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For the older ones amongst us, when the word ERNIE is mentioned, it can mean two things, a particularly fast milk man played by Benny Hill, or the machine (Electronic Random Number Indicator Equipment) used since 1957 to produce the winning numbers for people who have National Savings & Investment Premium Bonds.

Premium Bonds and indeed the full range of NS&I products, have been offering savers a safe and secure way to save money since 1861.  Backed by HM Treasury, the product range has expanded from Premium Bonds right through to Junior Independent Savings Accounts (JISA) and the more recently launched Green Savings Bonds (more on this later).  The common theme for all these products, is that unlike a traditional bank or building society, whatever is invested, the capital is 100% secure, unless of course the UK Government goes bust.

Dependent on the amount you wish to invest, the term you wish to invest over and your tax position, there should be a product within the range that is suitable, unless you are looking to gamble with your capital to achieve greater returns.  The NS&I range is all about capital security and certainty of returns.

Over the years, the product range has evolved and there are now seven active products:

• Premium Bonds
• Direct Saver
• Direct ISA
• JISA
• Income Bonds
• Investment Account
• Green Savings Bond

The Green Savings Bond is the latest and probably most topical product in the range.  Launched this year and announced in the most recent budget, this three-year term investment, pays a fixed annual return.  Any investment into these bonds will be contributing to green projects chosen by the Government.  The Government will publish details about how the money is being spent and what the environmental benefits are, so investors can see the difference their investment is making.

Whilst offering investors capital security, the NS&I range have struggled to maintain a positive real rate of return and even more so since rate cuts in November 2020.  The real rate of return is the cash value of your investment over time, accounting for inflation and taxes.  In simple terms, is your money keeping up with the cost of living and will it be able to buy the same things in the future as it would now?

Because of this, longer-term investors have considered alternatives to NS&I and ventured into non-cased backed investments, however if this is something you are considering then we would always recommend you seek independent financial advice.  We have experts in our Carlisle, Dalston, Dumfries, Penrith and Workington offices who are always on hand to help you.