Granny Bonds

[Mervyn and Trish]

Is anyone else considering the new Granny Bonds - or will they when the NS&I website starts working properly again?

[GillD46]

I would - but I'm not old enough!

OH reaches the age in April, by which time I expect they'll have sold out - but even if they haven't, by the time you take off the tax, it's down to 2.4% which isn't SO great!

[Boris+]

Well apart from the fact that I don't qualify (too young) - I'm not going to disrupt my current arrangements for a measly interest rate like that.

It's not worth my time.

Em

[towny44]

Well apart from the fact that I don't qualify (too young) - I'm not going to disrupt my current arrangements for a measly interest rate like that.

It's not worth my time.

Em

Em, please let us know where your higher interest rate investments are, I can't find any reputable ones giving better rates for safe cah investments.

[Boris+]

Hi John,

Hey now - I don't do it, that part of life is my husband's responsibility - I just get given the results and monitor them; therefore I don't know, and as part of our 'trust' I don't ask.

Em

[Ray Scully]

When I saw this post I thought it would be referring to the 10.20 programme on Channel 4

[suespud]

Hi John,

Hey now - I don't do it, that part of life is my husband's responsibility - I just get given the results and monitor them; therefore I don't know, and as part of our 'trust' I don't ask.

Em

Nicely swerved Boris.....
Must admit I am surprised...as you normally like check everything to the far end of a ****...so to speak.

[Meg 50]

not quite old enough yet, but we'll consult the Financial advisor when we next have a review.

[GillD46]

We decide between us what investments we make and even if my husband was desperately keen to put money somewhere that I wasn't keen on, I am certain he would at the very least discuss it with me.

[anniec]

Hi John,

Hey now - I don't do it, that part of life is my husband's responsibility - I just get given the results and monitor them; therefore I don't know, and as part of our 'trust' I don't ask.

Em

So surely it's "worth your time"? It's your husband who'll be doing the leg work.

I am also interested in who gives a safe and better-earning home for savings. Surely, if you 'monitor them' you know?

[Boris+]

Nothing 'swerved' about it - that is just the way it is. I am content with whatever is going on (for us), it won't involve these 'Granny Bonds', and I see no reason to change things at the present time.

There is no leg work involved - we either get phone calls or data online. And yes, Sue - I do like to check things - and I monitor our files twice daily, and yes - I do know what's going on (give or take 10p) - and no, that doesn't make me a boring old twit; and it doesn't normally 'rule' my life.

However, I think I might say that the name Granny Bonds made me think it was maybe something to do with 007.

Em

[Manoverboard]

Thought about it but you have to invest for a lengthy-ish term to get the 4%, not really a problem ...

BUT ...

Tax at 20% is auto deducted and those on higher rates of tax have to pay tax on the interest up front as per the old Income Bonds, however with these Bonds one doesn't get one's interest until after one's Bonds have fully matured.

So it's a from me.

[Mervyn and Trish]

I guess whether the interest rates are good enough or not depends on your circumstances and attitude to risk.

For one thing we are risk averse. A close friend who lost his wife was advised to put the life insurance money into investments which were not considered high risk. However in three years they'd halved in value. We don't have sufficient funds to gamble like that, nor to invest, for example, in buy to let property. We also want the income to supplement our pensions now so are not interested in a bigger risk that might come good in 5 or 10 years.

Trish's earnings are below the tax threshold so she can reclaim the tax and get the full 4% on a 3 year bond and 2.8% on the one year. Compare that to the 1.4% over 1 year or 1.75% over three which she's been offered if she reinvests a three year Cash ISA that matures this month it's pretty much no contest for us to invest in her name.

We don't have sufficient free cash at the moment to invest in my name too, which is a shame because as a basic rate taxpayer 4% after tax (3.2%) would still be better than anything else I can see that's zero risk.

[Manoverboard]

But note that Trish can only reclaim her 20% pre paid Tax by filling in three Inland Revenue forms after receipt of the interest on maturity.

[Frank Manning]

I am beginning to think you are right Mervyn. Unless stocks and shares start to do better, I can see a lot more people getting back into cash, even at today's low interest rates. By the time Fund Managers, and IFAs have had there cut there is precious little going to the one who is carrying the risk.

I want to spend mine, and I cant do that while it is tied up for someone else to play with.

[Mervyn and Trish]

But note that Trish can only reclaim her 20% pre paid Tax by filling in three Inland Revenue forms after receipt of the interest on maturity.

But at £80 tax rebate income per form that will be no great effort.

Better than losing £714 if she sticks with the ISA!

[Silver_Shiney]

Cash ISAs - tax-free

Newcastle Building Society 2.57%
Vernon Building Society 2.5%

You must save a minimum of £25 pm though.

Stock and Shares ISAs - tax-free.

Returns very dependent on the financial markets but can be well in excess of 2.4% For example, the unit price of First State Indian has risen by over 50% in the last 18 months or so.

Also, the price of metals is expected to soar - particularly silver. It's not for the faint-hearted, though - my "physical silver" (the name of a fund) holding has dropped over 40% since investment, whilst "leveraged silver" is down over 70%. But both are expected to start improving vastly, possibly around October. The markets are very unstable now, with Greece on the verge of being thrown out of the Euro and Germany probably going to withdraw as well. Yesterday's decision by the Swiss has also thrown the pigeon amongst the cats...

[Manoverboard]

But note that Trish can only reclaim her 20% pre paid Tax by filling in three Inland Revenue forms after receipt of the interest on maturity.

But at £80 tax rebate income per form that will be no great effort ...

I don't think so ... an £80 refund is due but you will need three forms ( one for each year ) to get that sum of £80, which by the way equates to 50p per week

[towny44]

But note that Trish can only reclaim her 20% pre paid Tax by filling in three Inland Revenue forms after receipt of the interest on maturity.

But at £80 tax rebate income per form that will be no great effort ...

I don't think so ... an £80 refund is due but you will need three forms ( one for each year ) to get that sum of £80, which by the way equates to 50p per week

But won't all 3 forms be identical, therefore fairly easy to complete?
However I still feel that a Govt. savings scheme should be part of the R85 scheme as are most other savings organisations.

[BrianI]

The forms will be different for each year as the interest is compounded and thus will be slightly more each year.
Brian

[Mervyn and Trish]

But note that Trish can only reclaim her 20% pre paid Tax by filling in three Inland Revenue forms after receipt of the interest on maturity.

But at £80 tax rebate income per form that will be no great effort ...

I don't think so ... an £80 refund is due but you will need three forms ( one for each year ) to get that sum of £80, which by the way equates to 50p per week

On the 3 year Bond, which I presume you are referring to by the need for three forms, the interest is 4%, i.e. £400 per annum on a £10,000 investment = £80 tax to be reclaimed per year, i.e. per form.

[Mervyn and Trish]

The forms will be different for each year as the interest is compounded and thus will be slightly more each year.
Brian

The amount to be claimed will be different as you say, but I presume the rest of the form will be the same. In any case the tax man pays me nothing at all to fill in my Self Assessment Form, so if he pays me £80 to fill in this one that's a result.

And last time we filled in a tax refund form it took about 20 minutes max, so never mind £1 a week Moby, that £240 an hour for my labour, and I never earned that in my life!

[BrianI]

It seems strange that they do not allow you to submit a R85 form and claim the interest to be paid gross.
Brian

[Mervyn and Trish]

Cash ISAs - tax-free

Newcastle Building Society 2.57%
Vernon Building Society 2.5%

You must save a minimum of £25 pm though.

Stock and Shares ISAs - tax-free.

Returns very dependent on the financial markets but can be well in excess of 2.4% For example, the unit price of First State Indian has risen by over 50% in the last 18 months or so.

Also, the price of metals is expected to soar - particularly silver. It's not for the faint-hearted, though - my "physical silver" (the name of a fund) holding has dropped over 40% since investment, whilst "leveraged silver" is down over 70%. But both are expected to start improving vastly, possibly around October. The markets are very unstable now, with Greece on the verge of being thrown out of the Euro and Germany probably going to withdraw as well. Yesterday's decision by the Swiss has also thrown the pigeon amongst the cats...

Sorry Shiney, but am I looking in the wrong place? The maximum rate Cash ISA rate I can see on the NBS website is 2.4% for a five year bond, excluding the ISA they offer specifically linked to later taking out a mortgage with them. And the Vernon BS one is only available to investors living within 25 miles of Stockport, which we don't.

And in any case, if you're right, which you probably are, 4% is still more than 2.57% or 2.5% for a non-tax payer, even if there is a form to fill in.

The rest of what you say is also probably true, but as I said before we are risk averse. Shares can go up as well as down. I've never owned one that went up other than quick buy and sell BT and British Gas shares years ago.

[Manoverboard]

There is also, apparently, limited availability for these Bonds so perhaps an application for say £10,000 will result in an allocation of only £4,000 thus making the whole deal even less attractive.

A much higher max without restrictions would, imo, have made them far more attractive but only if they had paid monthly interest at a lower rate albeit with a suitable bonus at the end of term.