Are National Savings and Investments worth it?
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I have a number of different investments but have been holding most of the cash element of my savings – worth about £80,000 – in bonds and other products from the National Savings. However, I’ve been notified that the interest rates they are offering are to be drastically cut. Are they still worth considering?
Jeremy Woodruff of Smith & Pinching responds:
You are right that National Savings & Investments (NS&I) have announced that they are cutting the rates they were offering savers from November 24. Before that, they were offering some of the best returns for cash savings in the market, so this has had a significant impact on the future growth of many people’s cash savings.
The cuts are aimed to bring NS&I savings into line with their competitors such as banks and building societies. The changes apply to their variable rate products and some fixed rate products. They’ve also reduced the value of the prize fund for Premium Bonds, which means that there will be fewer prizes from the December draw onwards. If you do decide to change, you will need to watch out for any penalties, if you have fixed rate products.
I strongly recommend that you talk to a Chartered Financial Planner about your savings and investments. A complete review of your financial situation will enable you and the adviser to put together a financial plan that is right for you and gets you on track to be where you want to be at different stages in your life. Advice will enable you to make decisions based on your actual circumstances and goals: we use lifetime cashflow planning tools to enable you to see how different actions will impact your financial position.
Cash investments such as savings accounts do generally have a lower risk rating than equity-based investments but current low interest rates mean that your money will struggle to keep pace with inflation and so may lose value in real terms over time. On the other hand, equity investments – although having the potential to outperform inflation – do have an element of risk. However, there are many different types of equity investment, with different levels of risk. A Chartered Financial Planner will evaluate your attitude to risk when helping you put together a diverse portfolio of savings and investments to ensure that you are only taking as much risk as is acceptable to you.
Any opinions expressed in this article do not constitute advice. The value of an investment and the income from it could go down as well as up. The return at the end of the investment period is not guaranteed and you may get back less than you originally invested.
For more information visit www.smith-pinching.co.uk
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