Why Choose Guaranteed Investment Bonds?

Guaranteed Investment Bonds (GIBs) are investments that might be recommended to you if you do not want to risk losing any of the capital you are investing, but you are sure that you will not need access to the sum of money invested for a fixed period of time, usually somewhere between one and ten years.

This type of investment is normally linked to the stock market, giving the opportunity for returns based on any rise in the stock market over the period of investment.  GIBs can offer investors the opportunity for better returns than a regular savings account, but without the risks usually associated with investing into the stock market.

However, if the stock market does not rise by the amount specified at the outset, you might only get back the money originally invested.  This means that, in real terms, the investment will be worth less than it was at the outset, as its value will have been reduced by inflation.

Another downside to GIBs is that the amount initially invested is usually only guaranteed if the bond is held until the end of the fixed term. If your circumstances change and you need access to your funds early, a proportion of the capital invested could be lost.

All GIBs have their own terms and conditions and the risks and possible returns will vary depending on the individual bond. An independent financial adviser should be able to determine if this type of investment is suitable for you and explain the risks and benefits associated with the different GIBs available on the market.

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