In the Chancellor's hands
National Savings offer some of the safest investments around. Abigail Montrose gives the details for people looking for a government home for their money
Wednesday 13 November 1996
The first National Savings Certificates were issued by the government in 1916 to raise money for World War I. National Savings now operate a whole range of savings schemes - many of which are entirely tax free. Added to this, you can be sure that your savings will be safe, since you are effectively banking with the Government.
National Savings offer three tax-free savings schemes: Fixed-Interest Savings Certificates, Index-Linked Savings Certificates and Children's Bonus Bonds. These schemes are usually best compared with Tessas, as they are all five-year tax-free savings schemes.
l Fixed Interest Savings Certificates guarantee to pay out a fixed rate of interest, equivalent to 5.35 per cent a year, as long as you keep them for five years. There is no tax to pay on the interest, but if you cash in the certificates early you will receive a reduced rate of interest.
The minimum investment is pounds 100 and the maximum is pounds 10,000, or pounds 20,000 from earlier Certificates which have now matured.
l Index-Linked Savings Certificates are suitable for people who are looking to ensure that their savings are proof against inflation. As long as you keep the certificates for the full five-year term, your savings will rise in line with inflation, and by an additional 2.5 per cent a year. The interest on your savings is tax free.
The minimum and maximum investment levels are the same as with Fixed- Interest Savings Certificates.
l Children's Bonus Bonds: These can be bought by anyone over 16, for children under 16. The bonds pay a set rate of interest for every five- year period they are held, up until the child's 21st birthday.
The current issue of bonds guarantees to pay 6.75 per cent a year tax- free for the next five years. The bonds must be held for the full five- year period if they are to receive the guaranteed rate, and the interest is received only when the bond is cashed in.
The minimum amount that can be invested in Children's Bonds is pounds 25, and the maximum holding in any issue is pounds 1,000.
l Tessas are issued by banks and building societies, and you can hold only one at a time. You can invest up to pounds 9,000 over five years in your first Tessa, but if you have already had one Tessa, which has now matured, you can invest all the money from it in a second one - so long as no more than six months elapses between the first one maturing and your investing the proceeds in a follow-up account.
Most Tessas pay a variable rate of interest, but there are a number of fixed-rate ones around. If you want to know exactly how much interest you are going to earn over the account's five-year term, then you may prefer to put your savings into a fixed-rate Tessa.
The general view at present is that interest rates will rise over the next five years, and so most banks and building societies are offering variable-rate Tessas. But some of the fixed-rate offers are still attractive.
So when are National Savings better than Tessas? Well that depends on what you want from your investments. If your main objective is to ensure that your savings keep up with inflation, perhaps because you are retired and on a set income, then Index-Linked National Savings Certificates are for you. Inflation may be low at present, but in the days when it soared to 15 per cent and more, these types of certificate were unbeatable.
If you are just looking for your savings to grow, and do not want to take any risks, then Tessas or National Savings Certificates are both appropriate.
If you are looking to set up a savings scheme for a child, then Children's Bonus Bonds offer better value than Savings Certificates.
You also need to look at how much you want to save. The limits on Children's Bonus Bonds and Tessas are relatively low, so you may find that once you have used up your allowances on these you have money left over and will need to invest the rest of your savings elsewhere.
In that case, index-linked or fixed rate Savings Certificates may be the answer
22 August 2014 10:30 PM
16 August 2014 12:00 AM
16 August 2014 12:00 AM
08 August 2014 11:30 PM
08 August 2014 11:30 PM
01 August 2014 07:30 PM
The new product marks a shift towards 'clear, straightforward and standardised' banking products, says Simon Read
01 August 2014 07:30 PM
25 July 2014 11:00 PM
25 July 2014 11:00 PM
A London estate agent yesterday put a price on having a garden. David Pollock of Greene & Co reckons it can increase a property's value by a tenth.
How couples can protect their financial interests when cohabiting
Authorities failing in hunt for 'most wanted' tax dodgers who owe HMRC £844m
Buyers beware of new-build home headaches
Dirty tricks in a divorce can cause some nasty surprises
A student's guide to financial survival: You don't have to drown in debt at university
- 1 Notting Hill Carnival: Woman shares selfie after being ‘punched in face for telling man to stop groping her’
- 2 Joan Rivers: 'Palestinians deserve to be dead'
- 3 Daily Show's Jon Stewart destroys Fox News for its Ferguson coverage
- 4 ALS ice bucket challenge co-founder Corey Griffin drowns, aged 27
- 5 Botched ice bucket challenge leaves man critically injured after plane drops hundreds of gallons of water
Exclusive: We share blame for creating 'jihad generation', says Muslim strategist
Robin Williams Emmys tribute led by Billy Crystal criticised for including 'racist' joke about Muslim woman
The Rotherham child abuse scandal is a tale of apologists, misogyny and double standards
Scottish independence TV debate: Pumped-up Alex Salmond bounces back in bruising second round against Alistair Darling
Do you realise just how foolish the UK looks?
Ukip Douglas Carswell defection: Tory MP jumps ship to join Nigel Farage
- < Previous
- Next >
iJobs Money & Business
£400 - £450 per day + competitive: Orgtel: My client, a leading bank, is curre...
£20000 - £30000 per annum + OTE £40-50K first year: SThree: The SThree group i...
£300 - £350 per day + competitive: Orgtel: Cost Reporting Manager - MI Packs -...
£85000 - £100000 per annum: Ashdown Group: Head of Marketing - Slough, Berkshi...
Day In a Page
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000
This three-bedroom flat within a former textile factory spans the corner of the fourth floor and has a balcony