- money market funds,
- income funds, and,
- bond funds.
Mortgage Bonds
One of the most attractive interest-bearing investments with a fixed capital value is participation mortgage bonds.
- Here you invest in units in large mortgage loans that are granted against the security of a first-class physical asset, for example, commercial, industrial or other property.
- Your capital is guaranteed and you earn interest at a competitive rate that can be variable or fixed.
- A great advantge is that a participation bond becomes quite liquid after the initial five-year period when you can still enjoy the interest income and withdraw on only three months' notice.
- (These mortgage bonds caused the subprime credit crisis in 2007-2008 in US).
Term Annuity
A voluntary purchased term annuity is another important investment product from which you can earn a regular income. It is simply the exchange of a cash lump sum for income, which is paid annually, half-yearly, quarterly or in monthly instalments over a specified period (minimum five years).
- This basically means that your original capital is refunded by way of regular instalments together with interest earned on the investment.
- You will therefore not get back any capital at the end of the period as in the case of fixed deposit.
- A voluntary term annuity can be purchased at any life office and is in essence an insurance contract.
- The interest or annuity rate is fixed for the term of the contract, but varies from institution to institution.
- This investment product also offers a tax benefit, as you pay tax only on the interest part of your annuity.
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