Bond rates too good to be true?

SAB777

Hi, I've just joined the forum and after checking through FAQ's this is my first post.
I’m looking to invest in a 1 yr savings bond and typically the market is offering up to 1.6% (Vanquis). However, when I look online I see luring offers of up to 5% for 1yr or even 22% for a 5 yr fixed rate bond claiming 100% money protection for up to £85,000. Are these bonds and offers like them a genuine safe option or is there a catch?

Thanks,

[Deleted User]

They are not genuine.
Care to provide more details of these offers?

TCA

Those luring offers aren't savings products and your capital is at risk. They are high risk investments. Avoid if you just want a savings account.

george4064

You've probably come across something called 'mini bonds', these are very high risk with zero secondary market (so you can't sell these until they mature or default).

A well known mini-bond scam was by London Capital & Finance, Google them and have a read of how they scammed millions of pounds from retail investors such as yourself who thought they were investing in a secure fixed bond.

SAB777

Thanks george4064

SAB777

Thanks for your replies so far - I will take all your advice and avoid. I've not learnt how to reply to individual comments yet as some of you were asking for details which I can provide but don't want to burden those who don't require it.

Albermarle

To the OP - it is just common sense if most banks will only offer you safe savings interest at 1.5% , then a guaranteed offer of 5% has got to be dodgy .
Google 'London Capital and Finance ' 

SAB777

Clearly, I am new to savings bonds and need to be very cautious. I have also come across a company called Julius Baer who offer 5% on a 1 yr bond. They say they purchased older bonds around 20yrs ago which yielded higher returns enabling these to be passed to the customer for an agreed period (1 - 5yrs). They state that investments are covered under FSCS rules. Anyone heard of this?

SFindlay

SAB777 said:

Clearly, I am new to savings bonds and need to be very cautious. I have also come across a company called Julius Baer who offer 5% on a 1 yr bond. They say they purchased older bonds around 20yrs ago which yielded higher returns enabling these to be passed to the customer for an agreed period (1 - 5yrs). They state that investments are covered under FSCS rules. Anyone heard of this?

As you've been told before the "offers" are all scams, check Julius Baer on FCA website and will see a number of "cloned" firms operate scams using this name. 
The old adage of "if sounds too good to be true then it is too good to be true" applies to all these "offers"!!! 
If looking to lock money away look at best buy tables on MSE and pick one that suits your requirements best. 

ColdIron

Anybody offering 5% is either very high risk or more likely an out and out scam. There are literally NO legitimate fixed term saving providers at these levels. Stop using Google or Facebook for your research

Linton

No-one will offer 5% on a 1 year bond unless there was a risk that you would not get your money back.  "Bond" investments are very different to what the high street banks mis-call bonds but are really fixed term deposit accounts. Many investments are covered under FSCS rules but that does not give protection against investment losses.

Julius Baer is the name of a large Swiss bank.  Do you think that the company that has offered you these bonds is a large Swiss Bank?  https://www.fca.org.uk/news/warnings/julius-baer-international-ltd-clone-fca-authorised-firm may be of interest.

So keep well clear.  In my view it is either a risky investment or a scam.