It’s no secret that Brits have been squirreling away money since the pandemic began, to the tune of over £238billion since March 2020. For many of us, that lack of commute and fewer trips to buy a flat white means our spare change is now just sitting in our bank accounts.
So, what do you do to make the most of those savings? With the average interest rate for savings accounts at below 0.2% for easy access, or around 1% for “longer” fixed rate bonds, it’s not looking like the high street is going to help you grow you savings in a meaningful way.
Plus, UK inflation is 2.1%, the highest in nearly two years. This means prices of things you can buy are rising faster than you can earn interest on your savings.
And that means if your savings are earning less than 2.1% a year, you’re losing money.
Why savers and investors are shifting to corporate bonds
Before the pandemic, bonds were seen as a safe, “boring” option for investors. UK government bonds (or “gilts”) especially were considered as low-risk padding to your otherwise exciting portfolio. The equivalent of lettuce in a burger; looks good, but ultimately doesn’t do much for you.
Typical investor portfolios were padded out a small amount – about 10% – with “safe” bonds to protect your other investments in times of strife.
Well, strife happened! In fact, it’s still here. And UK government bonds and other similar investment options have dipped just like everything else (Which begs the question: were government bonds so reliable after all?). Now investors and savers are keen to find some new ways of growing their money without the hassle of buying physical assets – like houses or flats, or precious metals. They’re finding this new way of investing in short term, fixed rate corporate bonds.
3 Year Bonds – an investment sweet spot?
Right now, the UK is finding its feet again after the economic turbulence of both Covid and Brexit arriving within months of each other in 2020. And the stock markets are reacting to this all the time.
And if you’re invested in stocks and shares, it’s said you should invest for at least 5 years. That’s because stocks are volatile over short-term. People in that investment space would tell you: “you need to give your money a chance to grow”.
We firmly believe you need to create chances for your money to grow. With fixed-rate bonds, 3 years is a great sweet spot between accessing your money earlier than you would with stocks and shares and growing your money with a great interest rate. That’s why we offer them to our investors!
The advantage of fixed rate corporate bonds is: your investment horizon is always in sight. You can simply invest and see your returns build. You don’t need to worry about global labour markets, strikes, what the US president is doing, or what may be around the corner.
Basically, they’re recession-, pandemic-, economy-proof investments!
Fixed rate corporate bonds: the secret to any successful investor
Let’s face it – if we all had the time to study the markets, we’d all be day traders. And if we bought Bitcoin in 2012 we’d all be doing very well by now. But who wants the hassle? Why worry about hindsight? Bonds give everyone an easy, passive way to invest and earn great returns on your investment without having to have your eyes glued to the finance pages every day.
It’s said that “time in the market beats timing the market”, and that’s definitely true of fixed-rate bonds. The advantages are pretty clear:
- Consistent interest payments into your account
- You know exactly what you’re getting, and when
- You haven’t locked your money away forever like in a pension
- You’re protected from market fluctuations
Interested in getting started? Propiteer Capital’s 3-year bonds are a great way to grow your money over the short-term. Get started here.
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