GEBs...good idea now

panos_k75

I have been looking at the option of investing a sum of around 10K in a GEB tracking the the FTSE index.

I am not very familiar with these bonds...are there any pitfalls? Any good place to research them? I have see the Premier Asset Management Bonds to be discussed here and they seem quite good to me...What do I need to be aware off and how does taxation works on them? What are the risks involved?

Many thanks in advance,
Panos

dunstonh

I am not very familiar with these bonds...are there any pitfalls?

Yes. They range from truly awful to a small handful that are quite good.

The main thing from a secuity point of view is that you should make sure the underwriter is based in the UK and FSA authorised.

Any good place to research them?

Not really. IFAs get the data and release information but there isnt going to be a good source on the web to get research.

how does taxation works on them?

It depends on whether they are unwrapped or not. Some get classed as income (income tax), some growth (capital gains tax), some can be held in the life assurance wrapper, ISA or SIPP tax wrappers.

What are the risks involved?

depends on the terms and the underwriter. If Lehmann Bros (US) was the underwriter for example, then you could be facing a loss of capital. Hence why you need to check the underwriter.

panos_k75

Thanks,

So are you saying that I really need an IFA to invest in those bonds in order to make the most of it?

dunstonh

You dont have to but you wont have access to the research tools and data that an IFA takes. So, it would take you longer. If you have the time and understand it then you dont need an IFA.

Its like many other things. Do you do your own decorating, do you do your own plumbing, do you service your own car? Some will do and do it well. Some will DIY and make a pigs ear of it. Some will get a professional to do it.

panos_k75

In general, would it be cheaper for to me buy directly or could an IFA negotiate a better commission rate etc..?

ray123

http://www.moneysavingexpert.com/savings/isa-discounts
You can invest £7200 in an ISA...

Best Invest covers 1,100 funds, and rebates 100% of the commission it earns on initial charges, making it one of the cheapest discount brokers, especially in the first year of investment. It also has the advantage of some very strong research facilities
http://www.bestinvest.co.uk/

Are you sure it is the right time to be investing in the stock market? It is possible to invest in a high interest savings account or fixed rate bond for a year or two or until the FTSE begins to improve!!!!

dunstonh

panos_k75 wrote: »

In general, would it be cheaper for to me buy directly or could an IFA negotiate a better commission rate etc..?

No straight answer to that. Some products are only available through IFAs. Others will pay a commission to an IFA if they are used but if you go direct they wont rebate it but keep it themselves. Others will discount. It really depends on the product provider in question as it varies.

Best Invest covers 1,100 funds, and rebates 100% of the commission it earns on initial charges, making it one of the cheapest discount brokers, especially in the first year of investment. It also has the advantage of some very strong research facilities
http://www.bestinvest.co.uk/

We are not talking about funds though. We are talking about GEBs.