Each financial year the ISA allowance rolls over, meaning that if you haven''t invested the full amount by the start of April, you lose the possibility to do so. At present the allowance is ?7,200 for the under-50s of which half can be made up in cash and the rest in stocks and shares options. Each year, most people make as greater use of their cash ISA as possible. The more that is saved away, the more money you have earning tax-free interest. Yet many people completely ignore the stocks and shares element of their ISA. One of the main reasons for this is a mistrust of the risks involved with the stock market. However, the term ''stocks and shares ISA'' is incredibly broad and can cover a wide range of different options, many of which carry little to no risk at all. One of these options is corporate bonds. A corporate bond is essentially a loan between a company and an individual. Through selling thousands of bonds the company can make large sums of money very quickly. In return the company promises to pay a certain amount of interest each quarter or each year, as well as repaying the full cost of the bond at the end of a pre-agreed period. In theory then, a corporate bond promises a set amount of return every year. The risk comes that a company may not have the cash to pay for its bond issues and therefore default on the bond, leaving the owner with nothing. To make things slightly more complex bonds can be bought or sold. They have an original price but this goes up or down depending on the reliability of the bond (in essence, how reliable the issuing company is). The reason why corporate bonds can be a good idea is that they are also issued by the government, in which case they are known as government bonds or gilts. Whilst companies can go bankrupt and default on their payments, governments do not, and therefore government bonds make a very sound investment (as proved by their price rocketing during the recession as investors bought government bonds for the security they offer). Corporate bond ISAs have varying levels of risk, you can choose an ISA with a high level of risk and a higher level of return, or a lower level of risk and a lower level of return. ISAs based on solid companies and government bonds are offering around 5% interest at the moment. This represents an excellent return and a very solid investment.
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Pearlie Bran opened his own corporate bonds with Legal
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