A distribution bond is designed to pay out a regularly distributed income with a minimum effect on your original investment. A distribution bond is invested in a mix of investment types such as UK equities, government bonds and commercial property.
This provides the investor with a strong steady income flow from reliable investments as well as the long term capital growth potential that comes with investing in equities. By ensuring your income is not wholly invested risky equity stocks and shares they offer the chance of high returns but also ensure your income remains secure through other more stable forms of investment.
Distribution bonds are also flexible in that they can be used solely for the purpose of long-term capital growth while retaining the option of withdrawing income further down the line.
However, moving or accessing your distribution bond may incur fees depending on the company, and the annual management charge of your bond will also vary so it is important to shop around and thoroughly compare terms and conditions.
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