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How fixed term bonds can really help motivate you to save

By Burton Mail  |  Posted: January 15, 2013

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Commercial Feature

When times are tough, saving money can seem even tougher. Especially as prices are generally going up and many of us are trying to tighten our belts where we can. But even after we’ve covered off the more day-to-day expenses, it’s still important to save for the longer term. After all, you might need a new car in a couple of years. You might want to upgrade your computer. Replace your sofa. Or take a relaxing break somewhere hot in the summer. Whatever you’re aiming for in the future, it’s worth thinking about a fixed term bonds savings account. It’s a good way to invest a lump sum over a set period of time. And make the most of your hard-earned cash.

Saving for the long-term

The biggest problem with only putting your money into a regular bank account is that it’s just too tempting to dip into it when you need some extra cash. But long-term, that won’t help you get the bigger, more expensive things you need in life. So as long as you don’t need access to it, locking your money away for a while in a fixed term bond savings account might work out better for you. And leave you better off. You’ll probably also get better returns compared to instant or easy access savings accounts.

With these the interest rate is normally lower because of the flexibility they offer.

Watch your money grow

Most banks and building societies offer fixed term bonds lasting for anything from six months to five years. The way they work is that you put in a certain amount into your savings account and leave it there. You then just sit back and watch it growing in interest for the time period you’ve chosen. In most cases there’s a minimum deposit to put in. But you probably can’t add to your initial deposit like you would with an easy access account. And you may not be allowed to make withdrawals until your account matures at the end of the agreed term. You should also remember that savings rates differ from account to account, so it’s wise to look around.

Fixed interest

Apart from being a great motivator for saving for something in the future, the other

benefit of a fixed rate savings account is that you’ll know exactly where you stand – month-to-month, year-to-year. The interest rate you earn is fixed for the whole term of the investment. And it won’t change, regardless of what happens in the financial markets. So if you think you can put some cash aside for a while, fixed term bonds could make a very profitable home for it.

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