What are National Savings and Investments?

The National Savings and Investments provide you will savings and investment accounts that are backed by the HM Treasury. This means you will obtain some of the best Premium Bonds available as well as be eligible for cash prizes. There are several products through the National Savings and Investments Company.

You may ask, what is the difference between the National Savings and Investments and the bank or building society choice in savings? You will find out that the banks and building societies are privately owned organisations. Your money when it is placed in a bank or building society is going to be reinvested to generate profit. IN other words the profit is shared between the organisation and its members. The National Savings and Investments Company is offering savings and investments for the general public. In other words you are lending money to the government to finance spending, but your money is secure because the government must repay the amount, plus any interest earned.

There are a few types of National Savings and Investment saving schemes. You will find there are easy access products, which will allow you to withdraw your money when you want, and then there are longer term investments that offer you a way to invest for one to five years before the money is available to you.

You will also find there are tax free savings schemes available. The National Savings and Investments allow for tax free savings as well as a savings on Capital Gains Tax on the interest or prizes you may earn. You will find Premium Bonds, Inflation beating savings, income bonds, fixed rate savings bonds, direct ISA, and Children’s bonus bonds are going to be in the tax free category. You will also find that when setting up the interest rates on the tax free products the National Savings and Investments will take into account the tax of the Exchequer that they would have received.

There are also taxable savings accounts. This means that you will have to pay interest in full on the products when you declare them on your tax return. These products include the easy access savings account, guaranteed equity bond, capital bond, income bond, investment account, and the pensioners guaranteed income bond. You will find the only exception to the taxable savings accounts is the fixed rate savings bonds, in which you will receive interest after the tax has been deducted from the amount in the savings account.

There are certain limits for who can invest in National Savings and Investments. For instance there are age limits on some of the products such as the Children’s Bonus Bonds that allow for children under 7 to purchase the accounts, but no one older. The pensioners guaranteed income bonds are only available to individuals who are over the age of 60 to invest. Some of the products are available to a wide range of individuals. In order to decide if you wish to invest there are a few things to look at. You will want to look at the fact that the National Savings and Investments are more secure and often a better choice than other plans.

Return To Financial News February 2008
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