5 yr protected FTSE plan

The_Geek · 20 February 2006 at 5:36PM

Hi all

I have about £17k at the moment which I would like to invest somewhere. I currently have £3k in a mini cash ISA so I've used up my allowance for this year.

I've always been very risk averse with my savings but I've decided that I'd like to try something a little bit more imaginative than a simple savings account.

I've been thinking about a maxi ISA in April but am unsure of whats the best. Also, don't like the idea of losing money.

So anyway, my bank (Barclays) have pointed me in the direction of their 5 year protected FTSE plan.

Basically, they guarantee my investment (ie. at worst I get back my money) and after 5 years, I get back 103% of the rise of the FTSE 100. My money's locked in for 5 years tho.

Does this sound like a good deal? I am a higher rate tax payer so ideally, I want something which will avoid me paying further taxes.

The blurb says that I can either invest as part of an ISA or my investment is subject to CGT. One idea I have is to invest say £10k in this plan then the other £7k in a normal maxi ISA. Another is to simply wait another year and shove another £7k in another Maxi ISA next year.

I doubt I will need the money in the next five years but you never know I suppose.

Any words of wisdom guys?
Thanks

EdInvestor · 20 February 2006 at 6:48PM

You can put 4k in a mini stocks and shares ISA immediately for this year and another 7k in a stocks and shares ISA after April 5 for next year, total 11k.Put the rest in a high interest a/c and then in another maxi ISA the following year.

The Barclays product is another one of these awful guaranteed equity bonds where you earn no interest and get no dividends on your share investment and might even have to pay tax in the unlikely event you make a capital gain.

Avoid.

ReportInvestor · 20 February 2006 at 6:57PM

If it is this product then it looks like they give you 110% of any FTSE rise and you wouldn't be liable for tax

But you miss out on the 3.4% pa dividends and you have to get out after five years. The dividends, if you reinvested them, could give you protection against a 17% fall in the FTSE assuming you chose an income fund.

dunstonh · 20 February 2006 at 7:21PM

We all like a debate on this board but there is one thing that all the regulars agree on. These products are rubbish.

So anyway, my bank (Barclays) have pointed me in the direction of their 5 year protected FTSE plan.

Barclays operate a tied salesforce. Tied advisors are not allowed to recommend investment funds or portfolio planning. So, they recommend products like this instead. Never buy regulated financial services products from your bank.

David42 · 20 February 2006 at 9:17PM

If you are using an ISA, there are better bonds available. The following website maintains a helpful survey of this market: http://www.lowes.co.uk/stockmarket_bonds_main.asp

According to that website, you could get 125% of FTSE growth over 6 years with the Morgan Stanley plan (subject to income tax, but that would not be a problem in an ISA). If you need to invest outside an ISA, the Barclays plan at 110% of FTSE growth has the advantage that you can use your capital gains tax allowance.

5 yr protected FTSE plan

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