What are bonds?

Sackagold

I've seen them mentioned in the same breath as ISAs, are they fixed-term cash ISAs? or something completely different?

turbobob

Its a word with several meanings. It can mean fixed term deposit accounts (which could be in the form of a cash ISA). Or it could refer to fixed interest securities such as corporate bonds which are basically loans made to companies. This type of bond can be held in stocks and shares ISA's either individually or as part of a managed fund.

LittleVoice

It is now generally a term used to market a product to suggest that it is safe. That doesn't mean that they are all risk-free savings.

dunstonh

investment bonds (technically a misname going back decades)
guaranteed bonds (another misname often used for structured products
fixed term deposits (more recently misnamed bonds by the banks)
corporate bonds
high yield bonds (variation of above)
portfolio bonds
NS&I have had a few products with the name bond in them over the years.
there are also others.

Bond has really become a marketing name used for a wide range of products to often dumb down from the real name or to make it sound more attractive. i.e. Investment Bonds are generically known as single premium, non qualifying,whole of life assurance plans. You can see why investment bond became their marketing name.

It is now generally a term used to market a product to suggest that it is safe. That doesn't mean that they are all risk-free savings.

Apart from when its used with investments.

cepheus

A bond is is usually a formal contract where a lender transfers a capital sum to a borrower who is obliged to return that capital at some future date plus periodic interest payments. The less reliable the lender or security is, the more interest is usually paid to cover the risk the borrower is taking.

Some bonds are tradeable and their value will fluctuate depending upon the credit worthness of the borrower, the time to maturity and underlying interest rates.

Sackagold

Thanks. I've just spoken to Nationwide about their fixed-rate ISA, this is a "fixed-term deposit" for 3 years, they said I couldn't make anymore deposits but I could open a bond (or two?), does this mean the money is still tax-free, and does it also mean that my deposits won't be accumulating in the ISA?

LittleVoice

Sackagold wrote: »

Thanks. I've just spoken to Nationwide about their fixed-rate ISA, this is a "fixed-term deposit" for 3 years, they said I couldn't make anymore deposits but I could open a bond (or two?), does this mean the money is still tax-free, and does it also mean that my deposits won't be accumulating in the ISA?

Look here http://www.nationwide.co.uk/savings/bonds/ . You will see that it shows all Bonds have a gross and a nett interest rate. Nett shows that the interest is taxable. (There is an ISA with "Bond" in its name but that requires a number of years of membership.)

If you have opened one ISA account this year then you cannot open another. You would have to wait till the new tax year on 6 April 2011.

Sackagold

opinions4u wrote: »

ITV1 - now.

You might catch the last half hour .

haha i've been catching sunday afternoon bonds for about 2 months!