Income Bonds

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Income Bonds

If you are looking for a regular monthly income, it's worth considering Income Bonds from National Savings. They are low risk, which means that you won't lose your original capital, and interest is paid to you gross.

This makes them particularly suitable for non-taxpayers, or for people who are retired and looking for a regular cash flow to pay bills or household expenses. They are less suitable for younger people who can afford to take greater risk with their money and who should be aiming to build up a capital sum, rather than withdrawing regular income.

The advantage is that interest is calculated daily. However, the interest rate is not fixed, which is good news when base rates are rising, but not so good when rates are falling. Bear in mind that National Savings do not pay the best rates in the market, so you have to weigh up the pros and cons. You will have a secure investment, but your money won't necessarily be keeping pace with inflation, particularly as you may be withdrawing all the interest earned each month.

The Income Bonds allow you to invest from £500 to £1 million and gross interest is paid directly to your bank or building society. Interest rates are tiered, with better rates available for sums of £25,000 and over. They are very secure, but they are not really suitable for money that you might need at short notice. In order to ensure you don't lose any interest, you need to give three month's notice if you want to cash your bonds in.

You can get more information from the National Savings website (www.nsandi.com), from Post Offices, or by calling 0845 964 5000.

There are many types of investment bond available for income or capital growth. See the complete guide at www.Investments.co.uk/Financial_Investments/Investment_Bonds

www.Investments.co.uk covers every type of investment available in the UK. You can also visit us at www.Investments.co.uk/Property_Investments for everything you need to know about investing your money in property.