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National Savings Come To The Fore

For many years National Savings and Investments (NS&I) have been seen by many investors as boring, with many not even giving them the time of day. However, there are signs of more investor interest and the index linked section of NS&I is proving to be particularly popular. So what are NS&I and what can they do for you?

NS&I are investments which are backed by the government and affectively allow investors to loan money to the government in exchange for a return. Whether this return is a simple interest rate or some kind of indexed linked formulae is down to the investor but with inflation at it highest for many years the index linked section is attracting interest.

In affect the interest rate return and the redemption amount on the index linked NS&I are increased by the rate of inflation as each month progresses. This means that not only does the interest rate paid to investors by the government rise, but the final redemption figure also keeps pace with inflation. When you consider some of the older NS&I bonds may well be offering fixed rates as low as 3% or 4% then any rise in the rate of inflation above that level means that the investment is depreciating in value in really terms. The indexed link alternative allows investors to keep pace with inflation and retain the value of their investments.

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