Do They Provide Better Returns?
Bonds generally provide higher rates of interest than other bank accounts, so fixed rate bond accounts are ideal for people who have spare money that they can afford to lock away for a fixed period of time.
There are a number of factors that you need to be aware of before choosing your account, for example, some accounts offer interest that it adds onto your balance monthly, which then accumulates more interest throughout the year based on the total balance. Other accounts pay the interest owed when the term ends, or pay the interest into a separate savings account on a monthly basis, so you will only be paid interest on the opening balance.
Purchasing a fixed rate bond is knowing, from the very start, what to expect out of the investment. As such, beginners in the investment world, as well as more experienced but conservative ones see this as a good and stable option. Those who are not very well-versed in investments also stand to benefit, because it no longer becomes necessary to monitor every single change in the economy that have a detrimental effect to the expected return of the bond.
Read more about this topic: Fixed Rate Bond
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