Nationwide new savings plan.

misgrace

I say its new, but could be an ongoing one for all I know, but I only heard about it the other day when I popped in to deposit some money in my ISA account.
So thought I would run it by you all and see who has done it, or what you think of it.

Correct me if I get some of it wrong, but apparently you can take out £3600, and put into a different account, but you cant touch it for 6 years.
They guarantee that you will get back a minimum of 5% the first years, or maybe they said the first two years, then it will either go up or down.

I am completey useless at understanding savings, and I have been reading through some of the posts the last few months trying to work out if I should change anyway and try and get a higher interest account, but in all honesty, its all double dutch to me.

I need to read up a bit more, and try and understand a bit more, but really dont want either NW or any other BS trying to get me to move my money, as obviously they want you to go with them.

Is the 'deal' I mentioned a good one, or is there better out there?

glider3560

I don't have time to read the full details and comment, but is this the product they tried to sell you? http://www.nationwide.co.uk/savings/bonds/guaranteedsavingsbond/introduction.htm

misgrace

Thankyou glider yes it is, I think it was the second one, but TBH, both go over my head :huh: as its all gobblygook to me, I really dont have a clue what they mean, or what is better, as I cant understand it, perhaps if they explained it more simpler, as though they are talking to a village idiot, I would understand lol

Jonbvn

It is a GEB, which are terrible products!

Avoid like the plague.

lisyloo

Hi Jon,

Can you please explain to me why you think GEBs are terrible products.

We currently have a mortgage at 0.99%.
We have £1800 each month to reduce our mortgage but so far we have put this into cash ISAs (4.05% and 3.24%).
We have now exhausted the cash ISA options and are looking at using equity ISAs rather than reducing the mortgage.
We are both 40% tax payers and have not so far had good experiences with investments. We are risk averse, don't want to lose our money but want more than 0.99%.

At the moment some form of guaranteed product within an ISA looks suitable.
I realise that better returns are possibly available with risk, but can you please explain to me why these are bad products for risk averse people who want a better return?

We don't want to take risks with our mortgage money and I know we could simply pay it off the mortage, but that seems silly when better rates can be had elsewhere.

It's not a trick question, we are trying to work out where to put this money currently and would be really interested in your explnation or any other suggestions you have.
BTW - we don't have any other debt (just anticipating the questions).

agsnu

Guaranteed Equity ISAs are not eligible to be placed in an Stocks and Shares ISA wrapper. The Nationwide GEISA product is actually Cash ISA. As you have already used your cash ISA allowance for this year, it sounds like you have been misadvised by the Nationwide.

For more information on what you can put in a S&S ISA, see the HMRC FAQ.

As for general thoughts on Guaranteed Equity Bonds (a type of structured product), see this thread (and many others if you search).

lisyloo

Guaranteed Equity ISAs are not eligible to be placed in an Stocks and Shares ISA wrapper. The Nationwide GEISA product is actually Cash ISA. As you have already used your cash ISA allowance for this year, it sounds like you have been misadvised by the Nationwide.

Thanks for the info (and links to other threads).
No, I haven't been mis-advised, just doing my own research and saw these could be put into ISAs and didn't realise it meant cash.
Thanks for pointing that out.
Will read the other threads.

Meanwhile any other suggestions?
apart from pay off the mortgage (which is one we're considering and doing whilst we research).

opinions4u

Meanwhile any other suggestions?

Regular saver accounts (e.g. Halifax, RBS, Lloyds or Nat West) paying 5% gross, 4% net, 3% after you've discharged your higher rate tax liability.

I know it's boring, but it's better to save at 3% than pay off debt at 0.99%.

Alternatively bang the rest in to Egg - 3.25% gorss, 2.60% net, 1.95% after discharging higher rate tax. Still nearly twice the benefit of the 0.99% benefit of mortgage debt reduction.

lisyloo

Thanks.
Yes that's certainly a good idea.

We are also going to talk to our advisor about equity ISA options.

lisyloo

Regular saver accounts (e.g. Halifax, RBS, Lloyds or Nat West) paying 5% gross, 4% net, 3% after you've discharged your higher rate tax liability.

Just thought I'd mention that I've noticed (on the Natwest one) that if you pay too little, too much, or miss a payment, or surrender early, then you lose the good rate and go onto a lower one.

Shouldn't be too hard on a direct debit, but circumstances can change, so just thought that's something people should be aware of, that one slip up and you lose the rate.
I expect that's how they manage to offer these rates.

Jonbvn

lisyloo wrote: »

Hi Jon,

Can you please explain to me why you think GEBs are terrible products.
other suggestions you have.

Because the return on GEB's is generally very poor. This is because the money is not actually invested in the FTSE. Therefore, you do not get any dividends from the money. If you investigate the historic returns from share markets, you will find that dividends are key to a good return.