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money people: SAVE MORE WITH NS&I.

Byline: Edited by Simon Read

SAVERS worried about financial security are leading a flight to the safety of Government-owned National Savings - but are also finding an added bonus.

Index-linked certificates offer a better rate than high street or online savings accounts.

The certificates pay one per cent more than the Retail Prices Index (RPI). And with inflation rising - the index hit 4.8 per cent last month - certificate holders are getting 5.8 per cent. But, here's the clever thing - interest is paid to you tax-free. So returns on index-linked certificates are currently worth 7.25 per cent to standard interest-rate payers and a whopping 9.6 per cent to high-rate taxpayers.

You won't find a better return anywhere - especially one where your savings are backed by a Government guarantee.

The best-paying, short-termfixed-rate account at present is a One-Year Internet Fixed-Rate Bond from the AA, which pays 7.21 per cent.

But you have to pay tax on that, which means for a standard taxpayer the return falls to just under 5.8 per cent.

The best tax-free deal on offer currently is the 6.3 per cent paid by Scarborough Building Society's One-Year ISA Bond.

But this is still one per cent less than you'll get through NS&I.

There are currently two issues of the certificates, both require you to lock your money away for at least a year and the minimum investment is pounds 100.

Withdrawals can be made after the first year, in which case both index linking and interest are added pro rata on a monthly basis. If the RPI falls, then the return on the certificates will drop too.

But savers know they will still get inflation beating returns.

Buy the certificates at any Post Office or online at www.nsandi.com.
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Title Annotation:Features
Publication:The People (London, England)
Date:Oct 12, 2008
Words:298
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