How to Guides
- Guide to savings accounts
Read our comprehensive guide to savings account and make your savings accounts work for you.
Growth Bonds
Growth bonds are like cousins to income bonds, and while the return can be good, the risks can be high. They are also sometimes called capital growth bonds or high growth bonds. Growth bonds will usually tie up your money for periods of one to ten years. In the UK, up to 5% of the initial income payments can be taken tax-free, which is one of the attractive features of growth bonds. If you choose to invest in growth bonds, be sure your investment strategy is balanced, and that you have sufficient cash savings beforehand. Read more...>
As a growth bond investor, you receive a guarantee (of sorts) that your capital will grow during the investment period of the bond. There isn't an income option with this type of bond. If all goes as planned, you will get a lump sum in addition to the original principal once the bond reaches maturity.
It is critical that you read the fine print on any type of growth bond you consider buying. In some cases, if there are, for example, severe fluctuations in the stock market and the investment doesn't achieve its growth targets that are spelled out in advance, then the "guarantee" may be worthless. Though the income is guaranteed with a growth bond, it's possible that the return of all of the principal isn't. And, like with many other types of bonds, if you try to cash out early, you could face severe exit penalties for it.
The bottom line is that growth bonds can yield a great return, but you also face more risk than you would with other types of investments. Growth bonds can be a great addition to an overall investment strategy, but they should only be part of a portfolio that includes things like cash savings accounts, other types of bonds, and stocks.
Savings Accounts Blogs
- Savings on your budget 9 Apr 2013 | Read More ›
- Where to invest your £1000 28 Feb 2013
- Live on £10 a week 15 Feb 2013
- What ISA To Get In The New Tax Year? 26 Apr 2012
Did you know?
UK's total energy consumption used by the domestic sector has risen by 23pc in the past 35 years.
Source: Daily Telegraph (www.telegraph.co.uk)
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Product Offers
Please ensure that you fully read the terms & conditions of any product or policy before you decide to proceed and are fully aware of the total costs and the benefits and any exclusions or limitations applicable to the product or plan.
Please note that the product links will take you direct to the Issuer or Insurer's site direct and we cannot be held responsible for the information which they provide within their own sites. On some comparison tables we use a star rating which rates products by visitor popularity.
Please ensure that you fully read the terms & conditions of any product or policy before you decide to proceed and are fully aware of the total costs and the benefits and any exclusions or limitations applicable to the product or plan.
Please note that the product links will take you direct to the Issuer or Insurer's site direct and we cannot be held responsible for the information which they provide within their own sites. On some comparison tables we use a star rating which rates products by visitor popularity.
