Investments

Investing is a step up from savings because in order to invest you need to use alternative instruments to generate a higher return on your income than by saving alone. There are many different types of investments which will suit different people depending on their risk profile. Read more...>

	Investec FTSE 100 5 Year Deposit Plan Investec Version Target Return - 26% gross	Growth Bond	£1,500	N/A
	Barclays Foundation Funds Investment ISA 5 ready-made portfolios to choose from	Investment ISA	£3,000	N/A
		Initial charge reduced to 0% (from 4%) for online applications
	Barclays Investors' Choice Investment ISA Hand-picked range of funds from Barclays Investments	Investment ISA	£500	N/A
		Initial charge reduced to 0% (from 4%) if you invest online
	Virgin FTSE All Share Tracker Invest up to £10,680 this tax year	Investment ISA	£1	N/A
	Investec FTSE 100 Enhanced Kick Out Final Growth Return - 1.20 x FTSE 100 Growth	Investement Trust	£1,500	N/A

Growth bonds

Growth bonds are fixed-term bonds meaning that once you have invested your money you can only ever withdraw the whole amount and close the bond to get at any of your money. However, this would most likely incur a breakage fee as part of the get-out clause. The returns you will receive would be in the form of a maturity amount and the amount would depend on the risk profile selected.

They are often seen as an ideal investment option for someone looking to grow their capital without taking any investment risk.

Growth bonds can be used to ensure that the original capital is protected and in order to prevent exposure to changes in interest rates.

Pro:  Risk-free investment
Con: Smaller returns than other investments with risk

Income bonds

An income bond is also a risk-free investment and works in a similar way to that of a growth bond. When you buy the bond you will be fully aware of the returns you should expect, and will receive a steady income flow.

Income bonds are often the preferred investment choice for investors looking to receive a regular cash income without any investment risk and can be used to receive a regular income while protecting the original capital.

Pro:  Flexible income payments
Con: Risk of long term fixed rate deals – your money could be fixed at a lower interest rate for a long time while standard interest rates have increased, meaning your money could be earning more elsewhere.

Investment ISAs

Investment ISAs or Stocks and Shares ISAs are different from Cash ISAs. With an Investment ISA you are investing into many different bodies, such as unit trusts, government and corporate bonds and open-ended investment companies. Consumers are able to buy shares and put them into the ISA. Unlike Cash ISAs, an Investment ISA are not free because they will incur a charge for administration and fund costs.

They are often seen as ideal for long-term investors who are not looking for a quick fix, as well as individuals planning for their future, and are used by investors to increase the total value of investments and, in some cases, even fund retirements.

Pro:  Lower tax on dividends and diversification
Con: Your investment could go down as well as up

Unit trusts

A unit trust is a collective investment meaning that many people put their money into the one fund which then buys and sells shares and bonds on their behalf. By pooling money together to invest, there is less risk involved as it is spread over the number of people in the trust.

Investors who are looking to share the investment risk with other investors and those looking for tax benefits on their investment typically use this type of investment product.

Unit trusts are used to increase value of investments over the long term while maintaining a relatively safe level of risk investment as the risk is spread across everyone within the unit.

Pro:  Relatively low fees and professional management
Con: Unsuitable for short term investments

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