SAYE (3rd Issue - Index-linked)

The SAYE 3rd issue is much more interesting. You have to contract to save an amount of from £4 to £20 a month for five years. You get neither interest nor bonuses. But the repayment value is linked to the Retail Price Index, so this is an inflation-proofed investment. So long as inflation proceeds at a rate higher than the going net-of-tax interest rate on deposits, this will be impossible to beat for yield.

Again, there are penalties for not keeping to your contract. You get nothing except your original contributions back if you stop before the end of 12 months; stop after a year but before five years and you get no inflation proofing, but you will be paid 6% tax-free interest.

At the end of five years each of your monthly contributions is up-valued in respect of the fall in the value of money during the interval, and you may draw out the up-valued investment. Alternatively you may leave the investment intact for a further two years, still with RPI adjustment, plus a tax-free bonus equal to two months' contributions.


Save-as-you-earn Schemes

The government sponsors two special schemes for regular savers which give a return to an investor which might be higher than a commercial organisation could afford, depending on changes in interest rates in the market over the next five years and the rate of inflation over the same period.

SAYE (2nd issue)

This scheme is operated through building societies and the National Savings Bank. You have to enter into a commitment to save from £1 to £20 (the maximum) a month for five years. You receive no payments of interest, but at the end of five years a bonus is added to your investment... see: Save-as-you-earn Schemes


Refunds, Personal And Business Finance 2017

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