NS&I. How long to invest

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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.
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  • Audaxer
    Audaxer Posts: 3,508 Forumite
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    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: 8,913 Forumite
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    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
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    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
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    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: 3,508 Forumite
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    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: 3,508 Forumite
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    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: 9,054 Forumite
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    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: 601 Forumite
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    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.
    "It is not the critic who counts..." - Theodore Roosevelt
  • Catswhiska
    Catswhiska Posts: 103 Forumite
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    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: 9,054 Forumite
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    edited 10 February 2018 at 1:11PM
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    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
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