A Capital Bond is a five year investment and like other bonds a lump sum is invested at a fixed interest rate with a promise to pay the principal plus the interest on the specified maturity date. It is a National Savings product and is therefore backed by HM Treasury and so is an entirely secure way to invest.
The interest that you earn on your Capital Bonds is reinvested annually with the fixed rate on your UK savings rising each year.
Tax-payers will have to declare their interest on the UK savings fund as it is taxable each year, but will automatically be added to your Capital Bond fund.
In order to make the most of your Capital Bond investment it is best to leave your money untouched for the full five years. It is possible to cash in your Capital Bonds at any time but this will be at a lower rate of return.
Capital Bonds can be another way of investing for your children. With the complete
security and as children are non-tax payers, no tax has to be paid on any interest they earn.
Click here for other ways you can invest for your children's future
If you would like to find out more about UK savings and investment opportunities, please use the links below.
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