Local Authority Loans

Where from? Local authorities.

How they work You invest a lump sum for a fixed amount of time anything between one and ten years - and get a fixed rate of interest. Interest is usually paid half-yearly, but with some loans it accumulates and is paid out when the loan comes to an end. If you cash in early, you might not get back the whole of the lump sum you invested.

Minimum investment Varies, for example £1000 or £4,000. Maximum investment Varies.

Tax Interest is paid with the equivalent of basic rate tax deducted. Non-taxpayers can't reclaim the tax.

Good for People who want a fixed and guaranteed return and can tie their money up for at least a year.

Bad for Anyone who might need their money back early. People seeking capital growth.


Read more about Variable Interest Rates

Insurance Company Income And Growth Bonds

Where from? Insurance companies, through financial advisers.

How they work You invest a lump sum for a fixed period of time which is different for different bonds - for example, two years or five years. The return is fixed at the time you invest, and either accumulates to be paid out when the bond comes to an end or is paid out regularly as income. You can't usually get your money back early.

Minimum investment Varies, for example £1000 or £4,000. Maximum investment None.

Tax Varies. With all, the return is paid with the equivalent of basic rate tax already... see: Insurance Company Income And Growth Bonds


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