With profits bond investment

Tiger_the_cat

We have a with profits bond which is 10 years old and is approaching is Capital Guarantee Date. In the last 10 years it has increased by £11k. This year it's giving 7% interest. Should we leave as it is or should we cash in to preserve the last 10 years of interest, if so, what should we do with our capital? We are not risk takers so need a reasonably safe investment as this would be our retirement nestegg.

dunstonh

This year it's giving 7% interest.

If you are in a with profits fund then you are not getting interest.

7% sounds rather high currently for a current bonus rate. Are you sure that figure is correct?

We are not risk takers so need a reasonably safe investment as this would be our retirement nestegg.

Most With Profits funds are between cautious and balanced in risk. Most are also obsolete with only a few still worth considering.

You should take this opportunity to analyse and review it and compare it with modern alternatives.

Tiger_the_cat

Sorry, used the incorrect terms. The difference in the valuation of the contracts between 2010 and 2011 statements is equivalent to approx 7% increase.

Geopulse

Tiger_the_cat wrote: »

We are not risk takers so need a reasonably safe investment as this would be our retirement nestegg.

If you need to avoid the risks of bond investment then this article can of great help http://www.articlesbase.com/investing-articles/risks-of-investing-in-bonds-4760108.html

dunstonh

Geopulse wrote: »

If you need to avoid the risks of bond investment then this article can of great help http://www.articlesbase.com/investing-articles/risks-of-investing-in-bonds-4760108.html

Bond in the context of this thread is investment bond. i.e. the life assurance tax wrapper.

The site you link to talks about bonds as a type of investment (i.e. corporate bonds). The two things are different.

Bond is the most misused name in financial services. Even fixed term deposits are being called bonds nowadays.

kidmugsy

One rather cautious policy would be this. You and your spouse could each invest £15k into ns&i Index-Linked Savings Certificates. If you have more than £30k, you could also each open one in trust for the other. After you've held them for a year, decide whether to hold them longer or cash them in (in whole or in part) and invest in something else.