All you need to know about the NS&I (National Savings & Investments)

Amanda Gillam
26th March, 2018
Money & Finance

The NS&I (National Savings and Investments) is often recommended as one of the safest options for savings and investment products. But does it offer the best deals? If you’re looking to do more with your money then it pays to get to know the NS&I, where it might be the best way to save and when other options could help you earn more. NS&I logo

What is the NS&I?

The NS&I has been around for well over a century and now has more than 25 million customers. It’s essentially a state owned UK savings bank that offers a range of savings and investments products, such as Premium Bonds and Children’s Bonds. The NS&I is a government department and an Executive Agency of the Chancellor of the Exchequer and is about as safe as they come with respect to ensuring your money is secure. The NS&I offers 100% security on all deposits, which is one of the factors that sets it apart as a savings and investment option.

What does 100% security mean?

In an age of issues with online fraud and hacking, the guarantee provided by the NS&I is very attractive. It means that if anything happens to the cash in NS&I accounts the organisation guarantees to reimburse the saver for any loss. So, where any payment has gone out of the account that has not been authorised by the account owner – unless it can be proved otherwise – reimbursement for the payment is guaranteed. The NS&I is also 100% safe as a savings institution – it is backed by HM Treasury so depositing your cash here means that it’s as risk free as it’s likely to get.

What kind of products does NS&I offer?

The NS&I is a good option for a range of different bonds, ISAs and investment accounts, all of which are managed online, including:

Premium Bonds – there is no interest or capital gain with Premium Bonds but you can be entered into draws for cash rewards (which are tax free).
Investment Guaranteed Growth Bonds – a product that requires tying up cash for at least three years. You’ll need a minimum £100 investment and get a rate of 2.2% interest before tax.
Guaranteed Income Bonds – for those with at least £500 to invest, Guaranteed Income Bonds can be committed to for one year or three. One year attracts 1.45% gross interest and three years 1.9%.
Guaranteed Growth Bonds – these are fixed rate bonds ideal for those seeking peace of mind from investments. They attract a rate of 1.5% gross for a one year commitment and 1.95% for three years.
ISAs – the NS&I Junior Isa has an attractive rate of 2.25% up to £4,126 for the 2017/18 tax year for those aged 16 or 17. Older investors can put cash into the regular NS&I ISA which attracts interest of 1%. Both are tax free.
Savings account – the NS&I Direct Saver account attracts interest of 0.95% (gross) and offers easy access at any time without notice or penalty.

Is the NS&I the best way to save and invest?

It depends on what you’re looking to achieve with your money. The NS&I is ideal for those who are seeking:

Safe savings – with 100% security there is no risk to your savings and investments, either in terms of loss from fraud or the financial institution going under.
Longer term savings – the best rates on NS&I products are available to those who can commit cash for at least three years.
Slower income growth – NS&I savings will certainly give you income growth but over a longer period of time.
Tax free savings – the NS&I offers a tax free ISA.

You may want to look elsewhere for savings and investment options if you:

Want a higher interest rate
Are looking for a more sizeable return
Are keen to achieve a faster return
Need a higher interest savings product that will give you instant access to your cash
Have money to spare that you can take more of a risk with

Other products from other banks and financial institutions might be better suited to the above criteria. For example, NS&I doesn’t offer a stocks and shares ISA, which is a higher risk product but also one that offers a greater return – the average stocks & shares ISA fund grew by 15.8% during the 2016/17 tax year. The key attraction with NS&I products is that you know your cash is safe, whatever happens. If that’s your priority as a saver or investor then the NS&I is well worth investigating.