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3.30%

Best 1 year

3.50%

Best 2 year

3.80%

Best 3 year

4.00%

Best 4 year

4.05%

Best 5 year

4.52%

Capital Bonds

Capital bonds are investments which guarantee the investor a fixed rate of return after a period of approximately five years. These bonds are usually invested at a specific interest rate and every year this interest is reinvested causing the initial amount to grow. The interest with every passing year will then be larger than the last and invested once again so that it grows even larger. Many people prefer this type of investment because there is no risk involved and they will be informed of exactly how much they will receive once the investment term has come to an end.

The investments are listed in a series and each of them has their own rate of return. Choosing the right series is important as the rates can fluctuate from high to low, although you will always be assured of getting at least a certain amount back from your investment as well as the interest that it has accumulated over the past five years. Once the term has ended you can always reinvest it in order to make even more money from your interest.

The amounts that can be invested range from about £100 to £1,000,000 (which cannot be exceeded). The term is usually fixed at five years and the investor should avoid withdrawing any money from that investment until the fixed period has come to an end. If they wish to withdraw their money then they can do so at any time as long as £100 remains in order to keep the investment growing. If they decide to withdraw some of their investment then they will have to pay a penalty fee. If you happen to withdraw from the investment within the first year then you might not be entitled to any interest within that time period.

This investment opportunity is available to those that are aged seven years and older but those that are younger can have investments made for them by another party. This is a very appealing option for those people who want to invest a minor’s money without having to worry about losing it in a risky investment. What adds to the popularity of this investment is that the interest that is earned from the investment is not taxable; you will be able to receive the full amount without paying any tax on it.

Investment bonds are popular with those people who want to invest in a no-risk opportunity. The fact that they will be informed of the results of their investment also appeals to them. They can invest relatively small amounts or larger amounts, depending on their tastes and they will still be able to make a profit from it.

It is important only to invest money that you can do without. This will prevent you from withdrawing from the investment and losing possible interest which may have accrued during the first year. This is also important because of the fact that the more money you invest, the more you interest you will accrue. You will then be able to withdraw more money when the investment period ends without having to pay any of it to the taxman.