Question
We have £58K to invest - we are only interested in safety of one, two or three year bonds. We notice the Post Office is only offering one bond - is there a reason for this and is the Post Office safe.
The only other option we have looked at is Barnsley Building Society - the interested is 3.05% for a one year bond which seems quite good. We have used ISAs for the year and we have max premium bonds.Answer
The only other option we have looked at is Barnsley Building Society - the interested is 3.05% for a one year bond which seems quite good. We have used ISAs for the year and we have max premium bonds.
I’ve just had a quick look on the Post Office website and the one fixed rate savings bond that it was offering has now closed. Post Office savings accounts are provided by the Bank of Ireland, so I guess they don’t have an appetite for raising money via fixed rate products at present. Given the outlook for interest rates looks pretty flat and the Irish economy is in a sorry state I don’t blame them.
Bank of Ireland savings accounts bought via the Post Office are safe in so far as they’re covered by the Irish Deposit Guarantee Scheme. This covers unlimited amounts up to 29 September 2010 and €100,000 per institution per person thereafter. The scheme is as safe as the Irish Government that backs it – credit rating agency Moody’s recently cut Ireland’s rating to Aa2, but this is still pretty safe in the scheme of things and not worth losing sleep over.
The Barnsley one year fixed rate, now 3%, is attractive, although eclipsed slightly by ICICI Bank at 3.1%. Both are covered by the UK Financial Service Compensation Scheme (FSCS), which guarantees the first £50,000 per institution per person.
If it worth tying money up beyond a year?
I think it’s likely interest rates will remain low for at least the next two years because our economy is troubled and I can’t see things improving sufficiently to warrant interest rate rises for quite a while yet. There has been some noise in the papers about rates rising to combat high inflation but I can’t see it – inflation is currently caused by oil prices and the VAT rise, not us all spending more.
Nationwide will pay you 3.75% on a two year bond and over three years you can get 4.3% fixed from Bank of Baroda (an Indian Bank, but it’s covered by the FSCS).
So, yes, if you you’re comfortable tying up money on a fixed rate beyond a year I’d give it serious consideration. Of course, I could be proved wrong, so a sensible compromise might be to split the money between rates of different durations. Perhaps put at least enough money on a one year rate to use your cash ISA allowances next year.
Good luck whatever you decide.
We have £58K to invest - we are only interested in safety of one, two or three year bonds. We notice the Post Office is only offering one bond - is there a reason for this and is the Post Office safe.
The only other option we have looked at is Barnsley Building Society - the interested is 3.05% for a one year bond which seems quite good. We have used ISAs for the year and we have max premium bonds.Answer
The only other option we have looked at is Barnsley Building Society - the interested is 3.05% for a one year bond which seems quite good. We have used ISAs for the year and we have max premium bonds.
I’ve just had a quick look on the Post Office website and the one fixed rate savings bond that it was offering has now closed. Post Office savings accounts are provided by the Bank of Ireland, so I guess they don’t have an appetite for raising money via fixed rate products at present. Given the outlook for interest rates looks pretty flat and the Irish economy is in a sorry state I don’t blame them.
Bank of Ireland savings accounts bought via the Post Office are safe in so far as they’re covered by the Irish Deposit Guarantee Scheme. This covers unlimited amounts up to 29 September 2010 and €100,000 per institution per person thereafter. The scheme is as safe as the Irish Government that backs it – credit rating agency Moody’s recently cut Ireland’s rating to Aa2, but this is still pretty safe in the scheme of things and not worth losing sleep over.
The Barnsley one year fixed rate, now 3%, is attractive, although eclipsed slightly by ICICI Bank at 3.1%. Both are covered by the UK Financial Service Compensation Scheme (FSCS), which guarantees the first £50,000 per institution per person.
If it worth tying money up beyond a year?
I think it’s likely interest rates will remain low for at least the next two years because our economy is troubled and I can’t see things improving sufficiently to warrant interest rate rises for quite a while yet. There has been some noise in the papers about rates rising to combat high inflation but I can’t see it – inflation is currently caused by oil prices and the VAT rise, not us all spending more.
Nationwide will pay you 3.75% on a two year bond and over three years you can get 4.3% fixed from Bank of Baroda (an Indian Bank, but it’s covered by the FSCS).
So, yes, if you you’re comfortable tying up money on a fixed rate beyond a year I’d give it serious consideration. Of course, I could be proved wrong, so a sensible compromise might be to split the money between rates of different durations. Perhaps put at least enough money on a one year rate to use your cash ISA allowances next year.
Good luck whatever you decide.
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