Anyone use Fixed Rate Bonds?

snowqueen555

OldMusicGuy wrote: »

I use a combination of Santander, Ford Money and fixed rate regulated bonds for our cash that will cover the next 5 years. I haven't gone further out than 2 years with my fixed rate bonds as I feel interest rates are more likely to go up, so I didn't take any 3 or 5 year options.

If you plan to spend the cash in the short to medium term rather than invest it, inflation isn't that relevant because you can control your own personal inflation rate. However, if you are going to keep it sitting around for more than 10 years, you need to get over your fear of investing. Inflation will be an issue in the longer term.

The other issue is tax. You only have £1,000 tax free allowance for interest, so if your interest is more than that the effective rate goes down (that's why cash ISAs have a lower interest rate). I am retired and don't pay tax so I can earn up to £6,000 in interest before paying tax on it (unless the budget changes things....).

I'm never going to go over that interest threshold, nothing to worry about there.

This is money more for a possible deposit, which I feel is 2+ years away at the earliest point.

Is the Ford one okay?

OldMusicGuy

snowqueen555 wrote: »

I'm never going to go over that interest threshold, nothing to worry about there.

This is money more for a possible deposit, which I feel is 2+ years away at the earliest point.

Is the Ford one okay?

You should not be investing if you want the money within 3-5 years, it's as simple as that.

Ford Money is fine, as a company. Look around to get the best rates though, banks like Shawbrook, OakNorth, Charter and others all offer good rates. They vary by length of deposit.

moneyfoolish

The best 1 year bond I've seen at the moment is 2.03% with Shawbrook Bank. Have a look at the Savings Champion website which only shows "genuine" Fixed Rate Bonds plus all othe top rate accounts.

londoninvestor

kidmugsy wrote: »

The OP is presumably referring to fixed-term, fixed-rate, no-withdrawal-until-maturity deposit accounts. It's a terrible mouthful but with the advantage of being descriptive and unambiguous. What's needed is a better word for these beasts. Fat chance!

"CDs" (certificates of deposit) seems to be the ubiquitous term for these in the US. As long as us over-40s can cope with the confusion with the recorded music format

kidmugsy

londoninvestor wrote: »

"CDs" (certificates of deposit) seems to be the ubiquitous term for these in the US. As long as us over-40s can cope with the confusion with the recorded music format

That's rather hard on the dyslexics. "DCs" - ugh!

Better to use FTFRNWUMDs, don't you think?

I'm not sure I'd want to tie my money up for several years if there's a realistic chance of a red-in-tooth-and-claw socialist government. Perhaps a 30-day or 60-day notice account would be a better bet. Or gold sovereigns hidden in the loo cistern.

snowqueen555

moneyfoolish wrote: »

The best 1 year bond I've seen at the moment is 2.03% with Shawbrook Bank. Have a look at the Savings Champion website which only shows "genuine" Fixed Rate Bonds plus all othe top rate accounts.

Yeah, I've just applied for Ford Money, as I do like the monthly payment of interest into my bank account. It isn't much but it will definitely be noticed at the end of the month.