Two or three year Fixed Bonds

Hungerdunger

Stavros wrote: »

Why tie your money up for 3 yrs?, You can get 3.75% 1 yr fix, then see whats about in 12 months time. IMHO 3 yrs is too long for me

Well obviously no one knows for sure what will happen to interest rates over the next two years, but if I put £1k into the 3 year fix @4.5%, and you put £1k into the one-year fix @ 3.75%, you'd have to achieve at least 4.9% over the following two years to beat me.

You might well achieve that, but then again in a year's time interest rates might still be hovering around the 4% mark.

alared

I know things can change quite quickly but from what the BoE says,it`s going to hold at .5% for another year.
I don`t usually fix for more than a year but with a Halifax 1 yr fix ISA coming up for maturity and the crap rates they are currently paying,I`ve gone for the 3 yr fix at the Principality paying 4.2% tax free.

kostigovs

Hungerdunger wrote: »

Well obviously no one knows for sure what will happen to interest rates over the next two years, but if I put £1k into the 3 year fix @4.5%, and you put £1k into the one-year fix @ 3.75%, you'd have to achieve at least 4.9% over the following two years to beat me.

You might well achieve that, but then again in a year's time interest rates might still be hovering around the 4% mark.

I now find myself choosing more and more 2 or 3 year bonds for this very reason

zzzLazyDaisy

If you have £5k - £7k to save and are concerned about being locked in, you could consider LTSB vantage account. It pays 4% on balances of £5k-£7k, you have instant access to your money (it is a current account), and you can have more than one account (I think the max is three). You do have to circulate £1k through the account(s) each month, but it doesn't have to be new money.