Help I have a weird Bond thing

happyhero

Hi my stepfather who is nearly 88 has asked me to help with his investments as he has dementia and the start of Parkinsons. He was a keen amateur investor and wants to simplify his accounts. He has ISA's with Hargreaves Lansdown which contain a mixture of funds and shares which he says is fine as ISA's would transfer to his spouse, ie my mother, however in one of his ISA's there is an investment which he cant remember anything about. So I phoned Hargreaves Lansdown and they were helpful but don't give advice so I don't know what to do with it, ie sell it or keep it. If he sold it we would invest the money in funds within the ISA.

The problem is we are worried about ruining something good or something that would be better left to run its course.

Hargreaves said it is a Bond but it has a percentage and a date next to the name, the name is National Grid Gas, the interest rate is 8.75% and the date is 2025. They say the date is when it will end which means my stepfather would be 98 by then and with his condition he does not think he will see that date, so he is concerned as to how it would be treated as far as his spouse is concerned, ie would it just transfer over to my mother as part of an ISA despite the fact it is a Bond?

We are surprised he was sold a Bond as we heard they normally don't sell a Bond to someone of his age. It says it was started 27th June 1995.

Information on the Fund says it has a Fixed Income/ Fixed rate Bond, it also says it is a fixed coupon type annually and will end 27th June 2025 so it appears to be a 30 year Bond. I do find that amazing as I have never heard of such a long term Bond.

Looking at the graph for the last 10 years it seems to have gone up overall but there has been a lot of up and down ie it does not look like it has grown steadily at 8.75% so how does the 8.75% work?

It looks like he put £7000 in initially and it looks like its value now is about £10500. Would it be a mistake to sell it, Hargreaves said we can sell it anytime with a phone call?

Is it going to be much better to let it run its course, ie will there be some bonuses or something at the end?

The 8.75% in today's climate sounds amazing but how does it work with the Bond?

Any help or info appreciated as Hargreaves could not advise me what to do for the best.

jimjames

It sounds like some form of corporate bond issued by National Grid. Corporate bonds are long term finance issued by companies, they are not in any way related to savings bonds that banks sell and unlike bank products these are not protected and you can lose money if the company goes bust.

8.75% refers to the interest paid on it - but this is based on the issue price not the current market value.

These types of bond can be bought and sold so they don't have to be held to maturity unlike "fixed rate bonds" sold by banks.

If it's with HL then it's unlikely that he was sold it, far more likely that he bought it without any advice. There is a big difference!

If it's paying a good income then it may be worth keeping or the money could be moved into a fund which might be less risky. However from your questions it seems that you may not understand the investments he has so it may be better to leave where it is.

kidmugsy

Banks and BSs use "bond" to mean a fixed term deposit account. Whereas this National Grid thing is, as jj says, a Corporate Bond. It will pass to your mother just like the rest of the ISA. There's nothing to be alarmed about. It will lose market value when interest rates rise, or gain market value when they fall, but meantime will pay out the promised interest, and in 2025 will pay out the promised maturity value. Unless National Grid defaults, of course, which is not awfully likely.

xylophone

Do you have Power of Attorney for your Stepfather?

If not, and his illness is at an early enough stage for him to have capacity, he should grant it?

http://www.hl.co.uk/shares/shares-search-results/n/national-grid-gas-8.75-2025

The above is the investment in question. It is a fixed rate corporate bond.

http://www.thisismoney.co.uk/money/guides/article-1714423/Corporate-bonds-A-guide-investing.html

planteria

yes, it will be a corporate bond. they are traded, as shares are.. they do not have to be held until maturity.