Fixed interest bonds

Ian_Weaver

I'm new here, but just wanted to ask whether it's felt that putting money into fixed interest bonds for 5 years is a good idea at the moment?

Ian

Old_Slaphead

Depends on your circumstances / requirements.

Personally I wouldn't - 5 years is, IMO, too long at today's rates. I would consider 3 years for 5%.

oldvicar

I have noticed an increasing trend for fixed-term bonds to say 'no access during the term, except on death'. Whilst I never invest in a fixed term expecting to want to exit early, I always choose those where, if needs be, I could. The penaltiies for early closure may be significant (they are going up too), but even say 1 year's interest penalty is quite acceptable in an emergency.

chucknorris

Ian_Weaver wrote: »

I'm new here, but just wanted to ask whether it's felt that putting money into fixed interest bonds for 5 years is a good idea at the moment?

Ian

I'm currently diverting the cash from my long term bonds as they mature into ftse trackers, but as well as being a punt due to dissapointment at the low rates currently available it is also balancing my portfolio.

But I wouldn't put it into the ftse if I didn't have quite a bit in cash savings also giving me balance. I assume that you have used your ISA allowance? I know the isa rates aren't great but you still get that isa status and it can be transferred in later years when better isa's are available.

Ian_Weaver

Yes ISAs are sorted - I am looking to split my cash into 1,2,3 and 5 year bonds so that I have a constant supply and hopefully shouldn't need to cash in early. Another factor is I'm a non taxpayer (invalid pension not taxed) so qualify for the gross rates for much of it. I just wonder if 5 years is too long with regards to what interest rates might or might not do.

Ian

meatandtwoveg

http://www.cheltglos.co.uk/savings/fixed-rates/index.html

Ian_Weaver

Thanks meatandtwoveg - I like the 3 year step - best rates I've seen so far

Ian

Jake'sGran

SAGA are doing a three year bond @ 4.2% if you are over 50.

oldvicar

My 5-year bond pays 7.00%. I bought it 3 years ago, when interest rates were going down.

The best 5-year bonds currently pay what - 5.00% or less? You will all have your own views on the likely trend for rates. My guess is continuing broadly as they are for longer than most people expect, then going through the roof.

bobbyj_2

I have a number of 5yr fixes most paying over 5%. I just open a new one every so often so the returns are 'stepped'. No problem fixing for 5 yrs personally.