Guaranteed Income Bonds

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Guaranteed Income Bonds

Guaranteed Income is safe, regular income. Just like it says, a guaranteed income bond means a cast-iron, regular income from your investment.

Caution

Although a simple product, this investment should be approached with caution. A guaranteed income bond may assure you of a set level of income throughout the time period - typically from one year to 10 - but the return on bonds generally can rise or fall meanwhile during this time period.

You are, in effect, locking yourself in as you would with a long term fixed rate mortgage deal. However, your capital is normally guaranteed to be safe, and is returned provided the bond is held until maturity.

Low risk investments

On the positive side, they are definitely a low risk investment. Income can be taken monthly or annually - see the tax guide for details of how income is taxed.

For those who opt for a monthly income option, a payment is paid direct into your bank account normally at the beginning of the month. If you prefer income paid annually, it is usually paid on the policy's annual anniversary. Like so many other income products, if you decide to cash in the bond before it matures there will certainly be penalties, and well may not receive the full amount of capital back.

Check the terms offered by the provider before committing yourself.