NS&I or fixed rate bond?

kempstar

Hello

I have just withdrawn £10k from my Icesave account. I do not need it for 1-2 years (savings are to go towards house deposit). I am looking for the best possible interest rate. I am happy to lock it away for 1 year, but not much longer than that.

What is the best option? I am a higher-rate tax payer.

Would the NS&I inflation-linked bonds give me the highest rate of return? Or would I be better of with a ~7% one year fixed rate somewhere else? Many thanks in advance.

Christian

isofa

It depends what inflation does, and what type of tax payer you are, etc.

If you are a non-tax payer, then for 1 year (providing inflation stays the same) a fixed rate bond may well be the best, if you are a basic rate tax payer it's a closer call and if you are a high rate tax payer, then a NS&I index link savings certificates would probably be better, remember you can access your money after the first 12 months, but any time before and you get no interest.

This has been covered in depth before, lots of detail and advice in this thread:

http://forums.moneysavingexpert.com/showthread.html?t=528781

StevieJ

kempstar wrote: »

Hello

I have just withdrawn £10k from my Icesave account. I do not need it for 1-2 years (savings are to go towards house deposit). I am looking for the best possible interest rate. I am happy to lock it away for 1 year, but not much longer than that.

What is the best option? I am a higher-rate tax payer.

Would the NS&I inflation-linked bonds give me the highest rate of return? Or would I be better of with a ~7% one year fixed rate somewhere else? Many thanks in advance.

Christian

As you state that you are a Higher Rate taxpayer and happy to tie up your savings for 1 year plus the NS&I indexed linked are a match made in heaven.

[Deleted User]

I agree, either that or an ISA.

kempstar

Thanks for the advice peoples.

I have put £10k away into NS&I today.

I have already used my £7k stocks and shares ISA limit this year.

BabyDragon_2

Hi, can someone tell me please with NS&I Income bonds - can you buy one and top it up ie 5k now and then add 5k to it?
Or are they stand alone so you would have to have buy a 5k bond and then later buy another 5k bond giving same total??

Been looking on the forum but could find the answer
Thanks you in advance

intalex

From what I know, you'll be adding the new 5k on the same reference number, but you may be given a separate 5k certificate, i.e. one reference number but 2 certificates.