National Savings Bonds

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National Savings Bonds

If you are looking for a safe home for your money, then National Savings Certificates (www.nsandi.com) could be an option.

They are back by HM Treasury and are therefore guarantee absolute security for your cash. There is a range of different types of products depending on whether you want income or capital growth, and whether you are a taxpayer or not. It includes index-linked and fixed-interest certificates, savings bonds and income bonds.

All National Savings products are "deposit-based" which means that you can always get back at least the money you paid in. If interest has built up then you will get your original cash back, plus extra. This means that they are ideal for savings that you don't want to take any risk with. They could form the safe core part of your investment strategy if you are planning to diversify and spread your money around products that have different levels of risk. Or they could be your main holding, for example if you were retired and you wanted somewhere really secure.

There are several things to bear in mind. Interest rates will often be lower than the best-buy deposit accounts available from banks and building societies. This is because you are taking minimal risk with your money - so the potential rewards are lower. Holding a big chunk of your wealth in cash means that over the long term the value will be gradually eroded by inflation. Nor are they ideal for cash that you need in a hurry. Some products require you to give a month's notice if you want to withdraw your cash - or you pay a penalty in lost interest. To get the maximum benefit you may need to leave your money in the account for several years.