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August 2017

With interest rates on savings at historic lows, investors holding some of their assets in cash have been hit hard. But the Chancellor has recently announced new fixed-rate savings bonds available through National Savings and Investments (NS&I), the state-owned savings bank. Could this be the answer savers are looking for?

What do these Guaranteed Growth Bonds offer?

The new bonds, which are on sale until 10 April 2018, offer the following key features:

  • fixed interest rate of 2.20%, paid annually
  • three-year term
  • minimum balance of £100
  • maximum investment of £3,000 per person
  • available to customers aged 16 or over
  • online application only
  • early withdrawals are possible, with a penalty of 90 days’ interest on the amount cashed in

Are Guaranteed Growth Bonds right for you?

At Ascot Lloyd, we always recommend investors hold a certain amount in cash, but it makes sense to earn the maximum interest possible on that cash. We believe these new bonds offer one of the best rates out there. Plus, because NS&I is backed by the government, the chance of default is (hopefully) low – meaning investors benefit from a strong rate and high level of protection.

Next steps for investors

The first thing to do is check the rates of interest being paid on your cash accounts. If you’re not receiving an appropriate level of interest, consider purchasing an NS&I fixed-rate bond. The offer is particularly attractive for couples, since you could invest up to £3,000 per person and receive more interest on your £6,000 than you would with a standard savings account.

Keep in mind that, although these bonds are technically available until April 2018, we expect the take-up to be high and they could sell out sooner. It’s easy to apply; simply head to the NS&I website and complete the online application.

The Ascot Lloyd team is committed to helping our clients get the most out of their investments. Talk to our expert financial advisers to find out how we can support you.