never lose a penny

ARMOR_2

davidssmith wrote: »

is it possible these days to invest and never lose a penny of your money?

I have been investing private funds in private placement mortgage loans secured by single family homes for over 25 years. My investors yield 10-13 % interest per annum. My clients have never lost a dime, much less a penny. Loans are based on LTV (loan to value). They never exceed 50% of appraised value. Always in first position. One of my clients started with $100,000 several years later she was worth over $1.3 million.

Lehmanvictim

Reaper wrote: »

Without knowing which one there are a few things to be careful about with products like this.

1) As said previously there is often an averaging in the last year that reduces its final year of growth.
2) Unlike investing directly you will not get any dividends.
3) There is usually a get out clause. eg you lose the capital guarantee if the FTSE drops by more than 50%
4) Although sold by UK banks like Barclays sometimes they are run by off-shore divisions in which case it comes under non-UK compensation schemes.
5) The guarantee is normally by a third party. In the past most of the schemes were farmed out to Lehmans and you know what happened to them. You can't be sure the government would step in if the guarentee part failed because they back savings not investments.

These sort of products have a LOT of small print. You need to work through it in detail to discover the traps before deciding whether to continue.

Please be very careful with this type of investment (known in the industry as a structured product). These products have two types of risk inherent in them ie. investment risk and credit risk. The brochures always focus on the investment risk, which appears to be low because the investment is usually spread across an index such as the FTSE, and the upside and downside are capped. The brochures play- down the credit risk, but in effect you are lending your whole invesment to a single institution - usually a bank. If the bank goes bust, you lose your money and you have no FSCS cover, as Lehman victims have found out. Even through Lehmans in the UK was a UK bank regulated by the FSA - no FSCS cover. The brochures usually have some obscure reference to FSCS, but FSCS only applies if (1) the intermediary that created the product goes bust and (2) you can prove that the product was mis-sold. Again there is really no automatic FSCS cover for this type of product. To find out more, go to the Lehman Victims web site missoldinvestments.co.uk