While the International Monetary Fund (IMF) began the year by forecasting the UK would be the only developed economy to shrink in 2023, the outlook isn’t entirely gloomy for savers.
The new year began with good news if you have money held in a National Savings & Investments (NS&I) product. As a Premium Bonds holder, you would have been delighted to hear that from January, a rejig of the prize pot means that there are now more high-value prizes available.
Those looking to help the environment have been financially rewarded too. While the fixed rate on an NS&I Green Savings Bond stood at just 0.65% when it launched in October 2021, it has since risen three times. It now stands at 4.2%.
Keep reading for your quick guide to NS&I in 2023.
With NS&I you are lending money to the government, making it 100% safe
Introduced more than 150 years ago, NS&I is a Treasury-backed way to lend money to the UK government. This means that by saving with NS&I you’ll be joining 25 million customers, with more than £179 billion invested, all of which is 100% secure.
The Premium Bond launched in 1956 but is far from the only NS&I offering.
You’ll also find ISAs, investment accounts, and the most recent addition, the NS&I Green Savings Bond.
3 of the key NS&I products you might consider this year
1. Premium Bonds
The money you pay into a Premium Bond account is used to buy £1 bonds. Each bond you own is an entry into a monthly prize draw with prizes ranging from £25 to a £1 million jackpot.
You need to be over 16 to buy Premium Bonds, but they can be bought on a child’s behalf, to be looked after until the child reaches 16. This could make them a great birthday or Christmas gift for a child or grandchild.
From January 2023, the prize pot has been rejigged to make Premium Bonds even more appealing. There are now three times as many chances to win the big prizes, those worth £5,000, £10,000, £25,000, £50,000, and £100,000.
2. Direct Saver
You can use the NS&I Direct Saver to save from £1 up to £2 million with annual interest. And because it’s an easy access savings account, you pay in and withdraw funds as and when you need with no notice and no penalty.
Be aware that if you are looking to save large amounts in the Direct Saver, the interest you generate could become liable to tax if it exceeds your Personal Savings Allowance.
For the 2023/24 tax year, the threshold is £1,000 for a basic-rate taxpayer and £500 for those on the higher rate. Tax will always be payable on interest for additional-rate taxpayers.
3. Green Savings Bond
Launched in October 2021 (following a March announcement), NS&I’s newest product is the Green Savings Bond.
By using this product, you will be helping to fund “green” projects designed to help the UK achieve net-zero carbon emissions by 2050. This might be by cleaning up transport links, aiding the transition to renewables, or helping to reduce pollution.
Available to over-16s, there is a minimum deposit of £100 and a maximum of £100,000. Fixed interest accrues daily at 4.2% and is added to your investment annually.
If you are looking for ways to align your finances with your values of environmental and sustainability issues, the Green Savings Bond could be a great option for you.
Improved rates might make NS&I an appealing option but always seek advice
2023 promises to be a tough year for the UK economy, but remember that the economy is not the stock market.
While NS&I products offer safe chances to see a return on your investment, other products on the market might better align with your risk profile.
At HA&W, we can put a plan in place that takes into account your circumstances now, as well as where you want to be in the future. This far-sighted approach, based on decades of experience in the market and commitment to nurturing long-term relationships, means that we are best placed to find the right product for you, from right across the market.
Get in touch
Contact us now to find out how our Chartered financial planners could help you.
Please note
The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Levels, bases of and reliefs from taxation may be subject to change and their value depends on the individual circumstances of the investor.
