The only difference between a rat and a hamster is Public Relations

This is what comes to my mind when I think about “Pensioner`s Bonds”. These bonds are the latest government offerings to be made to the public. To qualify for this largesse you have to be over the age of sixty five. Below is a table showing the interest you will receive from this taxable investment along with a comparison of similar investments over the same time period. It shows the results over both one year and three years. Three years being the longest time that the N&SI Pensioner Bond can be held.

pension

These bonds have been launched with a great publicity campaign and there has been a resulting lemming- like surge of a take-up. Before you could say “Robert is your father`s brother” the issue has been exhausted and the government is now talking about increasing the offer. I wonder how many of the participants are aware of the facts in the table above and how poor their return is actually going to be; especially if they are tax-payers. Yet again the real gainers are going to be the government and the financial industry. They will have your money at these low rates and re-invest to get a considerably better return and the difference goes into their pockets.

Saltydog subscribers will know that there are many low volatile funds that will give you returns near to 10% per annum not 4%. By being active and observant with your investing you should be enjoying this sort of return. During the last year, UK gilts and Index linked Gilts along with some low risk property funds have even exceeded this return. Apart from anything else why would you want to be tying down your money for a fixed period (unless you are borrowing) when there is the possibility that the world economies are in a state of recovery and the only way for interest rates is up? It makes no sense.

The shame is that there is a lack of financial education and of accurate investment numbers made available to the public. It is all part of the general dumbing down that is taking place. I believe these bonds are rats not hamsters.