MoneyBroker's Guide to: Investing into 1 year fixed rate bonds

There is something about fixed rate bonds which makes people feel secure. The answer why is easy: the bank plays with the cards open. You know beforehand what is the minimum amount you have to invest, know what interest and, respectively, return you are to receive upon bond maturity. You also know for how long you are parting with your money and that you have no right to withdraw it in the meantime. Some investors even inform you where your money will be re-invested.

A 1-year fixed rate bond, or as some refer to it - fixed term deposit, sounds like an excellent opportunity for anyone who has no immediate spending plans but wants none of his/her cash get eaten away by inflation.

What interest rate

Unless you are loyal to a specific bank, the interest rate would be the first thing to check. Currently, the 1 year fixed rate bond market offers rates in the 1.00 to 1.60 per cent range. Any offer out of that range should set your alarm bells ringing.

What amount

When deciding what amount to invest, ensure it is within the permissible range. Usually, banks place a cap for minimum and maximum investment alike. While they generally cater to small and medium investors alike, check whether your plans match with these requirements. Usually, banks have their lower threshold at £1,000-2,000 and the higher one at £500,000-1,000,000. Some, however, have set their ladder as high as £25,000 so make sure you have not chosen any of these institutions.


Protection Scheme

Make sure your money are safe and protected. One thing to look for is the FSCS tag - Financial Services Compensation Scheme.Your deposit will be usually protected up to £85,000 and up to £170,000 for joint accounts.


Choice of re-investment

If you are investment-conscious and you would wish your money to be invested in a particular type of securities, region or country, you can search for a financial institution with the relevant investment profile. Banks generally share such information; therefore, make sure you have requested and consulted it.

At MoneySupermarket, it is easy to compare fixed rate bonds. After clicking on the Savings button in the Main Menu, choose Fixed Rate on bar below and chose the starting balance and term. There you can see the basic parameters of each fixed rate bond and a brief description of the benefits and restrictions.

Lloyds TSB International has a special section which gives you a brief definition of fixed rate bonds and then re-directs you to its fixed term deposit page (as it itself says it calls fixed rate bonds). Pay attention that the minimum investment is £10,000.


Paragon also offers 1 year fixed rate bonds with minimum amount £1000 and during that period yu can not make any withdraws.

Review and then choose the alternative that suits you best.

You may also want to read about: Fixed Rate Bonds

The information on this page is designed to help you understand more and make more informed choices. We do not receive any commissions, instead we are funded from companies that we advertise on our website.