What investment product is suggested for someone with a horizon of 3 to 5 years?

The recommendation of a Unit Paying Medium-Term Bond Fund for an investment horizon of 3 to 5 years is justified by the nature of the investment itself. Medium-term bond funds are structured to provide returns over a period that aligns well with this time frame. They typically invest in bonds with maturities that match the investment horizon, which allows investors to take advantage of interest income while also managing the risks associated with interest rate fluctuations.

This type of fund generally provides more stable returns than equity funds, which can be more volatile and are better suited for longer investment horizons where there is more time to recover from market fluctuations. Additionally, medium-term bond funds can deliver a balance of yield and risk, making them more appropriate for an investor looking for moderate growth without exposing their capital to potentially higher risks associated with the stock market.

In contrast, a high yield savings account may offer lower returns compared to the potential income from medium-term bond funds, and while short-term government bonds carry very low risk, their returns tend to be less attractive over a 3 to 5-year investment period. Thus, choosing a Unit Paying Medium-Term Bond Fund caters effectively to the financial goals and risk tolerance typical of someone investing for this duration.