Investment bonds

Investment bonds are sold by life insurance companies and allow you to invest in a variety of funds managed by professional investment managers. They are normally designed to produce long term capital growth, but can also be used to generate an income.

The minimum investment is typically £5,000 or £10,000 and when you buy a bond you will be allocated a certain number of units in the funds of your choice. Each fund will hold a portfolio of investments, such as shares or bonds; and the price of your units – in other words the value of your capital – will normally rise and fall in line with the value of these investments.