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Three Common Questions About Fixed Rate Bonds

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					          Three Common Questions About Fixed Rate Bonds

Fixed rate bonds are arguably one of the most effective saving methods for those looking
for high returns to help them get the most from their money. As their name suggests,
fixed rate bonds give consumers the opportunity to lock away a sum of their money for a
set amount of time whilst receiving a fixed rate of interest. This means that in exchange
for an amount of capital, you receive the assurance that it will grow at a predetermined
pace over the agreed timeframe.

Bonds are not necessarily the best suited option for all savers - it completely depends on
what you are hoping to get from your savings account. However they do tend to offer
higher rates of interest than other options as you are saving for a set period of time. In
this article we will look to solve some of the most common queries regarding fixed rate
bonds.

1. How long do I have to save my money for to in order get a good return?

Because 'locking' your money away is a key factor of the fixed rate bond, many people
assume that you will have to wave goodbye to your money for decades on end. This is
not the case. Some bonds accounts may give you the option to save for ten or more years
but usually you choose a period between 6 months and 5 years. Typically the longer the
timeframe that you decide to save for, the higher your rate of returns are likely to be you
are rewarded accordingly for your commitment.

With some fixed rate bonds accounts, your savings are not completely inaccessible
however you could find that you are charged penalties for making withdrawals inside of
the agreed timeframe so this may not be advisable. Some people worry about the notion
of stowing money away however in the midst of a volatile economic climate, it could
offer you some security and peace of mind knowing that the interest rate you receive will
remain the same throughout.

2. Do I need tens of thousands to invest in this way?

As bonds are a type of investment, many people assume that you need five figure sums
just to open an account but the truth is most can be opened with around £1,000.
Obviously the more you invest the higher your returns are likely to be but whether you
are tucking some money away for a mortgage deposit or simply saving up for next year's
holiday, savings bonds could work for you.

For those of you looking to save higher amounts, fixed rate bonds accounts can usually
store a maximum of sums in the six figure region and the fixed rate of interest means that
you will be able to estimate just how much your nest-egg will grow over time.


3. There's so many savings options on the market. How do I know a bond is right for
me?
Obviously you do not want to store away your money for a period of time if you are not a
hundred percent sure about what you are committing yourself to. As with all financial
products, the key to making the right choices is to ensure that the decisions you make are
as informed as possible.Review the market and compare fixed rate bonds against other
savings options, consider the level of interests on offer and remember that with a bond,
you are offered that rate for the chosen period of time whereas interest rates with
traditional savings accounts may fluctuate.

In the first instance, it is important to consider what you are looking to get from your
savings and exactly how much growth you would like. If you are worried about not
having access to your savings then you could consider only saving a certain amount in a
bonds account and storing the rest in a savings account that you can access without
penalisation.

				
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