Are you currently seeking to earn a decent income from your savings? With the current climate of low interest rates, which looks likely to remain a long-term fixture of the economy, it's fair to say that most people can no longer automatically rely on the traditional savings account to provide their required income. However, the good news is that a number of other possible solutions are available to you. He we look at some commonly asked questions. Q: Is the stock market my only option to generate an income? A: No, although with shares you do have the chance to see capital growth over the years. This is why 'equity income' trusts have been a popular choice for income-seeking investors in more recent years. Q: What are the benefits of opting for gilts? A: Gilts have been a safe option in the past. The UK Government (like most governments around the world) issues gilts when it wants to raise revenue to fund its spending plans. Gilts are issued at a set price and pay you a fixed interest rate throughout a set term, after which their original face value is repaid. Once issued, gilts can be bought and sold at any time and the price you pay for them will vary. The likelihood of the Government going bust and failing to meet its interest payments is low, so the risk of holding gilts is low and consequently, the rates on offer are not usually particularly high. But you do get a lot of security for your money. However, in some economic climates the rates paid on gilts could be high. Q: Should I consider a corporate bond? A: While only governments can offer gilts, publicly quoted companies can issue something very similar - corporate bonds - and these potentially pay higher returns. Companies wanting to raise money issue bonds and agree to pay a fixed interest rate for a pre-set period, after which they repay the original selling price. They are often called IOUs issued by companies to people they borrow money from! As with gilts, bonds trade freely once they are issued - their prices can go up and down on a daily basis, though past history shows that they tend to be slightly less volatile than share prices. If a company were to hit hard times, it may decide to miss an interest payment, and if it were to go under it could not repay the bond's value. However, in the event of a company collapse, bondholders are actually further ahead in the queue for assets and repayment than ordinary shareholders. Q: When do corporate bond funds pay out their incomes? A: Many funds pay twice a year or quarterly but several now pay monthly, so select a trust that pays at times to suit your lifestyle - or pick a few to ensure that you earn a useful income throughout the year. The income is normally paid directly into your nominated bank or building society account. Remember, if you buy corporate bond trusts through an ISA, you get the interest entirely tax-free and don't have to declare it on your tax form. Q: Is it right that the tax breaks on corporate bond ISAs are better than those on equity based ISAs? A: Yes it is. The Government has announced subtle but important changes to the way equity and bond fund ISAs are to be treated. In a share (equity) based fund your manager can currently reclaim a ten per cent tax credit on dividends paid by the company shares in the portfolio. This is to be changed in April 2004, when no more tax credits can be reclaimed. Income from bonds is treated differently, however. Fund managers can reclaim tax deducted in full now, and that won't change in 2004. Incidentally, many people investing for growth currently pick bond funds and have the income reinvested to boost the ultimate value of their nest egg. This is likely to become an even more popular strategy after 2004 if the rules are not changed. Q: Why do I sometimes see two yield figures quoted for corporate bonds? A: The two figures refer to different things. The 'running yield' is effectively that paid to investors buying into a fund now - and it is the figure that should be paid for the next year, assuming bond prices don't change dramatically. But bond prices won't stay the same for ever - for example, a bond bought by a fund manager for £1.10 in order to enjoy a high yield on it may be due to be redeemed in a few years for its original offer price of just £1. This sort of automatic capital loss is included in the calculations for the 'redemption yields' or 'yields to maturity' - the other figure that is often quoted in information on corporate bond trusts. Q: Are there any other options I could consider for providing income? A: If you are in retirement and using your savings to boost your income, it might be worth looking at several other products. There are special products from National Savings that retired people could consider, although the current rates of return are not that high. But it is also worth looking at with-profits bonds. These are stock market based investments with safety-first structures. Your money is pooled together into a fund, which buys a broad range of shares and other financial instruments. The managers look at how they perform each year and then, based on the overall performance, award annual bonuses to investors - bonuses that can't generally be removed even if stock markets later slump. Although most Managers reserve the right to apply a Market Value Adjuster (MVA) on surrender in adverse market conditions which has the effect of removing bonuses previously added. As an income-seeking investor you can withdraw the bonus - or any other amount - each year. And your withdrawals will be treated well by the taxman - he effectively looks at the first 5 per cent per annum for twenty years as returns of capital rather than income, so most investors can avoid an extra tax bill. If withdrawals exceed 5 per cent per annum of the original investment, the excess will be assessable for income tax purposes. Whether income tax will become due will depend on the individuals circumstances. Distribution bonds are another option. These are similar to with-profits bonds, but have fewer safety-first features. So while the risks can be higher, so too can the returns. Their aim is to provide a rising income over the years, together with some capital gains. And, of course, a fund of emergency money in a top-paying, easy-access deposit account is essential for rainy days and emergencies.