what the safest way of investing 10k on ftse 100

dunstonh

What risks do you consider there are in structured products that link returns to the growth in the FTSE 100 index but aim to return at least the original investment at the end of the term? You know like the one Scottish Widows have available at the moment.

Limited upside (usually due to caps on growth), risk of underwriter failing and not having FSCS protection and high cost of guarantee that can often be avoided by building your own GEB (part cash based assets such as NS&I or fixed rate deposit and part funds with a spread).

With a GEB you are not investing in the FTSE. You are getting a semi link with a cap and no dividends.

I am not a fan of GEBs. They exist to be sold by low skilled advisers to low knowledge consumers. The soundbites of "guarantee" and "no charges" go down well until you analyse them closer.

whiteflag_3

Aegis wrote: »

Inflation risk and performance risk?

All depends how the investor defines risk in the end.

#yeah, my post to dh was worded badly! He actually said no "safe" way and i asked about risk , two different things. I should have just said what I was thinking- given that the op wanted to know how to invest to benefit from rises in the FTSE100 why (as an iFA) i wondered dh didnt mention structured products and instead said there was no safe way to invest.

Aegis

whiteflag wrote: »

#yeah, my post to dh was worded badly! He actually said no "safe" way and i asked about risk , two different things. I should have just said what I was thinking- given that the op wanted to know how to invest to benefit from rises in the FTSE100 why (as an iFA) i wondered dh didnt mention structured products and instead said there was no safe way to invest.

Ahh, gotcha. Makes more sense now

chookie1

a7man wrote: »

why has no one suggested ETFs?

I'd generally consider ETFs to be more or less the same as a tracker fund. Theoretically they do the same thing and as they're traded like shares you can buy/sell them easily through a regular brokerage account - no need to do separate paperwork.

If you were investing in the US then SPDRs (the S&P500 ETF) is a very easy way to invest and they're hugely liquid. I don't believe the FTSE100 one is so liquid.

Downside is that there are not as many providers so perhaps less competition to keep charges down - not expensed as such, but they take a cut out of the dividend.

As ever - you pays your money...

whiteflag_3

dunstonh wrote: »

Limited upside (usually due to caps on growth), risk of underwriter failing and not having FSCS protection and high cost of guarantee that can often be avoided by building your own GEB (part cash based assets such as NS&I or fixed rate deposit and part funds with a spread).

With a GEB you are not investing in the FTSE. You are getting a semi link with a cap and no dividends.

I am not a fan of GEBs. They exist to be sold by low skilled advisers to low knowledge consumers. The soundbites of "guarantee" and "no charges" go down well until you analyse them closer.

Agreed

I think though its important on a forum like this that just because you dont like them that you dont ignore them or dismiss them or pretend they dont exist. For some people they might be the perfect solution. Would you build your own GEB for someone with 10K to invest?