Investment Bonds

What are capital investment bonds?

Investing is the best way to receive substantial returns on your capital, but can also be a risky business as the tides of the stock market turn. With options such as capital investment bonds, you won’t eliminate the risk entirely, but you can look forward to a much safer method of investing and watching your capital grow across a number of years.

Unlike some other types of bonds, there is no upper limit to the amount you can invest in capital investment bonds, though the risk for investors comes in the possibility of their interest failing to reach the levels they hoped it would. This still makes this type of bond favourable for those hoping to reduce the risks associated with the stock market, and capital investment bonds have seen a surge in popularity in recent years, with the uncertain economy turning some investors away from other, riskier direct investment options.

The lack of an investment cap makes capital investment bonds an appealing option for those looking to make large capital investments and enjoy an even greater return on their cash – though the steep initial investments required, usually in the region of £5,000 or £10,000, can make them less realistic for first-time investors.

Another advantage of capital investment bonds over less flexible investments is that your money can be withdrawn at any time, though this will naturally reduce your interest. You will be permitted tax-deferred withdrawals up to a certain amount each year, typically five per cent, which can carry over to the next financial year if unused.

If you decide that capital investment bonds are the right investment option for you, you’ll have a wide range of investment funds to choose from, depending which you feel best suits your situation. If you’re looking for even greater tax sheltering however, offshore bonds could be a more ideal solution, though this will depend on factors such as withholding taxes and charges and your likely investment terms and returns. That said, it’s always important to seek sound financial advice before making and decisions. A financial adviser can assist you with making these decisions, and help you take your first tentative steps into the exciting and high-paying world of the stock market, without risking all your hard-earned money in the process.

About the Author

Paul is a part of the digital blogging team at cashzilla.co.uk who work with brands like Standard Life. For more information about me, or to keep up to date with the latest in finance news, check out my posts at cashzilla.co.uk or visit my Twitter account, @cashzilla.

Investment Strategies: Japan, Bonds, United States Oil, Gold