Guaranteed investment accounts

Harvey_Mushman

Hi been lurking a while but this is my first post.

I thinking of investing some savings in the above with the Yorkshire Building Society. A 4 year plan with growth depending on the performance of the FTSE 100 Index with a possible 40% growth and a guaranteed 11.25%.

What do you make of these plans? Has anyone else invested in this or similar?

Regards Rick

SeanW

They are generally not good.

If the FTSE is not up over 11.5 (and this isn't a straight forward calculation*) you get 11.5% return, or just 2.7% pa.

*they instead break the 4 years into 16 quarters and calculate gains/losses in each quarter, cap each at 2.5% and use the sum of all these. So if the market rebounded in quarter 1 and gained 100%, you would get 2.5 that quarter, if for the next 15 quarters it averaged 0.5% gain, you would get just the 11.5% back (i.e. 2.5 + 15 * 0.5 is less than 11.5%). Therefore the FTSE could go way up in value, but not your "investment".

dunstonh

I thinking of investing some savings in the above with the Yorkshire Building Society.

Why?

A 4 year plan with growth depending on the performance of the FTSE 100 Index with a possible 40% growth and a guaranteed 11.25%.

Terms dont appear very attractive and structured products are not as guaranteed as you may think.

What do you make of these plans?

Mostly poor quality, expensive (in hidden charges/implicit charges) and designed to be sold by low skilled sales reps to low knowledge customers. They have a few good soundbites (guarantee being the key one) but when you delve deeper you can do better).