fixed rate bonds question

sazdes

Hi
I was just searching around for a replacement storage account for when the santander 123 account rates drops and came across fixed rate bonds when searching for top interest rates,

https://www. londoncapitalandfinance.co.uk/

This for example offers 6.5% interest on 2 yr fix and on their live chat have been assured they haven't had any borrower default since they began, and although they're not fscs protected its asset secured, given the rates are so much higher than most savings accounts can anyone point out the catch/any big risks from such an investment before I sign up?

thanks!

Ballard

You probably want to read this thread:

http://forums.moneysavingexpert.com/showthread.php?t=5346049

xylophone

Are you already using other high interest current accounts?

sazdes

yep got all the standard regular savers/lloyds/tesco/m&s, bank of scotland, halifax fivers, help to buy isa etc. More after it for my parents sake as about to sell their second home and their santander 123 is already full up, but I aim to save about £1500 a month so will be needing it for personal money storage soon shortly

thanks

MarkFromCornwall

sazdes wrote: »

Hi
I was just searching around for a replacement storage account for when the santander 123 account rates drops ....

can anyone point out the catch/any big risks from such an investment before I sign up?

It's important to realise that this is a very different product form Santander 123. That is a savings product with FSCS protection. The bond you are interested in is an investment product, so your capital is at risk, and it's not FSCS protected. With investments, potential rewards are broadly proportional to risks so you would be moving from an ultra-low risk, quite low reward product to a product with high risk and high potential reward.

Mark

jimjames

MarkFromCornwall wrote: »

With investments, potential rewards are broadly proportional to risks so you would be moving from an ultra-low risk, quite low reward product to a product with high risk and high potential reward.

Mark

I'd disagree. This is a very high risk option with very low, fixed return. If you're prepared for 100% loss of capital why aren't you investing in the stock market where you are FSCS protected and have better chance of higher returns.

Totally agree it's different to a 123 account though.

Eco_Miser

sazdes wrote: »

yep got all the standard regular savers/lloyds/tesco/m&s, bank of scotland, halifax fivers, help to buy isa etc.

Here's a check-list to make sure you haven't missed any.

sazdes wrote: »

More after it for my parents sake as about to sell their second home and their santander 123 is already full up,

NS&I pay a totally safe 1% on up to £one million.

sazdes wrote: »

but I aim to save about £1500 a month so will be needing it for personal money storage soon shortly

You can get 5% on £1300 monthly savings and 4% on the rest, see links above, and here

Regarding your original post, absence of past defaults says little about the possibility of future defaults.

sazdes

thanks all!

currently have
halifax reward
tesco current acct - £3k full
4% monthly kent reliance £500/m
TSB x2 £2k full
tsb regular saver 250/m
first direct regular saver 300/m
marks and sparks reg 250/m
nationwide reg saver £500/m (my 12m of nationwide acct are up so can't use it)
club lloyds £5k
regular club lloyds £400/m
BOS £5k

current total of 37k, adding £1500 to that each month. I need to open some more BOS and a HSBC accts but because the NHS makes me move around the country annually, its not letting me pass the credit check at present :mad: My parents will soon have 180k I need to store away for them and they have all of the above accts too

AlanP_2

What is your objective in having so much CASH?

What are your parents plans for the £180k - buy a new 2nd property in a few months or use it to fund their lifestyle in retirement?

Match the INVESTMENT to the NEED is the essence of my point.

sazdes

My objective is a house deposit, but I didn't realise before I applied to medical school I'd be moving around the country annually so that's now realistically a bit infesible for another 10 years until I've fully trained unless I can get a buy to let mortgage and then use that rent to pay my rent elsewhere in the country maybe - can we use help to buy ISAs towards buy to let mortgages?

Parents may buy another house closer to home (their second home was bought 250miles away for me to live in at uni/rented out for a few years later) or else just keep it in savings accounts for retirement, they're very scared of investment side of things unfortunately so only have a few shares from dads old work company but wouldn't let me invest in stocks (plus I need to read up a bit more before considering it)

Thanks

enthusiasticsaver

I would put it in national savings income bonds. 1% so not brilliant but totally safe.