These are usually a lump-sum, unit-linked investment product that invests in one or a selection of the range of investment funds. It is designed for investors who have a 5 year (or more) timeframe in mind. There may be exit penalties for those cashing in within five years.
Purpose of Product
Investment Bond investors look to earn a higher return on their investment by harnessing the potential of the stock market.
Most of the funds that you can select have a medium to high equity content, and equities have outperformed all other asset classes over the long term. With the right advice you can design your own investment mix that will complement your risk/reward preferences.
Tax
On death, encashment, partial encashment or assignment of this policy, an exit tax is normally payable on the excess of the encashment value over the sum invested. The current rate of taxation is the standard rate of income tax plus 3%.
Fund Choice
Each investment bond will have it own fund choices, they can differ greatly between companies
Options
Each investment bond will have its own options, but typically:
You can opt to take a regular income from your bond.
Change the profile of your investment at any time by making a fund switch.
Option to write the Investment Bond under Trust.
You can make a full or partial encashment at any time. (some bonds will carry charges on early encashment)
This is only a sample of the options that may be available; each product will have a full list of the options available to it.
