Investing in Your Childs Future
WIN FREE Behaviour Whee
Using Corporate Bonds to
Invest in your Child’s Future
We all want to have a secure financial future, and we all want to make sure that
our children do too. Investing our money wisely can help us to build up our
finances so that we can better afford to look after our children and their
education. Here we take a look the low-risk investment in the form of corporate
bonds and explain what they can do for your finances.
Corporate bonds are issued by companies who are looking to raise funds for
expansion and growth. These bonds can be bought by members of the public –
essentially you are loaning a company money, and the company will pay you back
in regular instalments over the course of the investment. This makes them an
attractive investment for those looking for a source of regular income.
A corporate bond is a fixed interest security, which means that the level of
payment that you receive from the corporate bond is fixed in advance. This is
attractive to investors, particularly in today’s volatile financial climate, as
a more secure, regular pay off than can be found when investing in shares alone
You can invest in a corporate bond personally by buying up bonds yourself.
However, the cost of trading these yourself will mean having to pay fees on each
transaction, and this can outweigh the amount that you make in return.
You can also purchase bonds by joining a corporate bond fund. This way, your
money is pooled with other investors’ and this larger collective sum is used to
invest in a variety of corporate bonds. This method is popular as it helps to
spread investment risk, balancing out any losses that may be made should any
corporations default on their bond repayments.
It is important to remember that corporate bonds, because their returns are
fixed, can be affected by inflation levels, as well as interest rate levels and
general economic conditions. However, corporate bonds have a relatively low
investment risk – not as low as government bonds, but not as high as equities.
You can invest tax-free in the form of corporate bond ISA’s. With these
investment products, investors’ money is pooled together and used to invest in a
range of bonds. Any income that is earned this way is free from personal income
and capital gains tax under the government’s current tax rules.
For more information in investing tax-free in corporate bonds, take a look at
the Legal & General website, where they have a range of
corporate bonds options, including corporate bond ISA’s.
Tuesday, April 28, 2015
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