Savings bonds - explained

Most people feel they have a fairly good grasp of savings accounts, and know how to judge what will work best for them (if not, read our savings articles here at mysalary!)

However, there are lots of savings and investment products out there, and there is no need to shy away if you don't instantly know what they are - you can always learn and educate yourself as to these products!

One type of savings product that many are unsure of is the Savings Bond.

Who is this product for?

Bonds are best for those who are happy to lock their money away for years at a time, for instance 1, 2, 3 years are typical however bond products can run for more years than that.

The attraction with a bond is that you will tend to get a rate of interest that is two things: good (in terms of fairly high) and guaranteed - which means that even if interest rates move about during that period the bank or issuer of the bond guarantees to honour the initial rate.

Therefore this can be a good way to ensure against sudden changes in the interest rate - perhaps particularly if you field it is going to go down then you can lock money into a bond paying at a good interest rate.

Many bonds also let you have the interest paid monthly or annually, of course because the money is locked away this should not make much money to you but some do like to have it monthly so they can watch their money growing on a shorter timescale.

Bonds are also good for those who have masses of money to lock away, because the maximum deposit is usually suitably large and often around the million mark, if you're a personal banking customer with that sort of cash then you can probably afford to have some of it locked away unless you wish to buy a house in London!

So, if you have money that you are happy to have saved away for a fair period of time, and you want a guaranteed interest rate, then do shop around and look at the different bond rates out there, and you could have just found a savings product that is just right for you!

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