Understanding fixed rate bonds

Fixed rate bonds are some of your best options when the economy isn’t stable.

15:34 10 March 2013

Investing your money can be more difficult these days because of the unstable economic condition. In the past the Bank of England has made a strings of cuts to it base rate which affected the earnings of a lot of savers. 

When base rates are low, savers are very careful when choosing where to put their money. If you’re one of them and this applies, one of your best options is fixed term bonds. 

 

Fixed term bonds, as the term implies, offers fixed rate throughout the duration of the bond. This means, you’ll know exactly what you can expect to get. 

 

Compared to ISAs, most fixed term bonds have higher deposit limits. There are even some that will allow you to invest as much as you like. However, you must deposit the whole amount when opening an account, as you will not be allowed to put in additional funds once your account is active. 

 

The strategy to earn really well with fixed rate bonds is right timing. If you do your research and you understand how the market moves, you could open an account before rates significantly fall. This will allow you to earn well above the savings rates that are usually offered to variable rate and new customers.