4.5% John Lewis bond closes earlyRetailer reaches £50m target ahead of deadline

18 March 2011

John Lewis' flagstore in London

John Lewis customers were keen to invest in the firm

John Lewis has closed its five-year fixed-rate bond three weeks ahead of schedule after raising its £50m target in a fortnight. Paying 4.5% annual interest, plus 2% in vouchers, it offered a market-leading rate. 

Customer response to the savings bond

The new bond was exclusively available to John Lewis cardholders and clearly had strong appeal. 

Charlie Mayfield, Chairman of the John Lewis Partnership, said: 'The reaction of our cardholders and Partners has been extremely encouraging. To have reached £50 million of subscriptions in less than two weeks after launch shows that our customers and Partners valued a mix of gift vouchers and cash return totalling 6.5%.'

The success of the John Lewis bond echoes that of one offered in February by Tesco, who raised £125m from their customer base with a 7-year bond that paid 5.2%.

Five-year savings bonds   

Although savers are no longer able to buy the John Lewis bond, there are still plenty of five year, fixed rate accounts available from banks and building societies. Unlike retail bonds, these are covered by the Financial Services Compensation Scheme, so offer additional security as well as promising returns. 

If five years is too long for you to lock your money away, there are shorter period fixed rate bonds available: for one year, two years, three years or four. Generally, the shorter the period you tie your cash up for, the lower the fixed interest rate on offer. 

Don't forget to save in an Isa in the new financial year 

Savers with money to invest should also consider the Isa market for 2011-12. 

For the current tax year, is possible to put £5,100 into a cash Isa and the rest of your Isa allowance into a stocks and shares Isa. Alterrnatively, you can put the whole £10,200 into stocks and shares.

However, from 6 April your annual Isa allowance will rise to £10,680 - of which £5,340 can be held in cash.

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