After a rough ride during the economic crisis, many investors are now cooling their frayed nerves by gravitating towards guaranteed investments, which allow no risk to their capital.
Guaranteed investments are where performance meets peace of mind, coming as they do with a very simple guarantee: you get back at least what you put in.
Guaranteed investments come in many shapes and sizes, offering access to a wide range of asset classes from cash to property to equities. They appeal to those who are wary of taking on any risk to capital, but are attracted by the potential benefits that certain types of investments, such as medium-term stock market investments, have to offer. They are the perfect option for those prepared to pay an additional charge in return for the knowledge that they cannot lose, only gain in their investments.
It must be noted, though, that the real value of a lump sum would be reduced by inflation, if no growth were to occur during the term of the investment.
Three such guaranteed investments that copperfasten an agreed return are guaranteed bonds, income bonds, and fixed rate bonds.
Guaranteed bonds require you to lock your cash away for an agreed period, known as the term of the bond. At the end of the term they return your capital as a minimum, plus any growth that is achieved.
Certain guaranteed bonds provide the facility for taking income on an ongoing basis. One such bond is theMetLife Guaranteed Investment Bond, with a term of 8 years and the facility to draw up to 5% of your capital every year. The MetLife Guaranteed Investment Bondcombines the potential growth that the stock market has to offer, with the guarantee that your money will be returned in full. A particular attraction of the MetLife Guaranteed Investment Bond is the option to fold gains of up to 10% in any given year back into the bond, thus increasing the capital amount under guarantee.
Income bonds are guaranteed investments suited to those who want to take a monthly income from a lump sum, but avoid the stock markets altogether. Income bonds are not invested in stocks, and any charges on the bond are wrapped into the investment, so that you are paid the full amount of interest agreed.
Fixed rate bonds guarantee a fixed rate of interest on your investment, paid monthly or annually, either into the bond or into a separate bank account. Generally, the longer you agree to leave your money invested, the better the terms and conditions you will be offered.
