Guaranteed Income Bonds
Guaranteed Income Bonds
Guaranteed Income Bonds promise a fixed income over a certain amount of time, usually a choice of between 6 months and five years.
Advantages:
- Guaranteed returns
- The rate is fixed, so you will not lose out if the base rate goes down
- Can choose to have your interest paid monthly, annually or on bond maturity
Disadvantages:
- Charges if you try and cash your investment early
- Returns are taxed at the basic rate. Higher-rate tax payers will face an additional bill.
- If the base rate rises, you miss out on the extra cash you would have earned in a normal savings account.
With guaranteed income bonds, your original investment is secure – companies generally ask for a minimum investment of around £5,000, with a maximum typically of £1,000,000.
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