Should MIL tie up her savings?

Moniker

My 78 year old MIL has just had a bond of £5000 mature with the Birmingham Midshires. They have offered her 3.9% if she re-invests it for 2 years or 4.65% if she re-invests it for 3 years.

These both seem reasonable to me - the question is should an old lady tie her money up for 3 years even if she is in reasonable health? She only has her old age pension to live on and the income from various investments like the one above - not a huge amount but the interest helps pays for treats.

The problem is trying to second guess which way interest rates will go in the next three years. My gut feeling is that they will struggle to get to 2% by the end of this year and that 3.9% over 2 years is not a bad deal and gives her a bit more flexibility. What do you think? any advice welcome.

Moniker

alanq

This thread is a duplicate of

http://forums.moneysavingexpert.com/showthread.html?t=2218499