Bonds
Explained
Interest rates for savings accounts are still at a low despite a rise to 0.5% for the first time in a decade. The world’s stock markets are volatile as global economic uncertainty continues. For investors searching for an alternative that delivers both above market returns and a relatively safe option, the bond market is worth considering. Bonds are essentially loans to a company and are a relatively simple investment vehicle to get your head around and start using to your advantage. It tends to be that the higher the rate the bond / company pays the higher the risk, which is why we tend to only promote bonds where there is the additional comfort of asset backing of some description
Bonds Explained – Watch the Video
What is a bond?
A bond is also referred to as fixed income security and sometimes a Debenture
A bond is essentially a loan given to a business or the government. As the investor, you are the creditor, loaning your money for a defined period of time for an interest rate.
Interest rates can be both variable where they fluctuate reflecting market conditions or fixed, giving you certainty.
Bonds are issued when companies or other organisations need to raise additional capital, this can be for a variety of reasons, for instance, to refinance existing debts or to fund a new project.
Earning money from a bond
During the bond term from a bond from one of our Corporate Clients you can expect to receive regular interest payments. When the maturity date is reached, the loaned funds (the bond) are returned. If you were to purchase a bond for say £10,000 with a 15% interest rate, you would receive £1,500 annually over the bond term. Typically sold in small denominations, such as £5,000 or £10,000, bonds give you the flexibility to invest as much or as little as you want in a venture.
When compared to traditional bond markets, our Corporate Clients bonds tend to offer less volatility in pricing as there is usually no central market for trading these bonds. Bonds are usually bought by investing directly with the Company via an Investment Invitation, and the bonds are not normally designed to be traded on any secondary market.
Anyone can invest in bonds, choosing either individual bonds such as the bonds from our corporate clients or perhaps a government bond or a mutual fund bond to match your risk profile and needs.
Your bond investment £10,000
Your interest rate 15% per annum
How Do Property Bonds Generate Good Returns
You receive £1,500 annually over bond term
Bond interest rates are to rise further, find out why.
*Sample based on an investment total of £10,000
Why invest in a bond?
There’s been a growing interest and demand for traditional bonds in the UK in 2017 – in part, this could be due to the political and economic uncertainty the country is facing but, there’s also a case to be made for the potential returns a bond has to offer over typical savings accounts. The latest figures (2017) show that £4.9 billion has been placed in fixed-income funds in the three months to October 1 2017, totalling £9 billion over the 12 months to October.
Of the different asset classes, bonds were the bestselling throughout the third quarter 2017, with a particular focus on the strategic bond sector (www.theinvestmentassociation.org). The strong trade of bonds indicates that even as interest rates are poised to rise further in coming quarters, bonds still offer an attractive investment proposition to those keen to maximise their savings, diversify their portfolio and offset risk. The evidence is that there is large scale divesting of traditional bonds at this time…
Billions spent on Fixed Income Funds
There are multiple reasons to choose to place your funds in the bond market
Higher interest rates
Diversify your portfolio
Less associated risk
As with any type of investment, there are also disadvantages to weigh up against the advantages. As interest rates rise, there is a growing risk that the value of traditional (market traded and listed) bonds could be reduced when they reach maturity. As a result, it’s important to understand how interest rates are expected to move in the medium term so you can purchase bonds that reflect this
What areas can I invest in with a bond?
The bond market is hugely diverse. Bonds are released by both governments and private companies, allowing you to place your money into a range of projects. With the freedom to choose where your money is being placed, you can pick the areas that maximise profits and reduce risk, from fast growing property firms to manufacturing companies investing in the future.
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Since engaging the services of Michael and the U.K. Asset company both my partner and I have established a higher level of structure and disciplines to our finances.
Graham MacKim
Halstead, Essex
I have been a client of the U.K. Asset company for many years and am very happy with the service they provide. My contact there is professional, responsive and always happy to go the extra mile to deliver what is needed.
Mark johnson
Southampton, Hampshire
The customer service here is excellent. I have always found them to be informative and answered my questions fully. I have no hesitation in recommending them wholeheartedly.
Luke Richardson
London
I received 12% on my investment. Liam explained how straightforward investing into property bonds was. I'm planning on investing again.
Harry Smith
Ipswich, Suffolk
I performed my own extensive due diligence on a number of property bonds and opted to invest my funds in a 5 year bond.
Jemma Whitaker
Bristol
With banks paying so little interest at the moment we wanted to invest in property. As we have no experience with tenants and property management we decided to invest in Property Bonds after speaking with the U.K. Asset Company. They are very friendly and have all the information about the different options ready when asking for it. Great company
Marcus Pilgrim
London
