There really can be too much of a good thing – even if the thing in question isn't particularly good. Today, we look at a new, government-backed savings product, and examine its merits compared to the risks and rewards of investing in the crowdfunded peer-to-peer (P2P) business loans offered by Money&Co.
The National Savings & Investments (NS&I) website crashed late last week, following high demand for government savings bonds, which offer market-leading interest rates exclusively to the over-65s. The bonds, announced by chancellor George Osborne in December, offer savers interest of 2.8 per cent over one year and a fixed annual interest rate of 4 per cent over three years. With typical interest rates offered on market-leading three-year bonds barely above 2 per cent, and one-year bonds offering even less, the so-called "pensioner bonds" were proving very popular.
Some, including the Mail on Sunday, would say that the bonds were just too popular: "Frustrated pensioners vented their fury over the Government's new savings bonds yesterday after an official website went into meltdown – leaving many demanding refunds and asking where their money had gone.
"Chancellor George Osborne boasted that the bonds for the over-65s were the fastest-selling financial product in modern times, after more than 110,000 pensioners invested a total of billion in only two days.
"But the NS&I website could not cope with the demand and repeatedly crashed, leading to widespread confusion and payment errors."
So what's the alternative? Today sees the last opportunity to get a gross yield of around 11 per cent from the ARP loan offering on site, as the auction closes this afternoon. The A-rated Mar-Key Group has a loan offering over 8 per cent.
The key factors to consider are security, access and yield. The basic issues are regularly examined on this site, and are set out clearly in this article.