Post Office GEB

EdInvestor

dunstonh wrote:

A 100% GEB would pay back £5000
A 125% GEB would pay back £5000
A FTSE100 tracker would pay back £5112
An equity income fund would pay back around £7424

In the previous 5 years to that, 100 trackers trounced equity income.

That's not the point though - we are talking about risk-averse people whose priority is not to lose their capital, not to seek the top returns.

The "safety" element ( of the GEB)is there to comfort someone not wanting to lose capital. However, they are getting that safety at a cost. Many are not aware of that cost. If they were made aware of it and then still choose to go into one, at least they have done it with their eyes open. It's the way that cost of the safety net is hidden that I really dislike.

Agreed.

dunstonh

That's not the point though - we are talking about risk-averse people whose priority is not to lose their capital, not to seek the top returns.

No, we are talking about a GEB product in risk rating 4/5 out of 10. That risk rating is not for risk averse people but cautious investors.

The other point is that people taking out these investments do so because they are concerned they will lose their money in the event of a stockmarket crash. Well, those examples show what would have happened if they invested 5 years ago at the high point before the crash. Which product has actually lost money in real terms? The GEB.

BTW, with reference to an earlier post, I have just come across a 3 year one but that only has 75% participation in the FTSE100.

Also, if you read the current post office tranche it boasts that "there are no upfront charges or management charges reducing your investment amount". Talk about spin. Yes, they have no explicit charges but then they dont pay you any dividends either.

cheerfulcat

That risk rating is not for risk averse people but cautious investors.

Exactly! And people are being gulled by the providers into thinking that this is a no-risk proposition, when it is not.

whiteflag_3

All "guarantees" come at a cost .

I fail to see how anyone can endorse these products when the true cost of providing the guarantee cant be quantified.

Why are these products pushed by banks?.............need i say more!

Deemy

I would love to issue my own GEB... would be an easy way to make money

Protect the position with put options that cost far less than the 80% of any gain in the FTSE, with the dividends on top !

And if the market fell ! Even then make profits on the dividends

An easy money making forumla. for the BANKS etc.... !!

whiteflag_3

Wow

ED, DH, Deemy, Cheerfulcat and yours truly all agreeing :j

Never thought I would see the day.

On a serious note though I would suggest given the above, Martin may want to do a bit more research before appearing to "endorse" these products.

I take it they are simple to understand in the same way as with-profits?

jackthelad_2

I totally agree with our regular money experts. I’ve a HSBS Performance Plus ISA with £9000 of matured Tessa invested, 5y term due to end this May linked to FTSE 100 index at a starting point of 5806. My last valuation in Oct 05 was £8699 if I was to withdraw then.

Thankfully with the index above this level it now looks likely I’ll get my money back plus a few pence made! Could of made a couple of thousand just by putting it on deposit