Savers will soon be able to open a British Savings Bonds after the new savings account was announced in Jeremy Hunt‘s Spring Budget yesterday.
NS&I has released more details about the account, which will allow savers to invest their funds into UK companies to help grow the economy.
The account will offer a three year fixed rate for NS&I’s Guaranteed Growth Bonds and Guaranteed Income Bonds.
A key advantage of these Bonds is a person can securely invest up to £1million, well above the protected savings limit of £85,000 as with a standard savings account.
Martin Lewis mentioned the new savings product in his run down of the Budget on his BBC podcast. He said: “What we don’t know yet is the rate – above five percent, it would look pretty competitive and you probably should be doing it.
“Below five percent, it won’t look that competitive and you probably shouldn’t do it unless you specifically want to support Britain.”
Information on the NS&I website about the new savings option stated: “Like all savings from NS&I, your money will be 100 percent secure, backed by HM Treasury, and your savings will be invested back into supporting the UK.
“Due to launch early April – watch this space.”
The Chancellor also set out plans for a ‘British ISA’, allowing ISA savers to put up to £5,000 a year into savings to promote UK industry.
This £5,000 allowance will be on top of the current £20,000 allowance for saving into tax-free ISAs.
Laith Khalaf, head of investment analysis at AJ Bell, said ISA savers can already invest in UK businesses through their savings.
He said: “The Government is planning to introduce a British ISA in a bid to revive the London Stock Exchange, an endeavour which ultimately might not add a great deal of liquidity to the market, and which adds further complication to the ISA system.
“Time will tell. Of course, savers don’t need to wait until the British ISA is launched to buy £5,000 of UK shares in an ISA wrapper.
“Many already do, and though UK funds have fallen out of favour in recent years, investment in individual UK stocks by DIY investors is still very common.
“In theory investors can invest all of their £20,000 ISA allowance into the UK stock market, but that’s putting a lot of eggs in one basket.”
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