We’d like to remind Forumites to please avoid political debate on the Forum.

This is to keep it a safe and useful space for MoneySaving discussions. Threads that are – or become – political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.

📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
The Forum now has a brand new text editor, adding a bunch of handy features to use when creating posts. Read more in our how-to guide

NS&I. How long to invest

Catswhiska
Catswhiska Posts: 103 Forumite
in Savings & investments
I have a good lump sum to invest after selling an inheritanced house. I am looking at NS&I guaranteed income bonds. In view of predicted rate rises do I go for 3 years at 2.15% or a year at 1.45%. We don’t need to access the money.
«1

Comments

  • Audaxer
    Audaxer Posts: 3,552 Forumite
    Eighth Anniversary 1,000 Posts Name Dropper
    If you don't need access to the money, the NS&I Guaranteed Growth Bonds may be a better option as 2.2% for 3 years or 1.5% for 1 year. There is only a 90 day interest penalty on any early withdrawals, so if you go for the 3 year bond and need to take the funds out after a year, I think you would still earn more with the interest penalty than the matured one year bond.
  • Neil_Jones
    Neil_Jones Posts: 9,800 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    The Growth bond mentioned above is capped at £3000 maximum and you can only have one of them.

    The Guaranteed Income Bonds mentioned by the OP also does allow early withdrawal subject to 90 days, the vast majority of NS&I products work this way. But you can have multiples of them.
    https://www.nsandi.com/guaranteed-income-bonds wrote:
    Can I withdraw money?

    Yes, before the end of the term you can cash in all or part of your Bond online, by phone or by post with no notice. We will deduct a penalty equal to 90 days interest on the amount you cash in. This means that if you cash in within 90 days of buying your Bond, you'll get back less than you invested. You need to keep a balance of at least £500 to keep your Bond open.

    This works out to an interest penalty of about £16 for every £3k IIRC.
  • Catswhiska
    Catswhiska Posts: 103 Forumite
    Audaxer wrote: »
    If you don't need access to the money, the NS&I Guaranteed Growth Bonds may be a better option as 2.2% for 3 years or 1.5% for 1 year. There is only a 90 day interest penalty on any early withdrawals, so if you go for the 3 year bond and need to take the funds out after a year, I think you would still earn more with the interest penalty than the matured one year bond.

    Want the monthly income, hence looking at this one
  • msallen
    msallen Posts: 1,494 Forumite
    Tenth Anniversary 1,000 Posts Name Dropper
    Neil_Jones wrote: »
    The Growth bond mentioned above is capped at £3000 maximum and you can only have one of them.

    Close. It's capped at £1m and you can have as many as you want up to that total.
  • Audaxer
    Audaxer Posts: 3,552 Forumite
    Eighth Anniversary 1,000 Posts Name Dropper
    Neil_Jones wrote: »
    The Growth bond mentioned above is capped at £3000 maximum and you can only have one of them.
    No it's not. The new Guaranteed Growth Bond they launched in November has a maximum investment limit of £1m.
  • Audaxer
    Audaxer Posts: 3,552 Forumite
    Eighth Anniversary 1,000 Posts Name Dropper
    Catswhiska wrote: »
    Want the monthly income, hence looking at this one
    Same applies to the Guaranteed Income Bonds - that it would be better going for the 3 year option even if you need the money after a year.
  • ColdIron
    ColdIron Posts: 10,330 Forumite
    Part of the Furniture 10,000 Posts Hung up my suit! Name Dropper
    Audaxer wrote: »
    No it's not. The new Guaranteed Growth Bond they launched in November has a maximum investment limit of £1m.
    That's right, it's the old Investment Guaranteed Growth Bonds that have the £3,000 cap. Silly name as it's a cash product
  • dont_use_vistaprint
    dont_use_vistaprint Posts: 990 Forumite
    Part of the Furniture 500 Posts Photogenic Name Dropper
    I think what you are asking is the likelihood of making more interest with 1+3 , not advice on penalty charges or bond types ...

    Personally, right now I'd go for one year.
    The greatest prediction of your future is your daily actions.
  • Catswhiska
    Catswhiska Posts: 103 Forumite
    dont_use_vistaprint wrote: »
    I think what you are asking is the likelihood of making more interest with 1+3 , not advice on penalty charges or bond types ...

    Personally, right now I'd go for one year.
    Yes my thoughts if rates rise in the next year? will they exceed the 2.15% offered now within the 3 years though.
  • ColdIron
    ColdIron Posts: 10,330 Forumite
    Part of the Furniture 10,000 Posts Hung up my suit! Name Dropper
    edited 10 February 2018 at 1:11PM
    The point others are making is that if you take out the 3 year option at 2.15% and cash them in after 1 year you are still getting a better rate of interest (the equivalent of about 1.6%) than the 1.45% offered on the 1 year option. The penalty reduces further the longer you keep them
This discussion has been closed.
★ ★ ★ Meet your Ambassadors

🚀 Getting Started

Hi new member!

Our Getting Started Guide will help you get the most out of the Forum

Categories

  • All Categories
  • 354.3K Banking & Borrowing
  • 254.4K Reduce Debt & Boost Income
  • 455.4K Spending & Discounts
  • 247.2K Work, Benefits & Business
  • 603.9K Mortgages, Homes & Bills
  • 178.4K Life & Family
  • 261.4K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 16.1K Discuss & Feedback
  • 37.7K Read-Only Boards

Is this how you want to be seen?

We see you are using a default avatar. It takes only a few seconds to pick a picture.
Update Your Picture