Is it worth getting a NS&I – Guaranteed Equity Bond Issue

Touser

Hi,

Is the NS&I – Guaranteed Equity Bond Issue a good investment in the current financial climate?


Thanks...

dunstonh

Is the NS&I – Guaranteed Equity Bond Issue a good investment in the current financial climate?

No. There are better versions available if you really want that style of investment.

DiggerUK

Touser,
I'm with dunstonh on this one.
They're crap.
They weren't a good investment in the boom.

Christa1

Only if you are stark staring barmy and got more money than sense. I, on the best of authority, idiot that I am made the mistake of investing my daughter's savings since she was a baby in GEB 7 the NS&I GEB to beat all GEBS I was told, she has now been advised she will not see even 1p in interest because the returns are based on the last 6 months of the FTSE and of course it's been rubbish depite the 4+ years it's been really buoyant. Of course they are not FSA regulated either and their ISAs are absolute rubbish, maybe they think they have 'cornered' the market due to being govt backed and therefore, can afford to offer such rubbish rates and products.

dunstonh

Christa, the NS&I GEBs are rarely the best and only their marketing will tell you otherwise. However, it did exactly what it said it would do. Some of the best GEBs have kick out options where if they achieve a certain event they kick you out with your gain to that point. There are mixed views on these with some saying they are not as good as they mean you can miss out on the higher potential figure whilst others will say that they prefer to get a quicker, smaller amount and move on to the next one. Its possible you would have been better with a unit linked plan for your daughter and peridically moved the gains over to something safer. Although that would have still seen the equity side drop in the last few months but of course you then benefit from it going back up again in future without being constrained by a fixed maturity date.

However, the issue 17 terms are pretty abysmal. It matches any growth in the FTSE 100 index, up to 35% So, it has a cap of 35%. Zurich has one (on a thread currently running) that has a cap of 80%. Premier are paying 8% pa. for 5 years providing the FTSE doesnt drop by more than half its current value. Barclays have a range that beats that. Scottish widows have one paying 150% of FTSE 100 with a cap at 50%. Thats just a quick and dirty spread of alterantives from a small handful of providers. Its almost as if the NS&I dont want people to invest in this issue as the terms are so bad.

robpitt

Q. how are equity linked bonds taxed? Is it Income or capital gains tax?

Cheers,
Rob

JoeCrystal

Thanks, dunstonh. I was quite tempted to do it when an email arrived from National Savings and Investments that Guaranteed Equity Bond Issue 17 is no sale but thankfully, your post pulled me back from the blink. :beer:

Christa1

Yes it's a bit of a laugh really, NS&I kindly enclosed a pre populated form just for my daughter to sign to reinvest into GEB 17, of course 'this is a limited offer that closes early if fully subscribed'- in your dreams NS&I. Al least my son invested his money in an ISA, he is older and could do this, so of course as a comparison, it's harsh and I feel bad as I took this out in trust for her. I have also it seems lost most of their inheritance money to which I also thought long and hard about and eventually put into a JP Morgan fund( which is now called something else) and then was told these were transferring into OEICs, so another few grand down the swanee. Needless to say I am not flavour of the month with my kids at the moment!! For the OEICs I think I have little choice but to leave them for a few more years and then think about what they should do then.
I am not normally rubbish or careless with money especially other people's and I know non of us expected to see a situation like this, I also know NS&I have covered themselves completely in their ts and c's, but even my nephew who is a banker could not believe that anyone would invest in a five year plan where the last six months of that investment was the determining factor to the return. I guess we are all better for hindsight!

Myrmidon_J

Christa1 wrote:

... even my nephew who is a banker could not believe that anyone would invest in a five year plan where the last six months of that investment was the determining factor to the return. I guess we are all better for hindsight!

There's a lot to be said for five year plans. Ask the Soviets.

In all seriousness: the last six months are only the deciding factor when the markets happen to plummet. If the market (to which the GEB is linked) had performed well for four-and-a-half years, then stayed flat for the last six months, you'd be quids in.

Although the product is not the best (in my opinion), in this instance you have simply been "unlucky" in that investment conditions have been particularly horrible of late.

So has everyone else!

sabretoothtigger

I wouldnt say unlucky since you got the money back. ftse is down 30% over the last year so alot of people didnt get their money back

Its not a good investment but its not awful either and there is lots of funds that lost alot of money. So dont blame yourself too bad on that one, always check the alternatives

Years ago NS&I was the very best place to save, no one could match their rates afaik but they changed policy to adverts and other silly stuff and the rates have not been good for about 15 years now and Ive not used them since then
Always shop around if you can, its tiring but usually worth the bother