First is second on some counts in investment league

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The Independent Online
SAVERS can now do better from some building societies than with the National Savings First Option Bond if they want a short-term fixed return on their deposits.

The First Option Bond's sudden rate cut from 10.34 per cent gross to 9.67 per cent on Monday was followed by some nimble footwork from building societies eager to regain lost ground.

Bristol & West Building Society launched its Balmoral bond, which has rates fixed until 31 July 1993. The minimum investment is pounds 5,000 against First Option's relatively modest pounds 1,000, but Balmoral's interest bands start at 7.8 per cent net of basic rate tax. First Option starts at 7.25 per cent.

The Balmoral bond is only available through the post (details on 0800 100117).

Guaranteed income and growth bonds offered by insurance companies were offering generally better rates than the First Option Bond, even before its rate was dropped at noon on Tuesday.

These bonds pay fixed rates of interest on varying periods of between one and five years.

Interest is paid net of basic rate tax of 25 per cent in the same way as First Option, so income and growth bonds are not best suited to non-taxpayers.

Income and growth bonds that guarantee a rate for a year on as little as pounds 1,000 are rare, but Aegon Life is currently offering a net rate of 6.6 per cent net on pounds 1,000 fixed for two years. Consolidated Life offers 8.05 per cent net on pounds 2,000 for a year.

Cheltenham & Gloucester is reducing the rate on its London Share postal account from 10.4 gross (7.8 per cent net) to 10 per cent gross (7.5 per cent net).

----------------------------------------------------------------- HOW FIRST OPTION BOND COMPARES ----------------------------------------------------------------- pounds 1,000 pounds 5,000 pounds 10,000 pounds 20,000 pounds 50,000 Growth/ 8.35% net 8.40% net 8.55% net 8.60% net income Prosperity Aegon Life Aegon Life Aegon Life bonds 7.50% net 7.80% net 7.95% net 7.95% net 8.25% net One-year Portman Chelt & Glos* Bristol & West Bristol & West Bristol & West fixed- Bristol & West interest building society rates s6 1 First 7.25% net 7.25% net 7.25% net 7.55% net 7.55% net Option Bond (National Savings) ----------------------------------------------------------------- * pounds 2,500 minimum Source: Chase de Vere -----------------------------------------------------------------

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