Investment Bonds
Investment Bonds
The minimum investment is usually £5,000 or £10,000 and they are normally designed to produce long term capital growth or income. They should not be mistaken for Fixed Rate Bonds, Fixed Term Deposits or Structured Cash Deposits – as these are deposit accounts offered by banks and building societies and, in general, are capital protected.
When you buy an Investment Bond you are allocated a certain number of units in the fund(s) recommended. Investment Managers then place your money in a ‘pooled fund’ with money from other investors, which is then placed in a variety of assets such as stocks and shares, government gilts, property, cash and other investments. The price of your units - in other words the value of your capital - will normally rise and fall in line with the value of these underlying assets and is not guaranteed.
Benefits
- Low investment limits
- Efficient for trust planning
- Wide fund choice
Potential Drawbacks
- Risk to the capital return
- Lack of transparency
- Charges can be higher compared to deposit-based accounts
- For With Profits Bonds, Market Value Reductions (MVRs) could be applicable or during a period of market volatility. This is an adjustment mechanism used to prevent those who encash their bonds early from taking more than their fair share of the With Profits Fund
Taxation
- Gains subject to income tax
All investment returns are determined by performance, market conditions and overall economic factors.
To read about your other investment options, click on the following links:
To find out more about any of
the services we’ve mentioned
simply:
- Contact your SFS Financial Adviser
- Call a member of our Client
Help Line on 0800 137 832 - Visit your local Skipton
Building Society branch to
arrange an appointment with
an SFS Adviser
Assess how much money you need to save to reach future savings targets.
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