Further down the risk scale, an Aviva bond pays 8. A good bet might be Lloyds Bank, which has a bond maturing in three years and one month, which is paying 5. But the tie-in is 16 years. You're betting on Mario Monti making sure the Italians pay up. Advantages Much better rates than deposit accounts.
If the bond has more than five years to maturity, you can put it in a tax-free Isa. You can access your cash during the term by selling the bond, although you will only get the market value — which could be more or less than the total you originally put in. Ideally, you will want to keep it until it matures. Drawbacks The risk of defaults and "haircuts". You may lose some of your capital if you sell before the maturity date although you could make some, too.
Bonds trade on the money markets, and their prices rise and fall according to demand. If the markets believe interest rates are going to rise, the capital value of the bond is likely to fall. How to invest Easier than you think.
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Retail broker Hargreaves Lansdown has a service for small investors who want to buy it has on offer — go to hl. Additional costs for putting it into an Isa. Lots of other similar deals — the London Stock Exchange has a "locate a broker" page on its website. Most banks and building societies offer a cash Isa, but shop around for the best deal. Also be prepared to move your old Isa money across to the latest best-payer. There are two types of cash Isa — those that pay a variable rate and those that are fixed.
The fixed ones pay a higher interest rate, but if you take your money out before the fixed term, you may suffer penalties. Currently the best rate on a standard cash Isa is from Nationwide building society, at 3. After that Cheshire BS pays 3. Always look out for a fall in headline rates — Nationwide promises 3. If you're happy to lock your money away, the best deals fixed over one year are Aldermore at 3.
The Halifax and the Post Office are paying 3. NatWest is offering the highest fixed interest rates if you transfer from other providers. The bank will pay preferential rates to those switching Isa providers — 3. This is per person, per authorised firm. Advantages Income is tax free. You can transfer past Isas with relative ease. Drawbacks Best deals often include one-year only bonus. Interest rates on many cash Isas drop in later years. Rates can be worse than non-Isa accounts. How to invest Look at the Guardian Money best buy tables or on moneyfacts. The deal These are the savings accounts from banks and building societies that pay the highest rates of interest, but only if you lock your money away for two to five years.
The capital is guaranteed and backed by the FSCS and the rates can be attractive. The risk is that you need the money before the bond matures. Cashing in a bond early usually results in stiff penalties. The longer you are willing to lock the money away, the better rate you receive. Currently, the best short-term fixed rate bonds, where you can't access the money for a year, come from First Save 3.
If you prefer a better-known name, Bank of Scotland has a one-year bond at 3.
Once you move to a three-year lock-in, the rates improve markedly. Clydesdale Bank and Yorkshire Bank both part of the same group have a three-year fixed-rate bond paying 4. The highest interest rate, 4. If you're unfamiliar with the name, the BM stands for Birmingham Midshires and ultimately it's part of the Lloyds Bank group.
It is available online or by phone on But watch out for the early withdrawal charge, which can range from 90 to days' interest on the amount withdrawn. Other long-term fixed-rate deals include the AA 4. If you have already used up your cash Isa allowance, and you don't want to lock the rest of your money away in a fixed-rate bond, another alternative is the Investec High 5 and High 10 accounts. These promise to pay the average interest rate of the top five and top ten best-buy accounts as published by Moneyfacts, so your account should always pay a good rate.
Currently, it would give you a rate of either 3. Nationwide has a Champion Saver account that aggregates the five highest branch-based interest rates from a group of eight high street banks, but currently that only results in an interest rate of 2. Note that Yorkshire and Clydesdale Bank are covered by the same banking licence, so any balances held by customers at both banks are combined for the purposes of FSCS compensation.
Advantages Much better rates than instant access. Drawbacks Early withdrawal charges. If interest rates bounce back from their historic lows, you may find your cash is locked into an account paying a relatively low rate of interest.
How to invest The best rates tend to be offered by specialist providers, usually without a high street presence. You'll have to do it all online or by post. Many deals are only available for a short offer period. Keep an eye out for new deals in the Guardian Money and moneyfacts. Its inflation-linked bond Issue 4 is open until 29 March at the latest, and might be withdrawn before then. It pays RPI plus 0. If RPI stays at the current level, 3. But that's a very big if. Most economists expect RPI to fall further during Advantages Your money will be protected from inflation.
Your initial capital is guaranteed. If inflation soars and some say quantitative easing must lead to price inflation then you're in the money.
Drawbacks Inflation is heading down, economists say — the CBI's central forecast is 3. At that level, the bond will be paying less than many instant-access cash Isa accounts. A "breakage" charge if you need the money early, means you may not get back as much as you deposited. Like other non-Isa products, returns are taxable at your marginal rate. How to invest Online at postoffice.
If you'd rather wait for National Savings to re-open its deal, you can pre-register at nsandi. The deal The fund manager spreads the risk of buying a single corporate bond by investing in a spread of different bonds. Table-topping Old Mutual Corporate Bond fund currently yields 4. One rule of thumb is that the higher the yield on offer, the higher the level of risk. Advantages The idea not that it always works in practice is that you earn a decent return, plus pick up a little bit of capital appreciation. The funds are less risky than single corporate bonds.
They tend to have different bonds in the portfolio, so a single default doesn't wipe you out. Drawbacks Fees, fees and fees. And diversification doesn't mean they don't get it wrong; some bond managers were hugely into the bonds of banks going into the financial crisis, and lost a lot of money. Expect to pay a small initial charge plus 1. Or visit Guardian Investing's fund and Isa supermarket.
2. Cash Isas
Alternatively, use an adviser to select a fund for you, but the initial charge may be much higher. The deal Gilts are the name given to the bonds issued by the UK government to finance our national debt. They pay a fixed rate of interest twice a year the "coupon" and return the capital on the maturity date of the bond. Ones that are maturing in two years are currently paying only 0. Hold for 30 years and you crawl up to 3.
10 ways to improve the return on your savings
This week Moody's put the UK government on "negative outlook" ahead of a possible downgrade, but we're still a long way off Greece's "junk" rating. Advantages The Treasury has never defaulted on its bonds. Anyway, it can print money to pay you back, if necessary. Please, cancel my subscription immediately. You have some nerve! I subscribed to Leeb when they offered a 1 oz complementary 1 oz silver eagle if you subscribe for 2 years. Its been a two years and they still have not sent the eagle.
It is now November, and still no refund. Customer service has acknowledge my request, but no refund to date. Save your money and avoid this marketing ploy to get you money and forget about you. Leeb has lost me for good this time. His renewal teaser was renew and receive an uncirculated silver dollar. No big deal either way except no silver dollar. I renewed and have called 3 times receiving a fresh promise each time. The principle of the deal has kicked in an I am through.
I was a subscriber to this newsletter in and all of his picks lost lots of money that time, so I canceled it in a few months.
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Leeb’s Income Performance Letter
September 1, 2: July 16, 5: May 16, 3: April 16, Other than that problem, leeb is a great contrarian indicator! January 16, 5: Well Leeb gets on a theme and pounds it into the ground. If he is right great, wrong watch out, and who has a crystal ball to know which is the case this time.
He has so many services he takes about every point of view somewhere. His more conservative letters complete investor and performance letter are the most general offering. Million Dollar portfolio was short for about 9 months of the recovery rally. Had you followed this advice you would have been killed. December 24, 7:
Related Leebs Income Performance Letter (For 2011, Growth and Dividends Will Lead Book 5)
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