Is the New NS&I Investment Bond for 2017 a Best Buy?

Looking for somewhere new to put your money? National Savings & Investments (NS&I), the government-owned bank, has launched a new bond paying 2.2% interest on a maximum of £3,000 over a three-year term.

Here we take a look at the NS&I investment bond 2017.

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NS&I Bond 2017: What You Need to Know

It’s available until 10 April 2018 for anyone aged 16 or over and pays 2.2% over three years on a maximum £3,000 (minimum £100).

  • Interest is calculated daily
  • Online only – open it and manage it via the web
  • You need to put all your money into the bond when you open it – you cannot top it up later on

Example Return

If you put £1,000 in the NS&I bond, you would have £1,067.46 at the end of the three-year term.

Is the NS&I Bond a Market Leader?

Not quite. Officially called the Investment Guaranteed Growth Bond, it offers exactly the same interest as the 3 Year Fixed Saver offered by Atom Bank.

However, the Atom product is only available via an app, so might not be for you. Other than that, the NS&I bond rate, at the time of writing, does beat that of many other bonds available, albeit only marginally.

Commentators have pointed out that the NS&I bond is beaten by rates offered by some bank accounts. Tesco, for example, has a current account offering a guaranteed 3% on balances up to £3,000 until 1 April 2019.

What’s more, some of the other bonds allow you to put more in than the maximum allowed in the NS&I bond – £3,000. So while these other bonds may pay less interest, you will get that interest on a larger amount of money.

Is the NS&I Growth Bond Inflation-beating?

There is also the important issue of inflation. This bond, guaranteeing 2.2%, is designed to hold your cash over the three years, without you withdrawing any money.

However, with inflation rising and currently at 2.7%, an account offering 2.2% means your money has less purchasing power and in real terms, you are effectively losing money.

That’s why some commentators are calling on the government to introduce an inflation-linked NS&I savings product that matches or beats inflation, so your money keeps its purchasing power.

In terms of risk, the NS&I savings products are truly 100% secure as they are backed by HM Treasury.

 

Zachary Wyatt

Zach lives on the coast in the UK, with one eye fixated on the City. Prior to his writing, he got his feet wet with forex trading platforms.

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