Many of us would love to invest our money in stocks and shares but can’t always afford to do so. After all, there is generally a risk involved in investing in stocks and shares due to the volatility of the markets and not everyone is able to take on that risk. However, if you are still interested in making investments but would like to limit the risk to your money as much as possible, one interesting option for you to consider is a bonds and gilts ISA.
What is a bonds and gilts ISA? It is a type of stocks and shares ISA, but in contrast to most other types of investment ISA that invest your money solely in stock market shares, this one splits investments between government gilts and top rated corporate bonds. These types of investment are typically of a much lower risk than stock market investments, and so make an ideal option for people who are looking for a higher rate of return on their money than their regular savings account can provide but who are unwilling to make the move to riskier forms of investment.
The fact that there is less risk attached to this type of share ISA does mean that the rate of return can be significantly lower than the best performing ISAs, but many people find that the lower risk involved offsets this as they want their money to be more secure.
One thing to bear in mind with bonds and gilt ISAs, just as with all other share ISAs, is that the value of the investment can go down as well as rise. However, the bonds and gilts invested in by these ISAs are much more secure than most, particularly when you compare them with what are sometimes called ‘junk bonds’ that some investors put their money into.
This means that as well as being a good investment option for people who cannot afford to take too much of a risk, this type of share ISA can also be a good starting point for people who want to begin making investments but who are wary about jumping straight into the deep end.
If you are interested in a bonds and gilts ISA, you do have to be aware that they are riskier than putting your money into a cash ISA or deposit account. However, they are a relatively low risk form of investment and have the potential to offer a decent return on your money, making them a good choice for people who are looking to get more from their capital with as little risk attached as possible.