NS&I Guaranteed Growth Bond

tara747
tara747 Posts: 10,238 Forumite
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in Savings & investments
I have some fixed-rate savers coming to an end, and am debating what to do with the money. I'm also concerned about the stability of the banking system and want my money to be safe.

I'm considering the NS&I Guaranteed Growth Bond - it pays 2.2% per year for 3 years. There's a 90-day interest penalty if I need early access, but even so.

Say I need all the money in 12 months' time. Even with the penalty, I'll still be quids in compared with the Direct Saver (0.7%) or most of the savings accounts on offer at the moment.

Thoughts???? Or does anyone have one?

https://www.nsandi.com/investment-guaranteed-growth-bonds
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Comments

  • Neil_Jones
    Neil_Jones Posts: 8,904 Forumite
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    Look at it this way:

    A year's interest is IIRC £66 on that. The penalty of 90 days interest is about £16. So if you had to cash the bond in in 12 months time you'd still gain £50.

    Nowhere else can you fix for three years with the option of early withdrawal for that interest rate on that penalty. Even in the ISA market a five year fix is 2.15% but with 180 days interest penalty this can be more costly.

    Therefore the NS&I Bond is a bit of a no brainer.
  • chockydavid1983
    chockydavid1983 Posts: 713 Forumite
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    Cool, looks like a decent option for those who've exhausted the best current accounts/ regular savers.
  • EachPenny
    EachPenny Posts: 12,239 Forumite
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    chockydavid1983 wrote: »
    Cool, looks like a decent option for those who've exhausted the best current accounts/ regular savers.
    Perhaps, but if you've exhausted the best current accounts/regular savers then that's a lot of cash you've spread around already, in which case you'd probably be someone with a high level of confidence in the banking system.... which the OP doesn't seem to have.

    The other factor is new accounts are starting up on a regular basis, so for example in less than two month's time it is likely Virgin will have another two regular savers at 2.25% (perhaps more if the base rate increases). So in the first month there the OP (assuming all other options had been used) would have an extra £500 earning 2.25% rather than fixed at 2.2% with NS&I.

    The OP also mentions the ability to get at the money, and whilst beating the 0.7% easy access rate after year 1 is possible, the OP should actually be comparing with something like Tesco or Ford Money where easy access pays 1.1x%.
    tara747 wrote: »
    I have some fixed-rate savers coming to an end, and am debating what to do with the money. I'm also concerned about the stability of the banking system and want my money to be safe.

    Thoughts???? Or does anyone have one?

    So long as you keep your deposits below £85k with a FSCS institution then your money will be safe. For added protection many people split their money between different banking groups which means even if one has problems and there is a delay in accessing funds, one of the other banks should still be functioning and you'll be able to access some of your money with no disruption.

    The Guaranteed Growth Bond is not a bad account, it just isn't a particularly good one unless you have quite specific financial circumstances. Unless I'm misreading your post I'm not sure those circumstances apply to you. :)
    "In the future, everyone will be rich for 15 minutes"
  • tara747
    tara747 Posts: 10,238 Forumite
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    Neil_Jones wrote: »
    Look at it this way:

    A year's interest is IIRC £66 on that. The penalty of 90 days interest is about £16. So if you had to cash the bond in in 12 months time you'd still gain £50.

    Nowhere else can you fix for three years with the option of early withdrawal for that interest rate on that penalty. Even in the ISA market a five year fix is 2.15% but with 180 days interest penalty this can be more costly.

    Therefore the NS&I Bond is a bit of a no brainer.

    Yeah, that's what I'm thinking. Even with the penalty, it's still a good product in the current market.

    EachPenny wrote: »
    Perhaps, but if you've exhausted the best current accounts/regular savers then that's a lot of cash you've spread around already, in which case you'd probably be someone with a high level of confidence in the banking system.... which the OP doesn't seem to have.

    The other factor is new accounts are starting up on a regular basis, so for example in less than two month's time it is likely Virgin will have another two regular savers at 2.25% (perhaps more if the base rate increases). So in the first month there the OP (assuming all other options had been used) would have an extra £500 earning 2.25% rather than fixed at 2.2% with NS&I.

    The OP also mentions the ability to get at the money, and whilst beating the 0.7% easy access rate after year 1 is possible, the OP should actually be comparing with something like Tesco or Ford Money where easy access pays 1.1x%.

    So long as you keep your deposits below £85k with a FSCS institution then your money will be safe. For added protection many people split their money between different banking groups which means even if one has problems and there is a delay in accessing funds, one of the other banks should still be functioning and you'll be able to access some of your money with no disruption.

    The Guaranteed Growth Bond is not a bad account, it just isn't a particularly good one unless you have quite specific financial circumstances. Unless I'm misreading your post I'm not sure those circumstances apply to you. :)

    I know I'm being a scaremonger, but I actually fear a scenario in which a major bank collapses and the FSCS doesn't have enough money to pay out. Isn't it paid for by the remaining banks?

    The other point is that I'm looking for somewhere to put around £100,000, so regular savers just won't cut it.
    Get to 119lbs! 1/2/09: 135.6lbs 1/5/11: 145.8lbs 30/3/13 150lbs 22/2/14 137lbs 2/6/14 128lbs 29/8/14 124lbs 2/6/17 126lbs
    Save £180,000 by 31 Dec 2020! 2011: £54,342 * 2012: £62,200 * 2013: £74,127 * 2014: £84,839 * 2015: £95,207 * 2016: £109,122 * 2017: £121,733 * 2018: £136,565 * 2019: £161,957 * 2020: £197,685
    eBay sales - £4,559.89 Cashback - £2,309.73
  • tara747
    tara747 Posts: 10,238 Forumite
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    Thanks for all your input so far!
    Get to 119lbs! 1/2/09: 135.6lbs 1/5/11: 145.8lbs 30/3/13 150lbs 22/2/14 137lbs 2/6/14 128lbs 29/8/14 124lbs 2/6/17 126lbs
    Save £180,000 by 31 Dec 2020! 2011: £54,342 * 2012: £62,200 * 2013: £74,127 * 2014: £84,839 * 2015: £95,207 * 2016: £109,122 * 2017: £121,733 * 2018: £136,565 * 2019: £161,957 * 2020: £197,685
    eBay sales - £4,559.89 Cashback - £2,309.73
  • ab56
    ab56 Posts: 46 Forumite
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    Hi Tara


    Unfortunately the maximum you can deposit in the NS & I bond you refer to is only £3000.
  • ColdIron
    ColdIron Posts: 8,995 Forumite
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    tara747 wrote: »
    I know I'm being a scaremonger, but I actually fear a scenario in which a major bank collapses and the FSCS doesn't have enough money to pay out. Isn't it paid for by the remaining banks?
    In the unlikely event that the FSCS or the BoE cannot offer full protection and a major bank fails, you (and we) will suffer the consequences whether or not you have a few grand with them
    The other point is that I'm looking for somewhere to put around £100,000, so regular savers just won't cut it.
    And the NS&I Guaranteed Growth Bond will?
  • Stubod
    Stubod Posts: 2,162 Forumite
    First Anniversary First Post Name Dropper
    ..yep ..a great product, "and a no brainer" for a safe "investment , (we have one each), ..but again you are only allowed to put £3k max into it... :(
    .."It's everybody's fault but mine...."
  • jimjames
    jimjames Posts: 17,580 Forumite
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    ab56 wrote: »
    Hi Tara


    Unfortunately the maximum you can deposit in the NS & I bond you refer to is only £3000.

    Their website is very misleading. Under the reasons there is absolutely no mention of maximum limits, just that you need more than £100
    Remember the saying: if it looks too good to be true it almost certainly is.
  • Stubod
    Stubod Posts: 2,162 Forumite
    First Anniversary First Post Name Dropper
    ..sorry to disagree, but I looked on each page and the £3,000 max limit is mentioned on all of them as far as I can see.....but yes it is extremely disappointing since they no longer offer any index linked bonds either (and these had a more reasonable "cap" of £15k....)
    .."It's everybody's fault but mine...."
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