Mini-bonds could spell big trouble for small investors

Investors have been seduced by the high interest rates on mini-bonds, but they’re not as safe as they seem.

Last week the Financial Conduct Authority (FCA), the financial services regulator, announced that it was finally cracking down on mini-bonds. As of January 2020, they will no longer be marketed to retail investors.

A mini-bond is a form of debt security. You lend your money to a company in return for a high regular income, while you will get your original stake back when the bond matures. The interest rate is typically around 8%.

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Ruth Jackson-Kirby

Ruth Jackson-Kirby is a freelance personal finance journalist with 17 years’ experience, writing about everything from savings accounts and credit cards to pensions, property and pet insurance.

Ruth started her career at MoneyWeek after graduating with an MA from the University of St Andrews, and she continues to contribute regular articles to our personal finance section. After leaving MoneyWeek she went on to become deputy editor of Moneywise before becoming a freelance journalist.

Ruth writes regularly for national publications including The Sunday Times, The Times, The Mail on Sunday and Good Housekeeping, among many other titles both online and offline.