{"id":20422,"date":"2020-10-15T14:00:08","date_gmt":"2020-10-15T14:00:08","guid":{"rendered":"https:\/\/smh.group\/?p=20422"},"modified":"2020-10-15T14:00:10","modified_gmt":"2020-10-15T14:00:10","slug":"national-savings-wields-the-axe","status":"publish","type":"post","link":"https:\/\/devstagesite.co.uk\/smhgroup\/national-savings-wields-the-axe\/","title":{"rendered":"National Savings wields the axe"},"content":{"rendered":"\n<h3 class=\"wp-block-heading\"><strong>National Savings rate to drop sharply from 24 November.<\/strong><strong><\/strong><\/h3>\n\n\n\n<p>At times, National Savings &amp; Investments (NS&amp;I) looks like a relic. Its role in raising money for the government has seemed an increasing anachronism for three main reasons:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>The amount NS&amp;I raises each year is but a small part of the government\u2019s total borrowing. For 2020\/21, NS&amp;I\u2019s fundraising target is \u00a335 billon (<img loading=\"lazy\" decoding=\"async\" width=\"11\" height=\"18\" src=\"\">&nbsp;\u00a35 billion), but on current estimates, the government will need to borrow more than ten times as much.<\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\"><li>Rather than selling NS&amp;I products, the government can raise billions by selling government bonds (gilts) with much less administration at significantly lower interest rates. At the time of writing, gilt yields were <em>negative<\/em> for terms of up to six years.<strong> <\/strong><strong><\/strong><\/li><\/ul>\n\n\n\n<ul class=\"wp-block-list\"><li>On the rare occasions when NS&amp;I rates are competitive, it can distort the savings market, prompting criticism from the building societies and banks with which it competes for retail deposits.<\/li><\/ul>\n\n\n\n<p>In mid-February, NS&amp;I announced that it would be cutting interest rates across a range of plans from 1 May. Two months later, NS&amp;I changed its mind and announced in a press release under the headline \u201cNS&amp;I supports savers in this unprecedented time\u201d, that it was dropping the planned changes to variable rate products. All then went quiet, leaving NS&amp;I with a range of league-topping interest rates. Between April and June, nearly \u00a320 billion flowed into its coffers.<\/p>\n\n\n\n<p>On 21 September, NS&amp;I had a change of heart, deciding that reductions were necessary to \u201censure NS&amp;I\u2019s interest rates are aligned appropriately against those of competitors\u201d. The cuts, which generally take effect from 24 November, were dramatic, as the table shows.<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><strong>Product<\/strong><\/td><td><strong>Current rate<\/strong><\/td><td><strong>New Rate<\/strong><\/td><\/tr><tr><td>Direct Saver<\/td><td>1.00% gross\/AER<\/td><td>0.15% gross\/AER<\/td><\/tr><tr><td>Income Bonds<\/td><td>1.15% gross\/1.16% AER<\/td><td>0.01% gross\/AER<\/td><\/tr><tr><td>Investment A\/C<\/td><td>0.80% gross\/AER<\/td><td>0.01% gross\/AER<\/td><\/tr><tr><td>Direct ISA<\/td><td>0.90% gross\/AER<\/td><td>0.10% gross\/AER<\/td><\/tr><tr><td>Junior ISA<\/td><td>3.25% gross\/AER<\/td><td>1.50% gross\/AER<\/td><\/tr><tr><td>Premium Bonds*<\/td><td>1.40% 24,500:1 monthly odds<\/td><td>1.00% 34,500:1 monthly odds<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p>* From December prize draw.<\/p>\n\n\n\n<p>Such microscopic rates will take NS&amp;I to the bottom of the league tables. If your income will be hurt by the NS&amp;I cuts, make sure you consider all of the options before moving your money. With the best available rate just 1.6% \u2013 for a <em>five-year<\/em> bond \u2013 at the time of writing, now could be the time to talk to us about your income options beyond deposit <strong><span style=\"text-decoration: underline;\"><a href=\"https:\/\/devstagesite.co.uk\/smhgroup\/financial-services\/investment-options\/\">investments<\/a><\/span><\/strong>.<\/p>\n\n\n\n<p>Our <strong><a href=\"https:\/\/devstagesite.co.uk\/smhgroup\/financial-services\/\">Financial Services<\/a><\/strong> team are always available for a chat, contact them on <strong>0114 266 4432<\/strong> or <strong><span style=\"text-decoration: underline;\"><a href=\"mailto:info@smhca.co.uk\">info@smhca.co.uk<\/a><\/span><\/strong><\/p>\n\n\n\n<h6 class=\"wp-block-heading\"><em>The value of your investment and income from it can go down as well as up and you may not get back the full amount you invested.<\/em><\/h6>\n\n\n\n<h6 class=\"wp-block-heading\"><em>Past performance is not a reliable indicator of future performance.<\/em><em><\/em><\/h6>\n\n\n\n<h6 class=\"wp-block-heading\"><em>Investing in shares should be regarded as a long-term investment and should fit in with your overall attitude to risk and financial circumstances.<\/em><\/h6>\n","protected":false},"excerpt":{"rendered":"<p>National Savings rate to drop sharply from 24 November.<\/p>\n","protected":false},"author":4,"featured_media":17991,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[16],"tags":[667,97,666,206,484,96,668],"class_list":["post-20422","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-financial-services","tag-government-bonds","tag-investments","tag-national-savings","tag-nsi","tag-premium-bonds","tag-savings","tag-savings-bonds"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.9 - 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