Re-new a N.S.& I Guaranteed Growth Bond?

TUVOK

Should I re-new the above bond? I believe that I should, but are there any other views on this option?

bowlhead99

TUVOK said:

I believe that I should, but are there any other views on this option?

I imagine there would be a range of views, because some people would be happy to accept the terms and conditions of the product while others would prefer to put their money into other products.

As nobody knows your personal circumstances or objectives, how should we know whether you want to continue with the product? Are you going to continue with it indefinitely because you don't expect to need the cash for decades? If so, investment funds may be more suitable. Is it held inside a SIPP or SSAS as part of the cash component of your portfolio? If so, you might decide that now is a good time to move the money into equity funds, with the lower market prices that are now available. Is there a reason why you might need to access the money during the term of the renewal, and if so, can you find an alternative product whose interest rate would be better overall after taking into account the 90-day interest penalty for early withdrawal? Etc., etc.

*edit - the renewal terms are such that the bond is not accessible until maturity and the option to pay a penalty for early withdrawal has been removed

uknick

TUVOK said:

Should I re-new the above bond? I believe that I should, but are there any other views on this option?

Are you referring to the 1.7% 3 year renewal?  It seems to be a no brainer if you're still happy to tie up the funds.  When I took out the 2.2% bond 3 years ago, I thought interest rates had to go up by 2020, but the opposite happened.  With what's going on in the world, I find it hard to believe they'll go up much in the next 3 years.

Actually, thinking about it, ignore my advice.  I think they'll stay low, but last time I thought they'd go up and got that spectacularly wrong.  So what do I know?   

newatc

I wan't going to renew ours but have now decided to let it renew based on it being above market rate for similar and the additional security (probably small ).

lescarp88

Another reason to renew an NS&I 3 year bond is to defer the interest payment until another year. I am near to or just over the £1,000 limit for zero interest on savings.

colsten

lescarp88 said:

Another reason to renew an NS&I 3 year bond is to defer the interest payment until another year. I am near to or just over the £1,000 limit for zero interest on savings.

Interest on this account is paid annually. Renewal doesn't change the date on which interest is paid. Neither does early redemption before maturity, which comes at a cost of 90 days interest.

In answer to the OP's question: nobody can tell you what the best option for you is as we do not know your circumstances and requirements. If you want to stay in cash and are looking for a 3-year bond, 1.7% AER isn't bad as you'd have almost no better alternative for £3k-ish.

ColdIron

I don't think early redemption applies to the new Guaranteed Growth Bond

• If you decide to renew your Bond, you won't be able to cash in the new Bond before the maturity date - you'll need to hold it for the full term.
• We have also introduced a 30-day cooling off period.

veryintrigued

We've completed the instructions to reinvest half and withdraw half

colsten

ColdIron said:

I don't think early redemption applies to the new Guaranteed Growth Bond

That's correct. This option only exists on the old 2.2% issues of the Guaranteed Growth Bond and the Investment Guaranteed Growth Bond.

uknick

ColdIron said:

I don't think early redemption applies to the new Guaranteed Growth Bond

• If you decide to renew your Bond, you won't be able to cash in the new Bond before the maturity date - you'll need to hold it for the full term.
• We have also introduced a 30-day cooling off period.

Thanks for that, I'd missed the no withdrawal clause.  Not an issue with regard to taking the money out, but I'll have to make sure I only declare the interest upon maturity for tax purposes. 

newatc

uknick said:

ColdIron said:

I don't think early redemption applies to the new Guaranteed Growth Bond

• If you decide to renew your Bond, you won't be able to cash in the new Bond before the maturity date - you'll need to hold it for the full term.
• We have also introduced a 30-day cooling off period.

Thanks for that, I'd missed the no withdrawal clause.  Not an issue with regard to taking the money out, but I'll have to make sure I only declare the interest upon maturity for tax purposes. 

The 2.2% bond paid interest annually so I assume the new bond will do the same.