High income bonds
High income bonds offer investors a monthly income at a competitive variable interest rate and are particularly attractive for those wanting to earn a higher level of income than they could from traditional savings accounts.
They are designed with incentives in place to entice people to invest as much as possible. Basically, the more you invest in income bonds, the higher the rate of interest and the higher the income you will receive each month. However, it is important to be aware that with higher returns and higher income paid out the riskier the investment is likely to be.
The downside of a high income bond is that there is no guarantee on the money you invest. Some income bonds will pay out a fixed income to policyholders regardless of the bond's performance, others are capital-protected which means that should the fund deplete, then so too will the income that is paid out to investors.
It is therefore very important if you are considering investing in a high income bond to check the level of protection that comes with it.
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