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Bonds.  Your hold-to-maturity return 

Simple
example.
You buy Bondco's 3 year 5% annual pay fixed rate bond with a face value of £100 for £100 and hold it to maturity

Bondco sells a three-year bond with a face value of £100 (also called "par") on 1 January 2024. The maturity date is 1 January 2027.  

 

Bondco will pay you 5% interest on 1 January 2025, 2026 and 2027. Also, on 1 January 2027 Bondco will pay you back £100. 

 

This is a simple but realistic example.  If you held this bond from when it was first sold to maturity, your return would be 5%.

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Let's look at what could happen during the 3 year period
 

Scenario 1:
Bondco's business goes really well. By the end of 2024, its bond is trading at 102.  

Scenario 2:
Bondco's business slows as the economy bites.  Its bonds trade down to 95.

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