Falling interest rates and evaporating savings accounts mean looking elsewhere for safe growth of your money - how about corporate bonds?
Become The Lender: Loaning Money To Some Household Names Can Be A Smart Investment

Big Blue-Chip businesses issuing corporate bonds are currently paying out interest around 6 percent. An alternative to the Government bond, where you are lending money to the Treasury, corporate bonds providing capital to big household brands can be just as safe if well researched.

Although generally riskier than Government bonds these alternative bonds can be purchased in multiples of as low as £2k but yield 6 percent per annum in return. If the investor sticks to well known companies that are listed on the stock market, meaning financial information is publicly available, then a stable pick can be easy to locate.

The investor lends money to the company by purchasing the bond. This loan is for a fixed period and returns a fixed rate of interest. The loan has an end date, called the 'maturity date'. At the maturity date, if the bond is still held by the original investor, the issue price is returned.

Bonds such as these can be wrapped inside an ISA making them tax-efficient investments and will need to be purchased through a broker.


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