National Savings
National Savings are a series of savings account products that are issued and managed by the government via HM Treasury. Many people choose to use these products as government backing makes them secure and many offer tax free interest options. So, you stand no risk of losing the money that you invest in these products.
National savings products are managed by National Savings & Investments which is now one of the largest savings institutions in the country. Products here were initially set up in 1861 to raise money for the government. By investing in the government, you are given interest on your money in return.
National Savings offer various choices when it comes to saving your money. These include:
- Premium bonds - these are probably the best known of the National Savings products. Here you can invest your cash (from £100-30,000) and will then buy a number of bonds which will be entered into a monthly draw that gives you a chance of winning tax free cash prizes. You don’t earn interest on your savings here but could win anything from £50-1 million.
- Fixed rate bonds - here you agree to invest money in bonds for a specific period of time (usually a few years) and will be given a fixed rate of interest for doing so.
- Index linked bonds - here you invest your money in bonds again for a few years but will receive interest at a specific rate above the rate of inflation.
- Income bonds - these bonds work in much the same way as other bonds but will pay you a regular income (i.e. every month) rather than payments at the end.
- Children’s bonus bonds - here you invest on behalf of a child for a set period of time (usually five years) to get a fixed rate of return which is payable tax free.
- ISAs - here you can invest your tax free ISA allowance in National Savings accounts.
- Savings and investment accounts - these accounts work like standard savings accounts. Income here is usually taxable.