NS&I Investment bond launched

LastbutFast

I see NS&I investment bond, 3 year @ 2.2% is available for applications from today. Max investment £3000

Neil_Jones

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

What would the estimated balance be at the end of the term based on a £1,000 deposit?

A £1,000 deposit would be worth £1,067.46 at the end of the 3-year term.

It does work out like that with the maximum figure:

£3000 + 2.2% = £3066 + 2.2% = £3,133.45 + 2.2% = £3,202.38.

SallySunshine

Neil, the figures you quoted are for £1000 which are correct.
The figures below are based on the maximum £3000 deposit,

The Investment Bond's 2.2% interest rate means you'll be able to get a maximum £66 a year interest, or £202 over the three years, assuming interest compounds (ie, you earn interest on the interest). Interest will be paid annually

Pincher

Will pay 20% tax on 2.2% for sure, and possibly 40%.
If inflation is 2%, I'm pretty sure I'm losing money, in real terms, on the deal.

Might as well spend it on fast cars and loose women.
Well, £3,000 probably isn't enough for either, anyway.

epm-84

Withdrawals are subject to 90 days loss of interest.

Elijah_Bailey

Surely calling it an investment bond is incorrect as it's just a fixed rate / fixed term savings account.

My brother (a very old dog with no new tricks) always prefers NS&I accounts but he has assumed it was a stocks and shares account because it says "investment".

ctdctd

The 90 day interest lost to withdraw option is nice - you don't get that on normal fixed rate savings.

It means you can fix at 2.2% PA secure in the knowledge that the most you can lose is about 0.54% if you need the cash or if rates shoot up elsewhere!

Pincher

http://www.bbc.co.uk/news/business-39564885

Just got a 1.5% annual interest pay out on a three year fixed.

Not only am I getting 0.8% below on inflation, I will be paying at least 20% tax on the 1.5%.

Really doesn't pay to keep cash around.

veryintrigued

Anyone else have issues funding from this type of account?

RG2015

Neil_Jones wrote: »

It does work out like that with the maximum figure:

£3000 + 2.2% = £3066 + 2.2% = £3,133.45 + 2.2% = £3,202.38.

If I subscribe £3,000 today and leave this for three years I will earn interest of £202.38 payable on 12th April 2020 along with the initial £3,000

Will this £202.38 be part of my 2020/2021 savings income tax allowance of £1,000 or will it be split over three years?

ColdIron

Interest earned each year

We then add the interest to your Bond on each anniversary of the day you invested, so it grows in value each year. On the second and third anniversaries, your Bond will also earn interest on the interest that was previously added, as well as on the original investment. This means you get the benefit of compound interest.