A bond—the most common type of fixed income investment—is essentially an “IOU” in which an investor agrees to loan money to a company or government in exchange for a predetermined interest rate.

Bonds generally provide higher rates of interest than other bank accounts, so fixed term bonds are ideal for people who have spare money that they can afford to lock away for a fixed period of time.

Most fixed rate bonds are long term lasting on average at fifteen to twenty five years. Banks tend to offer bond terms in  increments of five years at a time unless the customer does not mind being locked in for a longer period of time.

Variable rate bonds offer investors fluctuating interest rates,. These bonds are perfect for those people who want to put money away, yet still like to keep their finger on the pulse of the market as far as interest rates are concerned. By having variable bonds, they can adjust their interest rates after the initial period of time to be sure and not lose money. However, this adjustment usually costs a fee so be sure the fee outweighs the change in rate.

Overall most people prefer fixed rate bonds to variable, especially in challenging economies.

When it comes to bank accounts, there is also a plan that fits everyone. For example, an individual with a personal bank account will have different needs from a business owner. There are a variety of different kinds of bank accounts, all focused on the needs of the users. A business owner would open a business bank account, as it would cater to the needs of a larger scale financial situation, rather than a personal bank account which is focused on the individual only. The savings can be more or less the same, but they will come about in different ways as one involves a singular person and perhaps their family, and the other involves employees and a fleet of staff that are all involved in the business.