiving the request.
A lot of people will have old National Savings Certificates that they’ve had for years. You should check these carefully as many will be earning what is called the General Extension Rate. This is tax-free, but a poor rate – presently only 1.5% per annum AER. If you have such certificates you can ring National Savings on 0845 964 5000 to establish what rate of interest you’re receiving. The lines are open Monday to Friday 8 am to 8 pm and Saturday 9am to 1 pm. Calls are charged at local rate. These certificates can be reinvested into a current issue earning a better rate of interest, but it does require action on your part to obtain the improvement. You can reinvest matured certificates in addition to the £10,000. National Savings do now write to you when a Certificate matures to tell you of the options available to you, but this was not always done in the past.
Further information is available at the National Savings website – www.nationalsavings.co.uk. There is a facility to buy online but you will still need to sign and return a form which will be sent to you. This would also apply to applications made by telephone.
If you want to buy certificates the booklet “Linked” is available at Post Offices and this contains an application form and pre-paid envelope. If you chose to buy the certificates at a Post Office you should complete both parts of the form. The top part of the form will be date stamped and returned to you as a receipt. If you want to buy by post you are requested to complete both parts of the form and make your cheque out to “National Savings & Investments (Savings Certificates)” and then to send the bottom part of the form and your cheque to National Savings, retaining the top part of the form for your records.
You could always be daring and not complete the top bit.
To contact NS&I by post about Savings Certificates you should write to:
...reading the prospectus for the National Savings Ordinary Account and it’s the funniest thing I’ve read in a while. Now I don’t normally find such things funny, but this has to be read to be believed.
I’d better give you a bit of background so that you can appreciate the joke as well, hadn’t I?
This is the basic Instant Access Account provided by the Post Office. You get a passbook. “Keep track of your savings with your passbook” says the prospectus, ... ...you have to apply to National Savings in Glasgow and this, the prospectus says, can take a few days. You go to your Post Office and ask for a withdrawal form and pre-addressed envelope (not pre-paid then, one assumes?) You then send the completed form and passbook to Glasgow. They then send you either a crossed warrant (i.e. a cheque) or you can ask to collect the money in cash at a named Post Office.
You think that’s ridiculous, don’t you? Well, ...
SueMagee 18.09.2001
· Read full review
Ciao members have rated this review on average: very helpful Review of National Savings and Investments
Advantages: A tax free, safe, convenient place for your money. Disadvantages: Interest rate not quite "on the money"
...When I opened my National Savings Cash mini ISA in September 2001, the rate on offer was a healthy 5.2%. At the time this compared pretty favourably with anything else out there. As we know interest rates have fallen over the intervening period, and the current rate on offer from the good folks in Durham is just 3.8%. To borrow a catchphrase from Bargain Hunt, if you shop around you’ll soon realise this is not “on the money.” Read the papers, I’ve ... ...redeeming features?
Well firstly National Savings and Investments unique selling point is that its’ backed by HM Treasury. You are exceedingly unlikely to loose your money, full stop. Secondly, it’s pretty convenient to set up and operate the savings account. You can pick up an application form at any Post Office, or request a form over the phone. In researching this opinion I checked the website and there was also a facility to set up an account ...
argyle_dave 26.05.2003
· Read full review
Ciao members have rated this review on average: very helpful Review of National Savings and Investments
Advantages: Good interest rate and convenient to use Disadvantages: No online facility to date
I opened my National Savings Cash mini ISA in January 2002 with just £10 (the minimum payment).
A mini cash ISA allows you to pay in up to £3000 a year, and the interest you earn on it is tax free! At the time of writing, the interest rate on my National Savings ISA is 4.15%pa, and the interest earned is paid out annually.
Accessing the account is relatively straightforward. Money is paid in by post, telephone (with a debit card), at the post office ... ...least with a name like National Savings you know your money is safe!
The only real disadvantage I have found with this account is that it cannot be accessed online but hopefully National Savings will consider this in the not too distant future.
As well as ISA's, National Savings can offer Premium Bonds, Ordinary and Investment accounts, Childrens Bonds, Income Bonds and Savings Certificates, to name but a few.
I would definitely recommend National ...
natfox 08.06.2002
· Read full review
Ciao members have rated this review on average: very helpful Review of National Savings and Investments
Advantages: Easy to use. Constant reasonable interest rates. Disadvantages: You can find better interest rates if you're prepared to put some time and effort into it.
...year into.
First off, National Savings offer the only Cash ISA backed by a Treasury guarantee. I admit, the chances of your capital vanishing in most other Cash ISAs is very, very slim, but if you're planning to keep the cash in your ISA account building up compound interest for years or even decades, it's nice to know that the only way your capital can be at risk is if HM Treasury runs out of money. NS doesn't have the best interest rate out there. ... ...my room looking for my National Insurance number, it would probably have been less than a minute. Making payments into the account is also easy, you just take your paying in book to a Post Office and you can pay cash or a a cheque straight in. If you want to chase the best interest rates and constantly move your money to realise its full potential, then this account isn't worth a look. If you just want to throw a few hundred quid into an account ...
spiffo 11.05.2001
· Read full review
Ciao members have rated this review on average: helpful Review of National Savings and Investments
Advantages: Post Offices are everywhere Disadvantages: Not all banks are yet in the scheme
...place to go to purchase National Savings products. But did you also know that you can now operate some bank accounts through the Post Office? If you have a personal current account with any of the following - Barclays; Lloyds TSB; Co-Op Bank; Cahoot; Smile; and, of course, Alliance and Leicester, you can cash cheques and deposit funds at your local Post Office.To cash a cheque, simply write it out as normal to Cash or Self and present your chequebook ... ...cashed up to the limit of your card.) To deposit cash, just fill in your personal inpayment slip and hand it over with your deposit; the clerk will stamp your book as a receipt. If you wish to deposit cheques you will need to obtain a paying-in envelope from your bank, and enclose the cheque along with your completed inpayment slip and hand the clerk the sealed envelope. The service is secure and quick,and there is no charge. As more and more bank ...
Suzan 10.12.2000
· Read full review
Ciao members have rated this review on average: helpful Review of National Savings and Investments
Staff courtesy
Promptness of service
Efficiency of service
Competitiveness of char...
Similar reviews »
Reviews which might be of interest for "National Savings and Investments"
Advantages: could win up to £1million, can cash in at any time, secure Disadvantages: high minimum investment, no interest earned
I became interested in investing in NationalSavings products after learning about them in my financial studies, and with the recent drop in interest rates that have seen savings accounts become less worthwhile, a bit of diversification seemed reasonable.
What is NationalSavings?
NationalSavings is a government backed savings scheme. It's big selling point is that your money is guaranteed to be completely safe. This compares to only the first £50,000 of your money with the banks, however much you invest with nationalsavings it is completely secure. This makes no odds to me, as I'm not lucky enough to have that sort of money anyway, but it's useful to know! They offer various savings products - fixed term certificates through to children's bonus bonds.
What are Premium Bonds?
Most people will have heard ...
Advantages: Easily understandable way to gamble without loss Disadvantages: No interest obtained on money set aside in this way
do, it is tax-free.
I?ve never been attracted to the National Lottery or Lotto as we?re now encouraged to call it. I don?t like the hype. I don?t know enough about football to bother with the pools. Besides I don?t want the hassle of doing something each week for low odds of winning. I?m not superstitious about numbers. I?ve studied statistics. I haven?t got the nerve to go on ?Who wants to be a millionaire?? with or without a coughing companion. But I do like the idea that silently each month I?ve got a relatively efficient entry in a silent Lottery that has already proven that the winner just could be me. Even if I never win again, I shall enjoy spending this £50 on something special.
The NationalSavings and Investment (NS&I) website (formerly just NationalSavings) is a very well organized source of information, and I ...
Advantages: Risk free lottery Disadvantages: Return relies on having "average luck"
"There are two times in a man's life when he should not speculate: when he can't afford it, and when he can" - Mark Twain.
Premium Bonds are a curious affair; part investment and part gamble, they are an almost-lottery run through NationalSavings and Investments, and backed by the government itself. I had until recently paid scant attention to them, until a chance conversation with my mother revealed that I had in fact owned a set of Premium Bonds since my 1st birthday, when my parents decided that some money given as a gift by my grandparents would be better placed into the bonds than into the savings account that they had opened for me. Having suddenly discovered this new dimension to my investment portfolio, I headed off to find out more about them.
The Premium Bond scheme was started back in 1956, it turned out, when ...
![The Long and the Short of it: A Guide to Finance and Investment for Normally Intelligent People Who Aren't in the Industry [Abridged] [Audiobook] [Box set] [Illustrated] [Large Print] - John Kay](http://imagesb.ciao.com/iuk/images/products/small/085/The_Long_and_the_Short_of_it_A_Guide_to_Finance_and_Investment_for_Normally_Intelligent_People_Who_Aren_t_in_the_Industry_Abridged_Audiobook_Box_set_Illustrated_Large_Print_John_Kay__7057085.jpg)
