Alliance & Leicester has teamed up with Legal & General to offer new fixed rate savings account combined with a bond.
The new Balanced Savings and Investment Plan comprises of a one year Fixed Rate Savings account from Alliance and Leicester, which has a 4.42 per cent AER, and an investment bond from Legal & General.
Product manager for investments at Alliance & Leicester, Sarah Ennion, said: "Research we carried out earlier this year, showed that both saving and investment levels in the UK are set to increase.
"It showed that people are planning to increase the amount they save to nearly double the amount they did a year ago and investment confidence is also increasing.
"This plan is ideal as it balances the need for a safe haven for short term savings, whilst giving the opportunity to invest over the longer term for potentially higher returns than from a typical deposit account."
The investment bond provides high returns over a five-year period. However, unlike a deposit account, capital and income put into the investment bond are not guaranteed so investors may get back less than they invested.
A survey by the Investment Management Association this week revealed that over a third of individuals in the 18 to 29 age group do not save, and instead spend their money on cigarettes, booze and mobile phone calls.
The IMA says that by saving as little as £20 a month, young people could guarantee a substantial saving account balance for the future.
New draft tax legislation could hit Legal & General with a one-off bill of almost half a billion pounds, according to recent reports.
British insurers have criticised the government this week for bringing in new tax plans without warning them first.To read more about Savings Accounts, click here.
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