May 13, 2021

Returns from NS&I products

At the end of 2020, NS&I slashed its interest rates across the board. The Income Bond reduced from a market-leading 1.16% to just 0.01%. The Direct Saver dropped from 1% to 0.15% and the Investment Account is down from 0.8% to just 0.01%.

Premium Bonds didn’t escape the onslaught either, with the odds on winning a prize reducing by 30%. The annual prize fund rate of 1% quoted on its website is a little misleading. Basing the pay-outs on ‘average luck’, if you have £50,000 invested in premium bonds, over 1 year, you may win roughly £450, which is 0.9% of the money you are investing. Of course, you might not win anything! Or win the jackpot!

With inflation at 0.70% and predicted to rise throughout the year – it’s clear to see how NS&I and cash savings are being eroded by inflation.

The table below illustrates this effect:

Investment	Interest	Inflation	Net Return*
NS&I Investment Account	0.01%	0.56%	-0.55%
NS&I Direct Saver	0.15%	0.56%	-0.41%
Bank Savings Account	0.50%	0.56%	-0.06%

*Returns over the last 6 months, with average inflation being 0.56%
Source: Brighton Capital Management

It is possible to achieve ‘real’ returns above the rate of inflation, by only taking a small amount of investment risk. Please contact us for more information.

This Insights post is intended for information purposes only and no action should be taken or refrained from being taken as a consequence without consulting a suitably qualified and regulated person. Opinions constitute our judgement as of this date and are subject to change without warning. With investing, your capital is at risk.