What Are Annuity Bonds

Annuity Bonds, also known as self liquidating bonds, are bonds that pay out a fixed sum every year till maturity.

This fixed payout incorporates both the interest payment and the principal repayment. The principal repayment is not made in lump-sum but throughout the tenure of the bond.

So for example, if you invest 100,000 in a 5 year Annuity Bond and get 25,000 each year, you’ve earned yourself an 8% interest per annum.