Premium Bonds down to 4.40% for March 2024 draw

eskbanker

FIREDreamer said:

eskbanker said:

Andreg said:

It seems NS&I are increasingly targetting wealthy savers who can afford to tie-up their money in five year deposits with no withdrawals.

Based on....?

Index linked certificates renewals are now tied in for the duration with no access at all. I won’t be renewing mine.

But as these are niche products that haven't been on sale (other than renewals) for many years, it can hardly be said that NS&I are increasingly targetting those who could afford them, implicitly at the expense of premium bonds that have always been freely available!

Andreg

Index linked savings certificates were not intended as niche products.  Their nickname was "granny bonds".   They really should be offered again, for grannies, with early access to the funds allowed (subject to penalty).  Particularly as the government has been paying higher index linked rates on gilts recently.  Why should institutional and professional investors get better rates that grannies?

Instead NS&I has been offering one-off silly (i.e. well out of line with the market) rates of interest for fixed term bonds that sell out in no-time, snapped up by wealthy investors who have the cash ready and can commit to tying it up for years.

masonic

Andreg said:

Index linked savings certificates were not intended as niche products.  Their nickname was "granny bonds".   They really should be offered again, for grannies, with early access to the funds allowed (subject to penalty).  Particularly as the government has been paying higher index linked rates on gilts recently.  Why should institutional and professional investors get better rates that grannies?

Instead NS&I has been offering one-off silly (i.e. well out of line with the market) rates of interest for fixed term bonds that sell out in no-time, snapped up by wealthy investors who have the cash ready and can commit to tying it up for years.

It's never been easier for grannies to invest in index linked gilts. But in answer to your question why should institutional and professional investors get a better deal - their business comes with lower costs and a lower regulatory burden.

ColdIron

Andreg said:

Instead NS&I has been offering one-off silly (i.e. well out of line with the market) rates of interest for fixed term bonds that sell out in no-time, snapped up by wealthy investors who have the cash ready and can commit to tying it up for years.

£500 for the recent 6.20% GGBs isn't exactly a high bar to entry

eskbanker

Andreg said:

Index linked savings certificates were not intended as niche products.  Their nickname was "granny bonds".   They really should be offered again, for grannies, with early access to the funds allowed (subject to penalty).  Particularly as the government has been paying higher index linked rates on gilts recently.  Why should institutional and professional investors get better rates that grannies?

Instead NS&I has been offering one-off silly (i.e. well out of line with the market) rates of interest for fixed term bonds that sell out in no-time, snapped up by wealthy investors who have the cash ready and can commit to tying it up for years.

I didn't say ILSCs were intended to be niche products, but was just observing that that's what they've become, by virtue of taking them off sale years ago.

I don't know how many five-year fixed products NS&I has marketed, let alone any that have been at silly rates (assuming you mean silly good rather than silly bad), but if they're minor limited edition offerings only available briefly, then it still doesn't seem particularly accurate to characterise them as being increasingly targetted versus other generally available products such as premium bonds.

subjecttocontract

The published rate of return doesn't take the fact that they are tax free into account.
They might be going down to 4.4% for NON taxpayers but for the rest of us that still equates to 5.5% for basic rate payers or 7.33% for higher rate payers. As I can't get that rate of return tax free anywhere else, I shall be leaving my money where it is.

eskbanker

subjecttocontract said:

The published rate of return doesn't take the fact that they are tax free into account.
They might be going down to 4.4% for NON taxpayers but for the rest of us that still equates to 5.5% for basic rate payers or 7.33% for higher rate payers. As I can't get that rate of return tax free anywhere else, I shall be leaving my money where it is.

Of course you'd have to be very lucky to get that rate of return from premium bonds too, given the distorting effect of the large (but massively unlikely) prizes!  The 'average luck' return is generally presented as between 80-90% of the quoted headline rate....

FIREDreamer

Albermarle said:

FIREDreamer said:

eskbanker said:

Andreg said:

It seems NS&I are increasingly targetting wealthy savers who can afford to tie-up their money in five year deposits with no withdrawals.

Based on....?

Index linked certificates renewals are now tied in for the duration with no access at all. I won’t be renewing mine.

Looking at previous threads on this you will be an outlier.
Despite the new restrictions, where else can you get a 100% safe investment that is guaranteed to increase with inflation?
If they offered new issues there would be a very long queue.

The fact I am retiring in June impacts my decision too!

hallmark

Albermarle said:

FIREDreamer said:

eskbanker said:

Andreg said:

It seems NS&I are increasingly targetting wealthy savers who can afford to tie-up their money in five year deposits with no withdrawals.

Based on....?

Index linked certificates renewals are now tied in for the duration with no access at all. I won’t be renewing mine.

Looking at previous threads on this you will be an outlier.
Despite the new restrictions, where else can you get a 100% safe investment that is guaranteed to increase with inflation?

Doesn't an index-linked Gilt offer exactly that?

(serious comment as I was under the impression it did.)

Albermarle

hallmark said:

Albermarle said:

FIREDreamer said:

eskbanker said:

Andreg said:

It seems NS&I are increasingly targetting wealthy savers who can afford to tie-up their money in five year deposits with no withdrawals.

Based on....?

Index linked certificates renewals are now tied in for the duration with no access at all. I won’t be renewing mine.

Looking at previous threads on this you will be an outlier.
Despite the new restrictions, where else can you get a 100% safe investment that is guaranteed to increase with inflation?

Doesn't an index-linked Gilt offer exactly that?

(serious comment as I was under the impression it did.)

You might be right, although for the average punter, the NS& I index linked certificates are easier to understand.
They are for me anyway !