Fixed Bonds

Arian_Woman

I am considering taking out a 3yr fixed rate bond with Vanquis. The offer is for 1.9% gross for up to 250k max. I only have about 16k to invest but it's a lot to me.
Whilst this offer is the best I can find, I haven't found anyone else recommending it in the forum, neither yay or nay, so I'm wondering if I've missed something.
Any reassuring thoughts folks? :idea::think

teddysmum

You could easily stash that amount between some of the interest paying current accounts and regular savers, giving a much better rate.

EachPenny

teddysmum wrote: »

You could easily stash that amount between some of the interest paying current accounts and regular savers, giving a much better rate.

....and without needing to tie your money up for three years either.

Completely agree with teddysmum.

greatkingrat

You might as well stick £3k of it in the new NS&I 3 year bond at 2.2% for a start.

Arian_Woman

teddysmum wrote: »

You could easily stash that amount between some of the interest paying current accounts and regular savers, giving a much better rate.

I have a current acc that pays interest providing I pay in £ 1k each month. I also have 4 saving accs that I pay the max into each month & an Isa that's not yet mature.
No other funds for another current acc.

The 16k was earmarked for this years Isa but I was thinking a 3yr bond would be a better option.

greatkingrat wrote:

;You might as well stick £3k of it in the new NS&I 3 year bond at 2.2% for a start.

Iagree, this is sensible, I was so disappointed to see the 3k limit.

soulsaver

Arian_Woman wrote: »

I have a current acc that pays interest providing I pay in £ 1k each month. I also have 4 saving accs that I pay the max into each month & an Isa that's not yet mature.
No other funds for another current acc.

You don't need other funds if you cycle the (c.£1k) deposit around the accounts. The same £1k can qualify you for Nationwide, TSB, Sanatnder123, BoS, Club Loyds etc - even HSBC which requires £1700 pm.

EachPenny

Arian_Woman wrote: »

greatkingrat wrote: »

You might as well stick £3k of it in the new NS&I 3 year bond at 2.2% for a start.

Iagree, this is sensible, I was so disappointed to see the 3k limit.

It might be sensible, but probably only after making full use of other accounts paying higher rates for easy/limited access, without the need to lock the money away for 3 years or pay a penalty for withdrawal. It isn't as good a deal as the Government would like us to believe.

As per teddysmum and soulsaver's posts, there are a whole range of current accounts which pay between 2 and 5% leaving you free to take the money out at any time and move it into regular savings, or anything else which comes along in the next three years paying more than 2.2%.

Arian_Woman

I take my hat off to all you organised folk that are juggling bank / saving accounts.
I've read the threads about doing this & indeed I did a fair bit of tarting to get rid of cr cd debt for both myself & partner.
I have been juggling current & saving accounts albeit on a small scale (compared to some) 3 current (1 inactive) 7 saving ( reduced to 4 now) + Isa.
I really just want to simplify things as I'm retired & health issues mean I don't want to be worrying about shifting monies around or the copious clutter that comes with it.
I find it enough of a headache when an Isa or account plummets & a new one needs to be found along with the various conditions.
Hence the 3yr bond seemed to suit better than an Isa.

Re NS&I

EachPenny, It isn't as good a deal as the Government would like us to believe./QUOTE]
EachPenny, Could you explain, please.

I haven't looked into this further but I see on [STRIKE]NS&I [/STRIKE] Vanquis site it says:
up to 1.90 % gross/AER*
Choose to invest from £1,000 to £250,000

http://www.vanquissavings.co.uk/3-year-fixed-rate-bonds/

Apologies. Amended to correct my mistake. I had put NS&I when should have put Vanquis.
My brain is slower these days.:o

Arthurian

Here's the link to the 2.2% NS&I bonds.
https://www.nsandi.com/Investment-Guaranteed-Growth-Bonds

EachPenny

Arian_Woman wrote: »

I really just want to simplify things as I'm retired & health issues mean I don't want to be worrying about shifting monies around or the copious clutter that comes with it.

EachPenny wrote:

It isn't as good a deal as the Government would like us to believe.

EachPenny, Could you explain, please.

I haven't looked into this further but I see on NS&I site it says:
up to 1.90 % gross/AER*
Choose to invest from £1,000 to £250,000

Hello Arian Woman, I'm not sure where you found the 1.9% on £1000-£250000 but I suspect it is for a different account which is no longer on sale... if it is still available can you please let us know which one it is please

I wasn't being anti-government by my comment, the new bond is at least a recognition that something needs to be done to help people relying on savings. The problem is it just isn't enough. The main MSE site article on the bond draws a similar conclusion. The Government don't really want us to put money into NS&I, but for political reasons had to do something.

The headline rate of 2.2% looks good on its own, but the account has a combination of limitations - you can only pay in £3000, it locks your money away for three years, it is online only.

The online-only restriction should help the government meet it's main objective, in conjunction with the £3000 limit.

It is good if you only have a small savings pot and want to put it somewhere you can forget all about it for three years. Or if you have a lot of savings and all the higher-interest options have been used up.

But as an example, the Nationwide FlexDirect account pays 5% for the first year on a balance of up to £2500, 1% in following years. At the end of year 1, the £3000 in the bond will have earned £66 interest, £2500 in FlexDirect will have earned £125. But, you say, in year 2 FlexDirect only pays 1%, that's less than half the NS&I bond rate. True, but at the end of year 2 the bond will have generated a total of £133.45, whereas the FlexDirect account will have generated £150, and on a deposit of only £2500 rather than the £3000 put in the bond. Again, the FlexDirect account has some requirements including a minimum monthly pay-in. But as it is a current account you can set up a standing order to move £1000 to your main current account and another SO to move it back the next day. Once set up you can more or less forget about it.

Year 3 is where the NS&I bond would overtake the FlexDirect account if you did nothing else. But there are other options for your money, and remember that there was still that 'spare' £500 which hopefully got saved somewhere useful too. The Flexclusive Regular Saver would be a good place to start.

Running multiple current accounts and regular savers does involve some work, but the amount doesn't have to be that much if you do it by setting up standing orders to meet pay-in requirements and have enough direct debits as well. Being retired should give you more than enough time to do it

Going back to your original post, if you have around £16k to find a home for, then £3000 in the NS&I bond is only going to make a small dent, and you will need to use some other options anyway. Locking the rest of the money away in a 3 year bond at a modest interest rate is a perfectly valid solution if that suits your needs, but there are other ways of making your money work harder with only a little extra effort and zero risk.

alanq

EachPenny wrote: »

...it locks your money away for three years, ...

There is a penalty for early withdrawal but at unlike most fixed term bonds the money is not locked in.