London, April 13, 2022 (GLOBE NEWSWIRE) — If you’ve noticed that the hotel you want to book for the upcoming summer vacation is more expensive than last year or your grocery bill has gone up even though you buy the same amount of food, you are witnessing the results of the last surge of inflation.

While the rise in prices for goods and services over the past few months has mostly been attributed to the reopening of the world, we don’t know exactly how long this will last or how we should react financially. For the everyday consumer, rising prices can mean limiting splurges to avoid a hit to your wallet. But for those who invest, you’re probably more concerned about your money losing value in the market.

We spoke with Mark Sutton, asset management advisor for a renowned banking institution, earlier this week:

“Keeping your money in short-term fixed rate bonds or Gilts is a similar strategy to keeping cash in a savings account. Your money is safe and accessible. And if higher inflation leads to higher interest rates, short-term fixed-rate bonds are more resilient. It is for this reason that I advise my clients that it is best to stick to short to medium term fixed rate bonds and avoid anything that is long term oriented. If your money is in a Gilt your money is safer than it would be in your bank account as HM Treasury will guarantee up to £5m of your investment and it is just as accessible whenever you need it. The huge benefit you get with a Gilt is getting paid up to 5% fixed interest per year. Some bank bonds can yield up to 10%, sometimes even 11%. Additionally, as a fixed rate bond is a type of savings account, the Financial Services Compensation Scheme (FSCS) will cover up to £85,000.00 of your deposit or £170,000.00 per joint account on n’ any UK bank or building society deposit,” said Mark Sutton. .

What are fixed rate bonds?

A fixed rate bond is a type of savings account that allows you to set aside your money for a set period of time in exchange for a fixed amount of interest on your money. By financial definition, you actually lend your money to a bank and the bank pays you back the original amount plus interest earned on the dates specified in the terms and conditions. As a fixed rate bond is a type of savings account, the Financial Services Compensation Scheme (FSCS) will cover up to £85,000.00 of your deposit or £170,000.00 per joint account on any deposit bank or building society in the UK. In the event of bank failure, the FSCS will also cover any interest you have earned up to that point, provided the total amount invested in the account is still below the limit of £85,000.00 or £170,000.00 per joint account.

How do fixed rate bonds work?

Fixed rate bonds are available with different terms. In general, the longer the term, the higher the interest rate. Most fixed rate bonds require a minimum deposit to open the account. Unlike many other savings accounts, you are usually only allowed to pay once, which is when you open the account. Fixed-rate bond providers may give you the option of having earned interest paid either semi-annually or annually. Most bonds require you to lock in your money for a set period of time, but some bonds offer an “easy access” option that lets you access your capital at any time by giving notice and paying a liquidation fee. . With fixed rate bonds, the “duration” is how long you choose to lock your money in, i.e. 1 year or 2 years.

Can the interest rate change on a fixed rate bond?

No, the interest rate is fixed until your account matures.

What is a Gilt?

A Gilt is a bond issued by the British government. This is one of the many ways Her Majesty’s Treasury generates annual revenue. The benefit of a gilt is different from a corporate bond, the full value of the bond issue is guaranteed by the UK Treasury. So if you were to invest up to £5,000,000.00 in UK Treasury Gilts for example; the full value of your principal is guaranteed, unlike a bank bond which only has a protection limit of £85,000.00.

What are the advantages of a Gilt?

The advantage of owning a Gilt is that investors know for sure how much interest they will earn and for how long. If you want to safely invest a lump sum, a job bonus, proceeds from a home sale, or even an inheritance, then a Gilt is probably your best bet.

How do gilts work?

In general, the longer the term, the higher the interest rate. Most Gilts require a minimum deposit to open the account. Unlike many other savings accounts, you are usually only allowed to pay once, which is when you open the account. HM Treasury gives you the option of having interest earned paid either half-yearly or annually. Most gilts require you to lock in your money for a set period of time, but some companies offer an “easy access” option that lets you access your capital at any time by giving notice and paying a liquidation fee. .

Can the interest rate change on a Gilt?

No, the interest rate is fixed until your account matures.

In summary, taking advantage of short-term fixed returns can most certainly provide stability to your portfolio while paying you regular income. searchbestinvestments.com’s team of investment professionals can guide you through the various options available, ensuring that your investment gives you the best possible returns.

Take a look at what they offer at www.searchbestinvestments.com

Warning: The information contained in this press release is provided for informational purposes only. Search Best Investments is not a financial adviser. You should consider seeking independent legal, financial, tax or other advice to verify the relationship of the information to your particular circumstances.