Investment bonds are a great way to securely save your money and grow your wealth over time. Finding the right investment bonds is crucial, and it’s essential that you confer with an expert investment bonds advice team before placing your money; that’s where Prosperity Wealth can help. We’re an expert team of independent financial advisors with decades of experience in helping clients like you make better investment choices.
Investment bonds are a lump sum investment that provides the potential for medium to long-term growth on your money. Similar to Individual Savings Accounts (ISAs), you can pay money in and take money out when necessary.
Generally, investment bonds aim to make the most of the money you put in over a five-year period, or longer. Some investment bonds have a fixed term, while others have no set term.
As investment bonds are classed as single premium life insurance policies, they can help provide a regular income throughout your pension period.
Onshore bonds are issued by an investment bond provider in the UK. These bonds are non-income investments where the insurance company pays a basic rate of tax on the bond’s income and gains. As such, basic rate taxpayers will have no additional income tax to pay, while higher rate taxpayers may have to make up the difference in the event that results in a chargeable gain. These are known as chargeable events.
Offshore investment bonds are issued by companies outside of the UK, usually referring to bonds issued in the Channel Islands, the Isle of Man, and other locations including Dublin. Carefully choosing the location and provider of offshore bonds is important as they can be domiciled in various tax jurisdictions with their own set of rules regarding taxation and access.
Chargeable events also occur in offshore bonds with much the same triggers as an onshore bond, but the main difference between the two is how these gains are taxed. In an offshore bond, income and capital gains tax is not payable on the underlying investment but Withholding Tax may be deducted from the gains received.
Designed to provide long-term capital growth and income, Capital Investment bonds usually have a defined time limit that can vary from short-term and long-term periods upwards of 30 years and can offer regular access to your money.
Capital Investment bonds provide a safer alternative to investing in the stock market, providing a consistent income and far less risk. They protect an investor’s capital regardless of whether stock prices fall.
There are two main types of Capital Investment bonds – coupon bonds and zero-coupon bonds.
With coupon bonds, investors receive periodic interest payments over the bond’s lifetime. Zero coupon bonds are bonds bought at a discounted price than the full value of the bond.
Our client had been mapping out retirement options in order to receive the most benefit alongside his pension after he retired. With some experience using savings accounts, he came to Prosperity Wealth with the goal of receiving a larger pay out.
Because investment bonds act as life insurance policies, it was the perfect recommendation to ensure he earned a regular income throughout his pension.
Our investment bonds advice team assured him that while an investment bond can carry more risk than a savings account, finding the right bond to ensure he could remain confident in his earnings was a priority.
After choosing the right plan, our client has been using his investment bond to secure a future for himself and his family after his retirement. Since then, we’ve had regular meetings with him to ensure the investment bond is performing well for him, always looking at the other market offerings to ensure that he is earning the most he possibly could while working with us, a trusted investment bond provider.
Investment bonds are purchased from an insurance provider with a required investment of at least £5,000. As such, it’s often beneficial to do research and receive advice on what provider will benefit you the most and what funds to choose. A good investment will then grow over time, allowing you to withdraw the money as a lump sum or over the course of the investment. Investment bonds advice can help you to fully understand the risks involved.
Due to the nature of this being an investment, there is a risk to your money. If your investment doesn’t perform well, then you may lose money over time. However, there are some bonds that guarantee you’ll receive at least as much as you originally invested when the term ends. This provides some more security for your money. As such, investment bonds are considered a safer way to invest.
You can access the money in an investment bond by withdrawing a lump sum from your bond at any time, depending on the stipulations of the investment, or you can cash in your investment fully. Both of these may be subject to tax implications based on the type of investment.
If you’re ready to invest your money into Bonds but want to make sure you’re making risk-averse decisions, get in touch today. We’ll be happy to provide you with a no-obligation consultation to talk through your options.
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