Posted on May 28, 2010.
National Savings - the right option for you? When dealing with new customers, we often encounter Premium Bonds, but it's not very often that we see the many products offered by National Savings and Investments (NS & I).
Some NS & I returns are currently looking very attractive, and it may be worth a look at two such investments, Premium Bonds and savings certificates.
The purpose of NS & I savings accounts and offering bonds is to raise funds for the government. The different offers ranging from tax-free to the taxpayer, of course, are havens for your money because they are supported by the British government.
Nearly one quarter of all money invested in NS & I is held in Premium Bonds. Of course, strictly speaking, they are not investments, because they are based not on earning interest, but actually a lottery in the form of a monthly draw.
Of course, this means that you can be lucky or not. Odds of winning gives you a rate of 3.8% tax free.
But you do not risk the interest of the capital.
For a higher rate taxpayer, assuming the tax to 40%, there is an equivalent rate of 6.33% gross.
Now let's look at the savings certificates.
One problem for higher rate taxpayers is to have a big part of their earnings taxed at 40%. A major advantage of savings certificates is that they are tax exempt.
The fixed rate certificate, such as the option of 2 years, pays 3.95%. This appears to 6.58% for a higher rate taxpayer and 4.94% for a rate payer base. There is also an option of 5 years, which currently pays 3.85%.
Regarding certificates indexed, the picture is even more attractive. With the increase in inflation, on trial for such purposes, to 4.5%, the question 3 years yields 1.35% over this. This gives a net return of 5.85% per annum and a gross equivalent for a higher rate taxpayer 9.75%! The rate is also the same for over 5 years.
You can invest from £ 100 to £ 15,000 per issue, with no limit on reinvesting matured certificates.
You can learn more about NS & I nsandi.com
Key considerations:
Make sure you consider all the rates and products out there, especially if you pay higher tax. NS & I could be perfect for you, especially if you're in a phase of your life where you do not need to take any risks with your capital.
Now might be a good time to review all your investments in money and bond function.
