Backed by Her Majesty’s Treasury, National Savings & Investments (NS&I) recently launched two one-year bonds with headline rates topping the UK savings league table.
However, investors are advised to look to closely at their net return for a clear picture of potential profits. UK consumers searching for suitable assets for their portfolio like government bonds and stocks often take investment advice in Shropshire, Derbyshire and other areas of the country. Offering a clear picture or risk and return, wealth managers use plain language to inform clients on different investment vehicles.
NS&I’s main role is to provide cost-effective financing for the UK government. In the present fiscal year, it has been tasked with raising from £4.5 to £10.5 billion for the UK Treasury’s coffers, which is a modest objective when comparted to the £237.8 billion projected for sales of government bonds for the period.
However, according to figures from the Bank of England, the financial institution experienced net outflows during June and July which totalled £0.3 billion. August saw NS&I react dramatically to the outflows, compounded by rising interest rates by raising returns on the one-year Guaranteed Growth Bond, as well as the Guaranteed Income Bond, which increased from 5.0 per cent and 5.12 per cent to 6.2 per cent.
While arguably this is a good rate, investors must factor tax in to work out their net return. As a result, interested consumers should pay attention to the net figure instead of the eye-catching headline number.
