Bonds

Loughton_Monkey

Forum_User wrote: »

BONDS LINKED TO STOCKS AND SHARES, i.e. you take out a bond and the profit margin is linked to the stock market. They are frequently referred to as stocks and shares bonds.

But, as I said, what I am looking for is something to do with a few grand, which I can lock up for around 5 years if needs be, MAYBE even up to 10, but I'm generally looking at around 3-5 here. I don't mind having no access to it, but what I am looking for is what is likely to give me the highest growth yield.

I don't mind if it has a risk element to it but would preferably like a guaranteed growth, and a decent one at that.

There is.

Methinks you are getting rather confused. You are looking for 'decent growth', which is 'guaranteed' and 'highest yield'.

I am really totally confused with what you want. If you want to invest in Stocks & Shares for a 5 to 10 year period, why are you not doing the obvious and using a tax free Stocks & Shares ISA?

If you want a 'bond', why not look at the bond market. These are not Stocks and Shares. These are loans to corporations at a fixed rate of interest.

If you are looking at a high street bank product [where they often use terms such as guaranteed growth... bond... in an attempt to confuse the unsphisticated investor that they are buying something 'fantastic'] then the only 'advice' you will normally get here is to avoid these miserable products like the plague.

Forum_User_2

dunstonh wrote: »

There is no generic product of that name.

You are now describing what are generically called structured products.

They are not bonds. Although in the past some referred to them as guaranteed equity bonds. However, once it became clear they were not guaranteed, that soon stopped.

There is, as I have already stated. Do not think that just you saying there isn't means there isn't.

Forum_User_2

jimjames wrote: »

Probably a good idea to listen to Dunstonh's comments as he has a far better understanding of what products are available.

If you are prepared to leave the money for 5-10 years then you may be better off to invest directly in a share based ISA. You don't then have any of the lock ins that the structured products have. The amount isn't guaranteed but at least you will benefit from 100% of the growth of the stock market plus dividends unlike these products.

What interest rate do they pay? Do they give you a monthly yield or yearly?

dunstonh

There is, as I have already stated. Do not think that just you saying there isn't means there isn't.

and do you think that you saying there is means there is? Please provide evidence of such a product as we would appreciate it. Maybe a link to such a product.

It isnt an attempt be difficult. You are dropping in various bits of terminology that apply to different types of investment. It is very difficult to see what you are after at the moment. My guess is that you are talking about structured products but the mention of bond and yield is clouding the issue.

jimjames

Forum_User wrote: »

What interest rate do they pay? Do they give you a monthly yield or yearly?

Mostly yearly or 6 monthly.

The current yield for Equity income funds are around 4 - 4.5%. Obviously this depends on the dividends received from companies in the portfolio and something like BP cancelling their dividend can have an effect. However unlike a cash ISA you don't need to move your money at the end of the year due to the rate dropping to 0.1% and also unlike cash your capital isn't guaranteed. Long term however shares should outperform cash deposits. Despite the massive events of the last few years and stock market drops of 50% the markets are pretty much back to where they were before the credit crunch.

Please listen to the advice being given, as you are asking the question for help accept there are some very knowledgable people here that based on your inital post know more than you about investments. Just because a bank decided to come up with a product name that suggests it is "stocks and shares bond" doesn't mean that this is a product class that exists.

A bond is an IOU issued by a company
A share is part ownership of a company

The two are very different but as dunstonh has mentioned bond is a very misused word in investment terminology.

Rollinghome

Forum_User wrote: »

There is, as I have already stated. Do not think that just you saying there isn't means there isn't.

As with many words in English 'bond' has many meanings. The original meaning was 'fetter'. Among the dozens of meanings it's now used frequently for savings and investments and people tend to think that their usage of the term, whatever that is, is the more correct.

In savings, the term is often used for fixed-term saving; in investments a 'corporate bond' is a IOU for a loan to a company and also used for various products sold by banks and advisers. The latter often pay high rates of commission to advisers and only rarely are worth buying.

If you want to invest modest sums in corporate bonds and shares (shares, stocks and equities all mean much the same) then unit trusts or investment trusts are likely to be the most suitable way especially if inside an ISA. They're flexible, can be sold at any time and there's a wide range. You can find out more at www.bestinvest.co.uk and www.h-l.co.uk.

Whether now is the best time to be investing in either corporate bonds or equities is another question. Advisers who depend on sales commission will always say that it is of course. Many of the most respected fund managers are more sceptical with some moving from equities and bonds to cash. It's your call.

Forum_User_2

Well, I have seen many products in the past under this name. No I do not have a link, but it doesn't really bother me if you believe me or not. That isn't meant to offend but just to say the purpose of these post is not to inform or argue about the names of anything. But I personally know such products to exist under the name I mentioned. Maybe that isn't the product I'm after, I'm not expert, but it was worth mentioning.

Anyway, just to clarify, what I am asking for, these are basically what I want. Please if anyone wants to advise, I would strongly appreciate:

Don't mind locking away as long as it serves to improve the rate I get
Don't mind variable/risky rates as long as there is some kind of guaranteed minimum that will mean some kind of growth is certain (often these products give a rate such as 0.5% guaranteed +variable growth). Educated risk is not out of the question
Can lock away up to 5 years but of course if rates are going to go up in the next few years this might not be best
Would prefer monthly/more regularly than yearly interest yield but not at massive rate reduction

As close to these conditions as possible, I know there isn't always the perfect option but these are what I want the most and I will go for what best suits my needs.

Also yes I am doing my own Googling and other research too But anything people with more knowledge can tell me may help me a lot too

Thanks everyone that has contributed to this discussion so far

Ilya_Ilyich

Interestingly this thread is the #1 google result (out of 2,760) for "stocks and shares bond".

dunstonh

Well, I have seen many products in the past under this name. No I do not have a link, but it doesn't really bother me if you believe me or not.

If you cant link to a product of this type and we cannot identify the product type you are talking about (given your varied use of conflicting terminology) then how can we "advise" you if its a good idea or not?

Forum_User_2

If you can't, then don't! I still have the right to ask!