NS&I 3 Year Bond 2.20%

jimbow25

I crunched the numbers and taking into account the 90 day interest penalty, for a 2.2% bond it amounts to the following effective AERs if you withdraw early

6 months 1.10%
1 year 1.66%
1 year 6 months 1.84%
2 years 1.93%
2 years 6 months 1.99%
3 years (minus a day) 2.02%

Seems like a good bet? Even if rates do go up and you want to break it and re-invest.

Krb2609

Ok, so 1.5% for 1 year, 2.2% for 3 years, but take your money out anytime for 90days loss of interest.

So if you want to invest for a year, surely: invest for 3-years, take your money out early after 12 months and earn 9 months interest at 2.2% - which equates to 1.65%, in other words 10% higher return than the 1-year deal.

Is my maths wrong or theirs????

RG2015

Krb2609 wrote: »

Ok, so 1.5% for 1 year, 2.2% for 3 years, but take your money out anytime for 90days loss of interest.

So if you want to invest for a year, surely: invest for 3-years, take your money out early after 12 months and earn 9 months interest at 2.2% - which equates to 1.65%, in other words 10% higher return than the 1-year deal.

Is my maths wrong or theirs????

NS&I = State owned savings bank.

Do we rely on the UK Govt to do maths accurately?

Oh, and yes, who on earth would choose 1 year in this scenario?

RG2015

jimbow25 wrote: »

I crunched the numbers and taking into account the 90 day interest penalty, for a 2.2% bond it amounts to the following effective AERs if you withdraw early

6 months 1.10%
1 year 1.66%
1 year 6 months 1.84%
2 years 1.93%
2 years 6 months 1.99%
3 years (minus a day) 2.02%

Seems like a good bet? Even if rates do go up and you want to break it and re-invest.

Definitely a good bet. Rates in the main are currently static or falling. Can anyone see three year rates rising much above 2.20% in the next year

capital0ne

chucknorris wrote: »

What a strange name 'Guaranteed growth bond', how the hell did they come up with that? 2.2% less 40% tax = 1.32% net nominal growth, but less inflation = at least -0.5%! Guaranteed to lose in real terms bond' would have been far more apt. Or am I missing something?

Quuite easy to work that out. I would have thought any higher rate tax payer could work that out for them selves

Puddylove

I'm thinking of moving my emergency fund of 3 to 6 months' pay into the Guaranteed Growth Bond.
Am I missing something or does this sound like a good plan?

Audaxer

Puddylove wrote: »

I'm thinking of moving my emergency fund of 3 to 6 months' pay into the Guaranteed Growth Bond.
Am I missing something or does this sound like a good plan?

If you put your whole emergency fund in the bond and then an emergency occurs within the next 3 months and you need to draw out the lot, you would have to pay 3 months interest, so you would lose some capital. My view would be to put some of the emergency fund in the bond, but still keep some of it in instant access funds.

2010

Can I withdraw money?

Yes, before the end of the term you can cash in all or part of your Bond online, by phone or by post with no notice. We will deduct a penalty equal to 90 days’ interest on the amount you cash in. This means that if you cash in within 90 days of buying your Bond, you’ll get back less than you invested. You need to keep a balance of at least £500 to keep your Bond open.

At the end of the term you can cash in with no penalty. We’ll contact you about a month before the end of the term to let you know the options available at that time.

If my maths are correct you could draw out £10k anytime and it would cost you £54.

2010

Trying to see how to fund the bonds, is it by FP from a current account?

ColdIron

"invest at least £500, paid by a debit card in your own name, issued by a UK bank"