Two or three year Fixed Bonds

sindersoot

I have a sum of money that I won't need to touch for a few years. I am thinking of one of the Fixed Rate Bonds either a two or three year. AA currently have one at 2 yrs 4.35% AER and Barnsley at 3 yrs 5% AER. I don't pay tax and was wondering if anyone has any opinions on tying up saving for this length of time given the current financial climate or is there anything better out there that doesn't entail any risk.

ctdctd

sindersoot wrote: »

I have a sum of money that I won't need to touch for a few years. I am thinking of one of the Fixed Rate Bonds either a two or three year. AA currently have one at 2 yrs 4.35% AER and Barnsley at 3 yrs 5% AER.

I've just gone for the Principality 5.1% for 3 years and two months.
If the worst happens (or the best depending on your point of view!) and interest rates soar, there is a get out clause with the loss of 360 days interest.

I also put some into a two year jobbie a couple of months ago at 4.15% with a variable get out clause of up to 120 days.

Couldn't think of anything better!

HTH

triplea35

Consider 'laddering' your savings. If you have a reasonable pot to save divide it in three and put a 1/3 in a one year bond, 1/3 in a two year bond, and the last 1/3 in a three year bond.
Two benefits of this: part of your savings are more readily accessible in the event you do need to draw on them, and the other is that 1/3 of your money can be reinvested at better rates if the market improves.
Find the best rates for each term of this site or one like www.moneyfacts.co.uk

Liz33

That's a good idea triplea35, i've got some money to save for a longer term also and was concerned about tying it all up for too long, i'm going to look at doing that.

Georgia_Clanchy

Thanks for info..not sure about losing 360 days interest though

sindersoot

Thanks for all your replies.

I too like the idea of laddering savings, makes a lot of sense. I had actually been planning on putting away a certain amount on a shorter term with easy access in case of emergencies. I will now have a look at three accounts instead of planned two!

Going back to Principality being a higher rate at 5.1% are they as safe as AA and Barnsley? I wouldn't like to lose 360 days interest either - ooch!

Also, taken out credit card with % interest on purchases for 9 months which will allow me to gain a bit more interest on savings. Will pay off in full just prior to 9 months expiring. I never allow myself to pay interest on a credit card!

fullstop

Principality BS is just as safe as any other BS covered by the FSCS up to £50.000 per person.

sindersoot

Thanks fullstop, that's good to know.

cvd

I have a fixed term bond maturing with the Coventry at the end of this month and they have offered me a new 3 year bond fixed at 5.1% gross p.a with 90 days loss of interest on any amount withdrawn before the completion of the term on 31.08.2012.

This bond is not advertised on their web site. I do not know if this is because it is new or they are only planning to offer it to existing bond holders to tempt them to leave their savings with the Coventry.

Primrose

Nobody really knows what's going to happen to interest rates over the next two or three years so I think splitting the money into three separate accounts with differing maturing times makes a lot of sense. You say you don't pay tax at the moment. If there's any likelihood that you might end up doing so over the next three years the other option is to protect your future interests by putting some of the money in a cash ISA.

sindersoot

Hi Primrose, thanks for advice. I will keep in mind what you say about paying tax in the future and using a cash Isa.