britannia guaranteed capital investment bond

yelf

http://www.britannia.co.uk/home/_site/channels/savings/savings-bonds/gcib/index.html

Just wondering what peoples views are on this for a 60yr old wanting to invest a bit of cash for growth over the short term?

dunstonh

Not normally a fan but you often find after a market crash that you can pick up some very good examples. However, already the terms available are starting to fall back.

For example, the fixed income versions could get 9% earlier in the year. Now they are at 7% and recent launches are in the 6% range. The growth versions rarely appeal to me but again, one can pop along occasionally that bucks that trend.

The one's offered by the banks and building societies are generally poor value and are easily beaten on the whole of market. For example, the Britannia income one pays 5% p.a. but you can get 7.6% currently.

These investments have soft protection in that the guarantee of capital is dependent on the FTSE (normally). e.g. if the FTSE isnt more 50% down from the date of investment they will return your capital. If it is then you get a reduction. These plans are not all created equal either with slight variances. E.g. do they monitor the reduction daily whilst you hold the investment to see if its more then 50% down or do they wait until the maturity date and only do it then. You are also subject to provider risk. That doesnt mean the retailer but the underwriter (market counterparty). So, you want to make sure that they are financially strong.

yelf

Im not sure on this - the 4 year bond has an averaging period of 12mths (so the average over the last 12 mths is taken as the end figure) - I may consider a fixed rate ISA.

plus you dont get the growth of the FTSE: just 15% AER as long as FTSE is above start point. Will now look at the Principailty 3yr fixed cash iSA at 4.2%AER.

dunstonh

You are looking at the growth ones. As I said, they are rarely attractive. However, look at the income ones and you get 6.1-7.6% fixed income and no issues on averaging.

geosaver

dunstonh wrote: »

You are looking at the growth ones. As I said, they are rarely attractive. However, look at the income ones and you get 6.1-7.6% fixed income and no issues on averaging.

Can you tell me where to start looking for some of these 6.1 - 7.6% fixed income?

Thanks.

dunstonh

Can you tell me where to start looking for some of these 6.1 - 7.6% fixed income?

They are available through IFAs.