Alternative to Bonds?

Underworld666

Hi All - I live overseas, but need to keep some liquid and semi liquid money in England. I'm very familiar with Canadian and US saving vehicles but not with English ones.

Could you help me out with listing all of the possible Bond alternatives there are in England? I'm looking for options that let me lock away money for 1 or more years. It would be good to get some options that take into account interest rates and inflation.

Thanks!

TheTracker

The U.K. Current Account is like a US Checking Account. But in the UK banks use these products as gateway drugs to sell other services so there are healthy perks on them such as 3% interest on tens of thousands of pounds. The UK has an excellent "switching service" which allows one to move bank simply and take with you regular payment instructions all within a week. This has increased competition and many banks will even pay you £100 to switch to them.

On the other hand there are easy access Savings Accounts. Despite their name they pay pitiful interest. Strange situation.

You have Notice Accounts. For agreeing not to access your money without a 30/60/120/180 day notice you get boosted interest rates.

Then there are what banks sometimes call Bonds or Fixed Term Savings. That's your 1, 2, 3, 5 year saving rate. Sometimes they allow you to make one withdrawal per year. Often they let you close early with a penalty such as forgoing of 6 months interest. They all pay less than the best current accounts, you'd need 20-50k+ just to make them worthwhile.

You also have regular savers. Put away a small amount of money (£00s) each month for a better interest rate. You become a sticky customer.

UK banks protect customer funds with a £75k per banking group compensation limit. There are also government institutions that offer full protection but lower interest.

Finally the UK has a popular but peculiar vehicle called Premium Bonds. You don't personally earn interest but collectively all interest on all peoples money enters a pot that becomes a prize pool. Each month a lottery is run on that amount and you can win a lottery of £0 through £1m. Your capital is protected. The effective rate is low.

You could also buy real Bonds or Gilts but your capital would be at risk and/or the money not fully liquid.

Finally there is p2p and you probably know about that already.

colsten

Underworld666 will find it impossible to open a UK current account, and most other UK accounts, as they are not a UK resident. If Underworld666 is a US citizen, they are also disqualified from most UK bank accounts due to the FATCA reporting obligations that banks find too costly.

It might be possible to open a ££ account with Citibank US, or an account with one of the offshore banks that operate from the Channel Islands and other places.