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Savings & Investments glossary

Investment bonds

Investment bonds are investments with insurance providers where people pay a lump-sum into a product which is then invested on their behalf.

They are not the same as a standard fixed-term deposit from a bank or building society (often termed "bonds").

With investment bonds, money paid in by individuals is placed in a joint fund with other investors' money, and this is then placed in managed investments on the bondholders' behalf.

Money remains in this fund, either for a fixed-term after which the investment bond is wound up and money is returned to bondholders, or indefinitely.

Unit-linked bonds, with-profits bonds, distribution bonds, guaranteed equity bonds, guaranteed growth bonds and guaranteed income bonds are all different sorts of investment bonds.


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