Where can I learn about bonds/investments/risks etc

fimonkey

Anyone know a mickey mouse site that teaches the basics of this?

I have 30K. Originally I was going to use it for a house deposit, but even with that amount of deposit I'm still priced out of the market for what I want in the area I want (2 bed in Christchurch, Dorset). Hence I've decided to continue saving and I was thinking of putting it all into the A&L savings account which pays 6.1%AER Gross. (Already got the maximum in my NS&I ISA and I pay £100 p.m into A&L's regular 12% saver).

However, now I'm reading threads that say things like '1 year guaranteed bond for 6,45%' and I see Abbey have a 'bond or term' paying 8.1% AER.

1. What's the difference between 'bond' or 'term'?

I only want to invest this for 1 year in the first instance, to see if the long awaited house price 'correction' ever happens.

2. What's the risk with 'bond' or 'term'? could I end up loosing all of my initial investment?

3. Is the return based on the FTSE? And has the FTSE always risen more than interest rates in the past 10 years?

4. Any other idea's of what I should do to maximise this 30K please?, but relatively low risk as it's the only money I have.

btw, I do intend to see an IFA at some point, but I'd like to have ahead start rather than blindly follow what ever they tell me.

Many thanks

Ian_W

1. "Term" means for a fixed period usually with a penalty if you withdraw early. "Bond" in the context you're asking is a marketing term which in itself means nothing but sounds good - the name's Bond, Guaranteed Equity Bond! Read the T&Cs of these Bonds which usually promise stock market growth but set the bar so high you'll often get nothing but your money back or less than you'd have earned in a savings account. BTW Abbey aren't AFAIK offering an 8.1% bond, they're offering an ISA with that interest for 1 year provided you put the same amount in a GEB for 3 yrs - which is likely to disappoint a lot of folks when it matures.
2. In bank terms for Bond - inflation as you're often likely to get back less than the rate of inflation but most guarantee your capital is safe.
3. Usually and sometimes - but a lot of these Bonds use averaging which lowers the return in their favour and of course the FTSE can go down as well as up so whatever happened in the past happened then it doesn't mean it will happen when you want it to.
4. For 1 year and relatively low risk the A&L account is pretty good but again read the T&Cs re withdrawals.

If you want to know about investing and proper Bonds for the future try HERE for starters.

Jake'sGran

As you are new to all these terms I would definitely steer clear of Guaranteed Equity Bonds. To get your lump sum earning asap I would put it in a one year bond earning the best rate you can find. At the moment people are reluctant to put money away for fixed terms over one year as there is expected to be another base rate rise. It didn't happen this week but will probably happen in the next month or so. In these conditions many building societies increase their rates on savings (or they should do) and if you have locked your money away for, say, three years you could lose out. Don't forget to use your mini cash ISA allowance if you haven't already done so but not with A & L. This week I realised that the £3000 cash ISA I put in their hands last year @ 5.2% is now earning 5%. I dislike A&L for various reasons and therefore will never invest with them again.

Brum_Man

This week I realised that the £3000 cash ISA I put in their hands last year @ 5.2% is now earning 5%. I dislike A&L for various reasons and therefore will never invest with them again.

That's because you put the money in there when they were offerring a bonus of 0.7% on top the standard rate of 4.5% at the time of offering. It was made clear when you opened it that this ran out on 30th April so surely it was up to you to move it before this date?