Investec 3 year bond

TheGoldfish

I have a one year bond that matures later this month with Investec and have had an email asking what I would like to do with the funds. One option they have given me is a 3 year bond with the following features :-


[FONT=arial, Helvetica, sans-serif]3 year fixed term deposit with no early closure or withdrawals permitted during this period[/FONT]
[FONT=arial, Helvetica, sans-serif]The interest rate payable will be 1% above the Bank of England Base Rate, and is a variable rate[/FONT]
[FONT=arial, Helvetica, sans-serif]Minimum interest rate of 2.60% AER*[/FONT]
[FONT=arial, Helvetica, sans-serif]Interest will be paid annually[/FONT]
[FONT=arial, Helvetica, sans-serif]Minimum deposit of £25,000 - Maximum deposit of £2,000,000[/FONT]


I will have £45k to invest and to me this looks quite a good deal. I already have maximum funds in the Santander 123 account for their 3%.

Any comments on the Investec bond would be appreciated

Reaper

Yes it sounds like a fair deal. However just be aware you could get slightly more elsewhere, such as Shawbrook Bank 2.75% over 3 years (and a lower minimum at £5,000).

I assume it is the link to the Bank of England Base Rate which appeals to you. If so note as they add 1% to the base it means the Bank of England base rate has to rise from 0.5% to above 1.6% before you start to benefit from any rises.

ManAtHome

I'm going for one of these (already have the Shawbrook) - reasonable rate for a 3 year fix with a bit of protection for year 3. Note that the Investec pays out the interest every year, so no compounding.

kidmugsy

You have a nice opportunity there to diversify across Shawbrook and Investec. If you are a taxpayer, and have some NISA capacity spare, you could also consider a three year, fixed rate, tax-free account.
https://forums.moneysavingexpert.com/discussion/401374

bowlhead99

Aldermore is 2.7% for a 3 year fix with no early withdrawal. So, that beats investec for as long as the bank base rate stays below 1.7.

With the slightly higher rate at the start(i.e., currently beating investec by 0.1%), you could afford the base rate to go up to 1.9% in the last year as long as it had remained at 1.6 or less for the first two, and still be better off having used Aldermore.

Of course, 0.1% p.a. is only £40 on £40k and so you may not be too fussed either way. Aldermore are a quality outfit with a good reputation for customer service and a host of best buy awards in recent years, so I wouldn't overlook them if you're happy with something like the Shawbrook product at very similar rates and no base rate tracking.