There is often a great deal of confusion when it comes to differentiating between an ISA and a Bond, and while they both offer means of investment - the benefits of each differ greatly.
In this blog, the Hunter Jones Group team clear up the confusion surrounding bonds and ISAs, while also providing insight into what could potentially reap a better return.
What is a Bond?
A savings bond is a form of fixed-term investment, which means that any invested money is inaccessible for a certain period of time. The premise of a savings bond means that the longer the money is left untouched, the higher the interest rate will be - but if a person does decide to access the money earlier than expected, then they are likely to impose penalties or fines.
Similarly, a property investment bond is an agreement between a property investment and/or development company and the investor. This type of bond acts as a secure loan in some respects as the borrower will pledge an asset in return for larger sums of money. This is a good investment opportunity because a fixed rate of interest is provided over a defined timescale, while often delivering higher than average returns.
What is an ISA?
An ISA on the other hand stands for ‘Individual Savings Account’. There are various types of ISAs, with the most popular being cash-free ISAs, which offer a tax-free allowance for any interest earnt and often come with instant access, meaning customers can withdraw their savings whenever they please.
Alternatively, many banks offer Stocks and Shares ISAs, which provide the opportunity for individuals to invest in a portfolio of stocks and shares without paying income or Capital Gains tax on any money earnt from investments made through the ISA. These ISAs are higher risk but also have significantly higher rewards than cash ISA options.
Which option is better?
Both Bonds and ISAs have unique benefits.
Where cash ISAs provide an ideal option for investors with minimal appetite for risk, both Stocks and Shares ISAs and investment Bonds come with greater potential for returns.
However, where Stocks and Shares ISAs are 100% reliant on the performance of the stock market and are at risk of losing value during periods of economic downturn or uncertainty, investment Bonds are often secured against assets, like property, offering a more attractive alternative.
Ultimately, there are many different routes to investment, and it is always advisable to take your own personal circumstances and appetite for risk into account, while ensuring to work with a trusted investment introducer and/or provider with a proven track record in delivering profitable returns.
How Hunter Jones Group can help
Established in 2013, Hunter Jones Group comprises of a team of experienced investment consultants, committed to providing investors with access to property-based investment products and opportunities, while ensuring high-net-worth and sophisticated investors benefit from alternatives ways in which to reap the rewards of property investment.
To find out more about current investment opportunities or to arrange a call with a member of our team, please email info@hunterjonesgroup.com
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