Taking a fixed interest in building societies

Article Abstract:

Permanent interest bearing shares (Pibs) are offered by UK building societies and pay more than savings accounts at the same building society. Pibs are loan and pay a set interest rate, and a return of capital is not guaranteed. Yields are superficially attractive, but there are a number of drawbacks to Pibs, such as market risks. Pibs have to be sold through stockbrokers, and the price may fall. The building society could also go bankrupt, and holders of Pibs run a credit risk since they are paid last.

United Kingdom, Evaluation, Bonds, Bonds (Securities)

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Building bonuses: building societies offer investors a rere chance of a one-way bet - the sort of offer our portfolios can't refuse

Article Abstract:

The Britannia building society is considering a payout of a share of its profits to customers and N&P has said that even savers with recently opened share accounts will qualifty for the basic distribution of 500 pounds sterling of Abbey National shares. There are rumours that the Woolwich and Bristol & West may become banks which could lead to payouts for customers

Investor relations

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Higher interest rates away from societies: Insurers' guaranteed income bonds (Gibs) can offer higher rates than building societies for investors seeking a safe home for their money

Article Abstract:

Investment rates on guaranteed income bonds (Gibs), sold by insurance companies, can match building society fixed-rate bond rates, according to a survey by Chase de Vere, independent advisers. Income from a Gib is paid with the basic-rate tax already deducted and they can be useful for higher rate taxpayers as they allow some tax deferral.

Prices and rates, Savings

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