Local Authority Bonds

Where from? Banks or stockbrokers.

With-profits insurance policies

How they work These are similar to British Government stocks but are issued by local authorities instead of the central government. You invest a lump sum. You can choose to invest until redemption and get a fixed return, or you can sell earlier on the stock market. If you hold to redemption, you get back the same amount that you invested, so your overall return is made up only of interest. If you sell before redemption, what you get back will depend on the market price at the time you sell, and the return is made up of two parts - interest and capital gain (or loss).

Minimum investment £4,000. Maximum investment None.

Tax Interest is taxable and paid with basic rate income tax already deducted. Non-taxpayers can reclaim the tax. Capital gains are tax-free.

Good for People seeking a fixed income who can tie their money up. People wanting to take a chance on the stock market.

Bad for Anyone who might need their money back at short notice.

For more information about The Sib Complaints Procedure

British Government Stocks (gilts)

Where from? Stockbrokers or other investment advisers, or the National Savings Stock Register. New issues of stock through newspapers.

How they work You invest a lump sum. You can choose to invest for a fixed time (until 'redemption', though there are a few stocks with no set redemption date) for a fixed return. The return is made up of two parts interest (the 'coupon') and a capital gain (or loss) on redemption. If you don't want to keep your stocks until redemption, you can sell them on the stock market. The amount you get back then depends on the market price of the stock which will rise... see: British Government Stocks (gilts)

More money