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Posted on February 15, 2017

Income bond

Income bond

Why choose this plan?

Why choose this plan?

Do you have a Lump Sum to invest and are looking to receive a guaranteed income for the next 20 years? You could consider Sheffield Mutual’s INCOME BOND:

What is the Income Bond designed for? The Income Bond is designed to pay you a regular income to your bank account from a lump sum you invest.

Why would I choose the Income Bond instead of a bank or building society account? The Income Bond allows you to choose the amount of income you would like to receive (subject to certain limits set by HMRC) and enables you to enjoy a level of income possibly higher than the typical interest rates currently available from banks and building societies, together with the prospect of some investment growth.

How does the income work? Invest a lump sum and decide how much income you would like to receive from your bond and how often. Choose a level of income in the range of 2% to 5% per annum of your lump sum, (you can amend, suspend or re-start the income at any time).

An example of how income works

An example of how income works

Other things you need to consider…
Unlike some interest paying accounts bonuses are not guaranteed and depend on how the Society’s investments perform. However, we have paid bonuses in every year the Income Bond has been available (since 2006).

If you choose to take a higher percentage rate of income withdrawals than the bonus rate paid, the value of your bond will of course reduce year-on-year. This is because your lump sum will reduce faster than your bonus ‘pot’ is growing. But even if you take the maximum 5% income per annum, you will still have your bonus ‘pot’ to cashin at the end of the term, plus the possibility of a final (terminal) bonus.
If you need to cash-in the bond during the first 5 years you will be charged a surrender penalty and you may receive back less than the lump sum invested less your income
withdrawals. However, the bond’s value would not be reduced in the unfortunate event of your death, so your next of kin would not be disadvantaged. The money you invest, less income withdrawn, is also guaranteed after 5 years.

How does the income work?

How does the income work?

This information is designed purely to help potential investors understand how income is paid from the Income Bond. You should also study the product brochure, Key Features and illustration before deciding whether to invest.

THIS BLOG PROVIDES GENERIC INFORMATION AND OPINIONS OF THE WRITER AND SHOULD NOT BE RELIED UPON FOR MAKING INVESTMENT DECISIONS. NO ADVICE HAS BEEN PROVIDED BY SHEFFIELD MUTUAL. IF YOU ARE IN ANY DOUBT AS TO WHETHER A SAVINGS OR INVESTMENT PLAN IS SUITABLE FOR YOU, YOU SHOULD CONSIDER CONTACTING A FINANCIAL ADVISER FOR ADVICE. IF YOU DO NOT HAVE A FINANCIAL ADVISER, YOU CAN GET DETAILS OF LOCAL FINANCIAL ADVISERS BY VISITING WWW.UNBIASED.CO.UK. or WWW.VOUCHEDFOR.CO.UK ADVISERS MAY CHARGE FOR PROVIDING SUCH ADVICE AND SHOULD CONFIRM ANY COSTS BEFOREHAND. ANY REFERENCE TO TAXATION IS BASED ON THE WRITER’S UNDERSTANDING OF CURRENT TAX LEGISLATION AND PRACTICE, WHICH COULD CHANGE IN THE FUTURE.

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