An In-Depth Look at Capital Bonds

British coin currency

British coin currencyWhat kind of investment are capital bonds? What are the benefits of choosing this type of financial product?

The main benefit is security. While no investment is a 100% secure, capital bonds come pretty close. Investors still need to do their due diligence and find the bond that is right for them. Investment introducers such as Amyma, based in the heart of the financial district in the city of London, can reach out to a selection of funds to help investors find the one that best suits their needs.

Playing the Long Game

So why do capital bonds offer such security? First of all, it’s important to understand that this isn’t a high-risk, high yield investment that buying shares in a booming industry can be. Bonds can take 30 years to mature, and once committed, an investor may not receive any money until this process is complete. Other capital bonds mature in a few weeks, so the timescales involved is something that investors need to be really clear on.

A bond is more like a loan that offers a steady return on investment as it matures. Many governments and public organisations offer bonds, as they can generally be assured of their continued existence over the decades.

How It Works

Investors either receive an interest payment over the course of the bond or a lump sum that is greater than their original investment once the bond matures. Depending on inflation, this may not be a huge return on investment over 30 years — but it is protected from the ups and downs of the market. Whatever is happening with the economy, capital bonds continue to pay out the interest payments or the lump sum, so no actual loss is suffered.

Who Could Benefit?

This high level of security makes it an ideal investment product for older people who don’t want to risk their remaining capital as they enter their autumn years but would like a little extra to boost their retirement fund. It can also be a great investment for parents who want to put something by for their children that will mature as their kids do.