Different Types of Income
Bonds
Income Bonds
Aside from their 5-year GEB, income bonds are
also offered by NS&I. This type of bond has a regular monthly
pay-out that varies depending on the interest your investment
earns.
NS&I income bonds may be from £500 to £1,000,000.
Other companies offer income bonds as well, in their own respective
amounts.
Interest rates are variable and is paid out gross,
and may be transferred directly to your bank account.
NS&I
income bonds are considered low-risk as they are supported
by the HM Treasury. And although there is a required notification
period of three months to avoid a 90 day interest deduction,
bonds
may be cashed with no other restrictions.
Despite the lower
risk factor, income bonds are subject to
declines in interest rates which will lower your monthly
pay-outs. The
value of your investment is also affected negatively by
a rise in inflation
rates.
