Many people struggle to start investing due to the number of options available and the risk of losing money. If you're one of those people, it might be worth thinking about fixed interest bonds.
A fixed interest bond is easy enough to understand. You simply deposit a certain sum for a set number of years. You will receive set interest payments throughout the investment term, then have the original sum returned when the term ends. They make a great option for anyone who wants to get the most from their money, but they are particularly good for those new to investing.
Here are just four reasons why.
1. Low Risk
The whole reason for investing your money is to make a return, but that usually comes with a fair amount of risk. Buying shares might come with the chance of making a sizeable profit, but you can also end up having less than you started with if the value of those shares drops. Fixed interest bonds are different. They might not provide the highest possible returns, but they do provide guaranteed payments. They are also secured to ensure you'll get your original investment back.
2. Consistent Returns
Many investments can be unpredictable, but that isn't the case with fixed interest bonds. In fact, you'll know exactly how much you'll be getting in monthly interest payments and how much you'll be left with at the end of the investment term. As such, you'll be able to plan your finances around exactly how the bond will perform, not how it may perform.
3. Easy to Manage
Learning how to put money into different investment opportunities is often much simpler than people imagine, and you can always use the services of an investment manager to help out. However, those new to investing will often want an option that requires relatively little management, and fixed interest bonds are ideal in this regard. You won't need to keep checking how certain markets are doing or keep your eye on anything else. Once the money is deposited, all the work is done.
4. Easy to Diversify
Diversification is an important part of any investment portfolio, and you can even diversify within a portfolio of fixed interest bonds. It's relatively easy to manage several fixed rate bonds, and splitting your money allows for varied returns. By choosing a variety of term lengths and interest rates, you can find the right set up to meet your financial needs and get some good experience in making multiple investments.
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10 August 2023
Planning for your financial future can be tricky. With so many outgoings to juggle, the typical person finds it difficult to keep track of their spending. Learning some basic financial skills, like how to make a budget and how to invest for the future, can make a huge difference to your long-term financial health. Take a look at our posts to find out how you can save money without making big sacrifices to your way of life. Learn about essential aspects of finance, such as retirement planning. Whether your goal is to get out of debt or save for a rainy day, we can help you achieve it.