Moneytree Wealth Management
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What’s an investment bond?

It’s basically where you invest a lump-sum in different funds in the shape of a life insurance policy. Investments are for either a fixed-term or until you die, when it’ll pay out to a beneficiary. You can choose either a with-profits or unit-linked policy, so you could get less back than you’ve paid in.

They’re also sometimes called insurance bonds, with-profit bonds or single-profit bonds. If you’ve seen any of these names and wanted what to know what they are, they’re the same as an investment bond.

Because of the way they work, investment bonds work best over the long-term. They’re considered a secure way of investing and are generally a good option if you’ve got a reasonably hefty lump-sum to start off with. There’s no limit to the amount you can invest.

The value of investments and the income they produce can fall as well as rise. You may get back less than you invested.

Can I take money out at any time?

Yes, you can. But there might be charges if you do, especially if you took the whole amount out and closed the policy.  There’s tax implications too, which you can read about below.

Are there any tax benefits?

  • Investment bond profits are charged at 20%, which usually comes straight out before you’re paid.
  • You can withdraw up to 5% a year for the first 20 years of the policy without incurring tax. Any more than that will be added to the profit when the bond’s cashed in and will be liable for tax.
  • If you don’t use any of the 5% allowance one year, you can roll it over and take 10% next year (a useful feature if you’re a high-rate tax payer).

If you’re not sure whether an investment bond is for you, send us a message using the form on the right-hand side of this page. We’ll get back to you as soon as we can.

You can always call us on 01244 470 107 or email: info@moneytreewm.co.uk if you prefer.

Nigel Court

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